Why Predatory Carriers Fear Apple’s Customers First Approach With iPhone

Why Predatory Carriers Fear Apple’s Customers First Approach With iPhone

A recent survey of mobile carrier execs by Deloitte highlights some of the major concerns over the next few years. Chief among them is losing control of the mobile industry and market space to platform developers – namely Apple and Google. As Galen Grumen points out for Infoworld, this scenario actually gives Apple more power than Google because Apple controls the entire iOS ecosystem, from operating system to hardware to app and media sales.

This situation has mobile carriers worried. Carriers in Europe have actually gone so far as to consider developing their own smartphone platform to compete with iOS and Android in the hopes of enough success to maintain bargaining power against the demands of Apple or Android manufacturers. But the big question is whether or not this is good for consumers and business customers.

Of course, carriers have actually handed a lot of clout to Google in aggressively marketing Android devices as iPhone alternatives in the hopes of creating competition that might ultimately weaken Apple’s dominant position at the negotiating table for future devices.

This has obviously backfired on two fronts: one, they handed Google and Android manufacturers, particularly Samsung, more power of their own and the freedom of manufacturers and carriers to skin Android and control the Android update process; a reason users prefer the consistent iOS experience and carrier-free update process – lessons Microsoft took to heart in negotiating its Windows Phone agreements.

Obviously, this is good for Apple, which is reaping huge profits from iOS. It’s also a win for consumers in terms of user experience and the ability to not be held captive when it comes to mobile OS updates.

Carriers, however, lose a lot of control of the device and the consumer in the process and effectively become just a data delivery system for devices – forcing them to compete solely on price and network performance. That’s a change from competing on device features and carrier-specific services, which have given carriers ways to differentiate for years.

It’s hard to feel bad for carriers since they’re attempts to control user choice are what has made Apple’s carrier-agnostic approach so compelling to consumers and businesses in the first place.

It’s also hard to see this as ultimately a bad thing for the industry. Carriers still maintain large profit margins, particularly when it comes to subsidizing device costs. If anything, the consumer control Apple offers is forcing carriers to be less predatory, which is definitely a plus in countries like the U.S., where there’s limited regulation of carrier sales tactics.

Ultimately, the carriers that find a way to maximize and monetize a consumer-focused sales experience and customer relationship will likely be able to ride it all the way to the bank.

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  • FriarNurgle

    No tears shed here for the carriers. 

  • Donald Michael Kraig

    “[F]orcing them to compete solely on price and network performance?” Really? Please tell me when Verizon, AT&T, or Sprint lowered their prices as a result of competition. Please tell me when the big three offered MORE data availability for less rather than charging more and receiving less, including “throttling” what you do receive. Sorry, but in spite of there being a supposedly competitive free market, it certainly appears that the carriers are a colluding, tight-knit club that focuses on less service, higher prices, and d@mn the consumer!

  • synthmeister

    Unfortunately the telcos don’t have to collude that much because the hodgepodge of GSM/CDMA standards between them prevents real competition. The “free market” worked against competition in this instance and consumers are paying the price.

    What the government needs to do is make it illegal for the carriers to lock phones with multi-band capability like the iPhone 4S.

  • orthorim

    “That’s a change from competing on device features and carrier-specific services, which have given carriers ways to differentiate for years”

    Really? I remember ridiculous, fugly branding. And expensive ringtones. Carriers never actually have taken advantage of being able to create a market place, or selling worth-while software on phones. It was all garbage. Now they fear losing the ability to inundate their customers with said garbage – why?

    Carriers thinking about creating their own mobile OS – that made me LOL though. Yeah, right. 

  • orthorim

    There is real competition outside the USA. The USA doesn’t have competition, mostly thanks to the fact that the barriers of entry are too high. Not enough frequencies available; incompatible systems. Huge area to cover, e.g. huge initial investment.

    Of course if the FCC auctioned off some more spectrum, and forced carriers to all use the same tech, and force them to have reasonably priced roaming agreements with newcomers, the market in the US would be ultra-competitive in no time. The reason that will never happen is that the politicians and lawmakers are being paid off by the “lobbys” of the incumbents. E.g. straight out corruption. 

  • sn0wball

    here in eastern europe. carriers don’t have control. we buy phones at full price and only use pre-paid

About the author

Ryan FaasRyan Faas is a technology journalist and consultant living in upstate New York who has written extensively about Apple, business and enterprise IT, and the mobile industry. In addition to writing for Cult of Mac, he is a contributor to Computerworld, InformIT, and Peachpit Press. In a previous existence he was a healthcare IT director as well as a systems and network administrator. Follow Ryan on Twitter and Google +

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