A New Way to Count

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Over the weekend, we got news that AT&T will be buying T-Mobile USA for something to the tune of $39 billion. That’s a hefty chunk of change, but I’m going to focus down on a few things that I read in GigaOM that caught my eye. GigaOM present a fairly decent argument as to why this is really really bad for customers, and I have a tendency to agree with a lot of what was said, namely in this piece, look at what they say about Android smartphones:

Don’t be surprised if you see AT&T impose its own will on what apps and service are put on its Android smartphones. I wouldn’t be surprised to see the worst phone company in the U.S.(according to Consumer Reports) tries to create its own app store and force everyone to buy apps through it.

Notably, the paragraph talks specifically about Android-powered handsets (which are “open,” mind you). Not only are a whole pantload of atrocities to net neutrality being committed due in large part to this whole “open” malarkey (which is another story for another day), I’m sure we’re going to see even more horrible stuff perpetrated by AT&T and Verizon as time rolls on. Having a choice between all of two carriers in the US is not a happy solution to me, which is why I’m looking forward to a future that doesn’t explicitly involve me having to fork over half a paycheck every month just to use my phone. As these companies become more powerful, they limit the amount of innovation that can occur in the portable computers and smartphones that are out on the market, mostly because they can then restrict what devices can be used on their network. There are always ways around this, but it’s a scary future, backed up here:

Phone Handset Makers. Before the merger was announced, the handset makers such as HTC and Motorola had two major carriers who could buy their GSM-based phones. They just lost any ability to control price and profits on handsets because now there is a single buyer that can dictate what GSM phones come to market. Even with LTE becoming the standard for the 4G world, it would essentially be a market dominated by three buyers (should Sprint go with LTE), which would place handset makers at the mercy of the giants.

That isn’t to say that this is the end of the road for handset manufacturers, however. Specifically, I think Apple has seen this coming for a while, and has been looking at things from all angles for some time now. On the one hand, they had to give a lot to be able to partner with AT&T, but AT&T gave in and netted themselves with millions of subscribers because they took on Apple’s revolutionary phone when no one else would. I imagine they also looked at the uphill battle they had to fight to get there and said, “What if we couldn’t partner with a carrier, what then?”. The answer came in the form of last year’s iPod Touch. In an article from Engadget:

…and it’s the most glaring sign yet that the next generation touch will flippin’ finally boast a camera (or just a way around that SMS-based activation?)…

Emphasis mine.

Also, from Apple’s support site:

What information do I need to call someone using FaceTime?

To call someone using FaceTime, you need their phone number or email address. Which one you use is determined by the device you are calling:
When calling an iPhone 4: Use the phone number of the person you are calling.
When calling an iPad 2, iPod touch, or FaceTime for Mac user: Use the email address designated for FaceTime of the person you are calling.

So, in short: Apple is trying to craft an ecosystem that is not reliant upon any single carrier to deliver the sort of innovation, creativity, and communication that has taken the world by storm. All you need now is an Internet connection, and that can be found just about everywhere. Think about it: instead of paying through the nose (in addition to losing an arm, leg, and first-born child) to use an iPhone, all you’ll need in the future is a cheap mobile hotspot, the kind that are available everywhere right now. The kind that you can get for $50/month or less. The kind that can have five devices tethered to them. The kind that enable face-to-face conversations with your friends through FaceTime. Brilliant.

When I stood in line for an iPad 2 and came away from the experience empty-handed, I started wondering why. After asking the Apple folks that were present, it became pretty clear to me that they had massive stock of wifi-based models, but very few 3G models1. I considered that for a moment as I ordered my new one online, and realized that this was Apple’s gambit. They’re trying to push their devices away from reliance on anyone or anything. (via)

The end result is still grim for most people, however, since the average person shopping for an iPhone isn’t going to be savvy to Apple’s future plans, they’re just looking for nice piece of kit to throw in their pocket or handbag. If control is taken away from consumers (control=choice), then the carriers will dictate how much and when people pay for each device. They’ll be able to perpetuate this madness with words like this:

Further, we recognize that there have been meaningful recent moves toward openness, including the introduction of open operating systems like Android. In addition, we anticipate soon seeing the effects on the market of the openness conditions we imposed on mobile providers that operate on upper 700 MHz C-Block spectrum, which includes Verizon Wireless, one of the largest mobile wireless carriers in the U.S.

In light of these considerations, we conclude it is appropriate to take measured steps at this time to protect the openness of the Internet when accessed through mobile broadband.

What a crock. Also: scary, because that’s where we’re headed. Now that AT&T and Verizon are effectively the only carriers in the US, you can bet your bottom dollar that they’ll be throwing their weight around in the government to try to get ignorant legislators to give them even more power.

AT&T points out that the combination of T-Mobile USA and AT&T “provides fast, efficient and certain solution to impending spectrum exhaust challenges facing AT&T and T-Mobile USA in key markets due to explosive demand for mobile broadband.” What we’re seeing here is AT&T using what some call a manufactured spectrum crisis — which the FCC has built to a fever pitch in the last two years — in order to shove this deal through the regulatory process. This is a deal that will ultimately be worse for consumers by reducing the number of nationwide wireless providers and consolidating much of the high-quality spectrum in the hands of the nation’s two largest carriers.

This is horrible for the consumer. Sure, AT&T will sugar coat the whole thing and make it look like they just handed you the world on a silver platter, but the bottom line is that they want to control what you get and how you get it.

Now I understand that carrier dependence is not the same as Net Neutrality, but there are certainly more similarities than differences. While Apple can’t necessarily fix the problems with Net Neutrlity, they can change the way people communicate around the world and create more alternatives for more people.

With iOS devices proliferating throughout the world at an amazing rate, it won’t be long until calling your friend in France and talking to them face-to-face from the palm of your hand will be commonplace and free. If you read the writing on the wall, you’ll see that it’s already begun.

1 I’d imagine that Apple also knows that 3G is reaching its EOL (end-of-life) soon, and doesn’t want its customers having a poor experience. If I were Apple, this would be something I’d be seriously considering, as well. The 3G versions are different from the wifi-only models in small ways, and it makes a difference to the overall experience. For the record, I do like the ease of the 3G model a whole lot more.

Thanks to Dazzie D for the picture.

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2 Comments on “A New Way to Count”

  1. Jordan says:

    Also on the bad side, AT&T is one of the most expensive wireless carriers. T-Mobile is/was the least expensive. That means this deal will mean higher prices for all.

    I also thought Facetime would be Apple’s way of getting around the carriers when they first released it, but they seem to be handling it poorly. It’s been out for about a year now, and it is still missing basic features like the ability to check if someone is online, the ability to leave a message, and even missed call functionality. You really need that stuff for it to replace calling. And now they’re charging for the OS X version if you don’t get it with a new computer. That’s really a bad move. And I don’t believe Apple’s “we have to for accounting reasons” line on that one. That just doesn’t make sense and no CPA I’ve talked to can make sense of it either.

    • Paul says:

      I think Apple’s doing the right thing with FaceTime, actually. I also think this new rumored MobileMe rollout will be more ammo in the chamber. Picture this: free MobileMe (at least for email), everyone with an Apple device is guaranteed a me.com email address; FaceTime gets tied into MobileMe, statuses can be adjusted/displayed on a unified landing/contact page; everyone with a camera-equipped iOS device can FaceTime.

      I can’t speak intelligently on the MacOS FaceTime thing. That’s just stupid. Why charge for it? On the other hand, people like paying for Apple stuff. It’s some kind of weird phenomenon that if Apple makes something and puts a price tag on it, people will buy it.


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