Fighting The Wrong Fight

We have been distracted by ridiculous arguments and fabricated “wars” for too long. We have been distracted by thinking that Google is Microsoft and Apple is Apple in a doomed fight already fought 20 years ago.

But that is not the fight we should be caring about at all. The fight we should be talking about, but aren’t, is the fight between mobile device makers and the carriers. This is the only real fight that matters.

Why should we care? Because carriers have been standing in the way of excellent user experiences for a long time. For years, Palm and HTC and Nokia and RIM have been kowtowing to the carriers. Carriers sell all the devices and the services, decide what software is available and what isn’t, decide what you can do with the device you paid $3000 or more for (over a two year contract). And who is punished? We, the consumers, with lousy service and controlled devices with crappy experiences.

I’ve been in this business for 13 years now. 3 years ago I had lost faith… until the iPhone. It wasn’t Apple’s designs or devices or user interfaces that excited me as much as it was their revolutionary business model (although the former excited me, too). Apple controls what apps are installed. Apple controls where the device is sold. Everyone — Apple, AT&T, developers — gets a cut of the revenues and the consumer gets an amazing experience and exceptional support.

I was just as equally excited when Google announced Android. The two most powerful companies in tech could surely go up against the four major carriers, reducing them to what they should be: regulated pipe providers just like your gas and electric company. And maybe, I thought, this will get Nokia and RIM to finally grow a pair and butt heads with the carriers. (Didn’t happen as RIM’s own mobile app store is still not pre-installed on their devices.)

But this pipe dream is being crushed quickly. The carriers, after giving up ground initially, are fighting back. They are using Android’s openness against the company. The carriers refuse to carry the Nexus. Verizon cuts exclusive deals with Skype. Slowness in “approving” new Android OS releases. AT&T locked devices from side-loading and the removal of the Google Marketplace. Secret (and ridiculous) deals on net neutrality. And now, insult to injury to Google who expected to make most of their money from selling ads like they do on the web, removing Google Search in favor of Microsoft Bing as the only and default search option on certain Android-based smartphones.

My goal here is to re-focus the conversation, put the attention back where it belongs. This is war. And this war will go nothing like Apple v. Microsoft. This is about who controls the experience; who gets to interact with the customer.

The stakes are a lot higher.

125 thoughts on “Fighting The Wrong Fight

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    • Wow… talk about entirely missing the point of the article.
      The ‘open’ canard is is trotted out as the source of ‘pro-consumer’, when the point is that its being used by the carriers for precisely the opposite reason.
      ‘Open’ means open for the carriers to cripple the device as they see fit, nothing more.

    • Open Source advocates often claim to be pro-consumer, when in fact they’re not – they are pro-freedom, and presuming that freedom is what consumers should want.

      And it seems they are willing to ignore the practical closed nature of the Android system as experienced by most users, because of the theoretical openness of the underlying system (hey, users can install new firmware).

      • *Way* too many open source advocates define freedom in extraordinarily parochial ways that constantly miss the forest for the trees, and that to the average consumer are counterintuitive and, frankly, meaningless.

      • Open Source/Free Software are pro freedom – only for the programmers and the corporations that hire them. That’s great if you’re a programmer with time and money on your hand, not so good if you’re just the poor Joe six-pack.

    • In this case, “open source” is not be definition, “pro consumer.” Google’s business model is ad-centric, and now carrier-centric, and is NOT consumer-centric. Apple, in contrast, traditionally has operated a more customer-centric business, even if it does exist within a “walled garden that is not “open source.” Don’t believe this? Just ask the millions of loyal Apple customers why they’d never consider using an Android phone or a Windows PC.

    • Pro consumer coupled with pro open source specifically describes iPhone.

      Pro consumer:

      iPhone is the most consumer electronics -oriented phone … it’s an iPod with a phone in it. It’s as easy to own, use, and maintain as an iPod. It requires no IT skills, not even auditing the apps. You can buy it in consumer electronics stores like Apple Store, Best Buy, Radio Shack.

      Pro open source:

      The Apple WebKit HTML5 browser core from iPhone and other Apple products is used in Android, Chrome, Palm, Nokia, BlackBerry, and others, because it’s one of the most successful open source projects in history. Bonjour is a widely-used Apple open source project that makes IP networking and printing easy enough for consumers. The OS X core is open source and Unix certified.

      But like the article says, that would all be nothing if Apple had not made a single, identical GSM device for all 100 plus carriers of iPhone. Carriers either carry iPhone or they don’t. Take it or leave it. They don’t get to add stuff, take stuff away, or even put any logos on there. The carriers cannot play dirty tricks on the user, all they can do is offer great network service or watch the user leave and take their iPhone to another network.

      Android may be open source, but it’s not an open phone. To make a phone open, you paradoxically need a firewall between the handset maker and carrier. Users buy an iPhone from Apple, then buy a SIM from, typically, a choice of 2-5 open carriers. The user combines the 2 into a working device. That way at any time, the user can fire the handset maker by buying a new phone and putting in their existing SIM. Or they can fire the carrier by removing the SIM from their existing phone and putting in a new SIM from another carrier. That puts the power in the user’s hands. The cost of firing the carrier is low. Carriers are all just SIM’s.

      With Android, they are almost all carrier phones, closed phones, no SIMs, and the phones are so unique to the carrier that even where they are available elsewhere, they often have different names and user interfaces. So to fire the carrier, you have to get a whole new phone, new carrier, new user interface and in some cases, new apps.

      So like the article says, forget about open source for a second, and notice open phones.

      • When you buy subsidized hardware you play by the carriers rules. If you don’t like those rules then don’t buy subsidized hardware.

        I have an iphone that was subsidized and was carrier locked. I have to run ultrasn0w on it to use it in a diff country without getting raped on roaming charges which is obnoxious.

        I also have an android phone which I bought straight up. I can do anything I want with it and I get to use updates direct from HTC without waiting for any carriers.

    • “Pro-consumer coupled with pro open source up against, well.. The opposite.”

      I love a mindless slogan as much as the next guy, but what does that even mean?

      How are any of the issues that Elia cites (exclusive deals with Skype, bans on side-loading apps, secret net neutrality deals, etc.) “pro-consumer”? How are they even “pro open source”? Did you even read the article? Are you trying to make any logical argument at all?

  2. Thanks, Jourdan. My spelling used to be so good! Now I rely on my computer’s various spell checkers too much. I fixed it. (I used the word sole instead of soul in my tweet, too. One of those days!)

  3. Nice rant.

    There is nothing revolutionary in the apple model.

    Control of applications was previously exercised by platform vendors and carriers. For further background, start developing j2me apps and deploy them into a marketplace without getting a carrier/partner certificate.

    Apple’s execution model is revolutionary. Nearly every manufacturer in this business is flailing. The failed promise of android has more to do with google being a one trick pony then megalomaniacal carriers quashing innovation. Google’s failures are starting to stack up… And the rate of failure is increasing. See wave, street view wifi scandal, aurora exploit, etc.

    Frankly, the only companies that are incented to look after the customer are the carriers. Google wants to give everything away because they want access to your privacy to improve advertising revenue. Apple does not support billing infrastructure that enables hundreds of millions of customers per month. The things that are needed to support customers on this scale is non-trivial. Google wants access to this for reasons that should make every one who thinks about unexpected consequences wary. Your call to action is fundamentally misguided.

    • You must be joking.

      “the only companies that are incented to look after the customer are the carriers.”
      By look after you mean lock in.

      “Apple does not support billing infrastructure that enables hundreds of millions of customers per month”
      iTunes has 150 million customer credit cards on file, and a direct billing relationship with each customer. That’s more than AT&T or Verizon.

      I don’t want a carrier to ‘support’ me. I want them to be a reliable dumb bitpipe. That’s it.

    • Dude, you’re misguided. Apple has a huge infrastructure already in place with iTunes, and it’s only getting bigger. They have a best of class retail presence, they have a huge data centre. If any company is ready to step in a replace a carrier, it’s Apple.

  4. A friend asked me through Mobile Portland: “How much is this the development community, though, versus the user community / media?”

    My response to him, which I thought I would share here:

    “I think it’s better to have ideas. You can change an idea. Changing a belief is trickier. Life should be malleable and progressive; working from idea to idea permits that. Beliefs anchor you to certain points and limit growth; new ideas can’t generate. Life becomes stagnant.” – Rufus (played by Chris Rock) in Dogma

    I think we are definitely part of the problem as our own beliefs, our own dogma, is playing a big part in that. I found myself falling into that trip, too, rooting for Apple over Android and being disgusted and bewildered by my own vitriol toward Google (even writing two back to back blog posts, one ripping Google and the next praising them, which just left me more confused).

    We, too, are distracted by the wrong fight. In fact I think the carriers are well aware of what they are doing and are happy to stay in the shadows while we divide ourselves in the trenches.

  5. I typed… Earlier I meant to say that there was nothing revolutionary in the apple biz model. Sorry for the confusion.

  6. I agree with your argument and I’ve been complaining about this for years too. However, if you’re that pissed off with it, get an unlocked device from an independent source – overseas or better still, get a month-to-month SIM card from the GSM provider of your choice and you’re off to the races.

    Or you could just jailbreak your iPhone and install whatever the hell you want on it, to hell with what your cell provider says.

    Instead of playing the victim, take control and do something about it.

    • Jailbreaking is immoral (notice I didn’t say illegal). It breaks the EULA that you agreed to when you began to use the device. Stating that jailbreaking should be used as a solution to a carrier/customer issue is wrong.

      • It’s not immoral to do whatever you want with a device you own (notice, I said “own” – I paid an unsubsidized price for my iPhone hardware)

        I do not believe EULAs are morally binding contracts. A contract requires a fairly equal “meeting of the minds” and negotiations, with both sides understanding what they are giving up and receiving.

        Software EULAs are anything but that. They are one-sides boilerplate which only serves to take away rights.

        Ironically, EULAs are considered (wrongly in my opinion, but the law’s the law) legal documents – so in reverse of what you think above, breaking my EULA is certainly grounds for a (theoretical) civil legal action, but it is most certainly NOT immoral.

      • Like all moral arguments that depends on a lot more then most people think it does.

        “You agreed to do X so you could do Y, and didn’t do X so it is immoral” doesn’t fly in all cases. For example “You agreed to murder my wife so you could keep breathing after I take my foot off your neck, and then you went to the police rather then murdering my wife, you are SOOOO immoral!”

        Granted that is an extreme case, but surely that can’t be the ONLY exception.

        So, did you really agree to a EULA? Did you get a chance to read it? Does buying something that has a EULA presented after the fact make it morally binding?

        In fact is there a EULA for you at all, or did someone else give you a phone? There are used iPhones on sale, do they have EULAs?

        If the EULA is presented when you first attempt use iTunes with the phone, did you agree to a EULA if you just don’t use iTunes with the phone?

        If you DID agree to the EULA did it actually say you can’t jailbreak it? If it did, is that a morally binding obligation, or is there a higher moral issue that makes that moot?

        Now it may be the case that you did agree to a EULA, and it may be the case that a EULA really does forbid jail breaking, and it may really be the case that there is no moral excuse for ignoring that restriction… however it isn’t a slam dunk here.

        Legally binding and moral don’t go hand in hand. You are fully correct that sometimes just because something is legal don’t make it moral (or right). However just as sometimes some illegal things ARE moral, sometimes (I hope quite frequently!) legal things are moral.

        There is a reason courts are reluctant to enforce EULAs. There is a reason courts are reluctant to enforce some clauses of contracts that are stronger then EULAs (as in formed between two parties both with negotiating power, and both offering consideration). Sometimes those reasons ARE judges projecting their morals onto the legal code.

        When a court finds the plain reading of the law invalid, it is worth a closer look to see if there is a moral reason to do so.

      • Nonsense. Breaking a EULA is most definitely NOT an immoral act. A EULA is a contract. People and businesses break contracts all the time, for all sorts of reasons and morality generally doesn’t play into the decision at all. The consequences of breaking the EULA are spelled out, just like any other contract – in most cases, it means that the carrier can decide not to help you out if you have an issue with your device. Effectively, you’re voiding your warranty. If that’s a potential issue you can live with, feel free to jailbreak or root your phone… there’s absolutely no moral ambiguity involved.

    • As with most geeks (not meant in a negative way), you totally misunderstand the level of interest 99% of people have in jailbreaking their devices. For you its fun… for most its an incomprehensible hassle that the stock iPhone relieves them from.

      iPhone is successful BECAUSE of the lockdown, not in spite of it.

      Enjoy hacking your devices, but its not what most people want to do.

  7. In Denmark, all four major carriers sell the iPhone. And Apple too is selling it directly to the customers – unlocked.

    All carriers support 3G or faster and tethering a laptop to an iPhone is fully supported.

    And we purchase our iPhone applications in Apple’s Danish AppStore.

    But of course Europeans who have visited the United States cal the US a cellphone developing country … BTW, in Denmark your two-year contracts are six month contracts. By law.

  8. The problem is 1) that US consumers short-sightedly accept subsidies and long contracts, and 2) the 4 networks are highly incompatible (two are CDMA and two are GSM, but even the GSM ones use incompatible 3G bands).

    Once LTE arrives we should have 4 genuinely competing networks, and all voice/data going over IP. Hopefully things will get better then.

    For the antidote to your complaint, go to carphonewarehouse.co.uk and marvel at the cheap and plentiful cell plans available. Sigh.

    • And the plans on carphonewarehouse.co.uk aren’t even the cheapest because some carriers in the UK have margins so tight that shops like carphonewarehouse.co.uk don’t carry them.

      • That’s right. A lot of companies are acting as carriers in Europe. Tescos (the Supermarket/superstore chain) for one. Here in Netherlands we can get plans and SIMs from the Hema, which is a chain of budget shops like Woolworths.

        The competition is great. I could try a different pay as you go card every month and never run out of new ones to try. Or, I can get a free iPhone from several carriers.

  9. @Per — things are changing, though. The US is by a long way the world’s largest smartphone market. And (amazingly) its large cities will have 4G sooner than most people in Western Europe.

  10. Thanks for refocusing the mobile computing discussion on the real problem — the U.S. carriers. I do not own an iPhone (intentionally, but that’s another story). However, I’ve been thinking about buying one lately. Why? Because Apple is the only mobile experience provider that has exerted any leverage over the carriers, who don’t give a damn about user experience.

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  12. One battle worth fighting, which no one is fighting, is the absurd fantasy that carriers “subsidize” phones and that justifies the onerous 2-year contract terms. With a 2-year contract to AT&T, I can get a 32 GB iPhone for $300. I can get an unsubsidized 32-GB iPod touch for… $300. Okay, the phone has a bit better camera, but other than that, you’re telling me it takes 2 years to pay for the additional tech that allows me to make phone calls and use 3G? What exactly is the value of those components? If we’re absurdly generous, say it’s $50. It doesn’t take much to see that there’s no way you should need a 2-year contract to pay that off.

    How do we fight back against that? Well, I admit I bought the iPhone 4 even though the thought crossed my mind to get the cheapest phone I could and an iPod touch instead. Didn’t want to have to carry 2 devices around. Lame, I know.

  13. @djr12 Apple established the (retail) price of 3G as $119 with the iPad so you probably have your answer there.

    As for Apple and the carriers, a long history there of shedding partners who they have to rely on. I absolutely believe Apple’s goal is to turn the iPod touch into a VOiP device with optional 3G for phone calls (or FaceTime calls, as the case may be). I speculated as such here:

    http://eliainsider.com/2010/06/22/apple-verizon-and-the-sound-of-deflating-balloons/

  14. > Buy an unlocked device

    Difficult to get without technical savvy. Also, almost all carriers won’t give you the cheaper plan you deserve because they don’t have to recoup a handset subsidy. That means you are throwing away the subsidy money.

    > Don’t sign a long contract

    Even if you “waste” money and buy an unlocked phone, many US carriers will force you into a 2 year contract.

    > Vote with your wallet, let the free market decide.

    It is not a free market. It is an oligopoly in the USA. There is no “dumb pipe” provider to choose in most cases.

    • You are right, you don’t tend to be able to get a discount for bringing an unlocked phone to the party I have gotten a no-term contract with T-Moble USA, Cingular (now AT&T), Verizon, and AT&T. Never tried with Sprint, but I assume it would work.

      You also can sort of get a discount. Most USA carriers don’t sell the “good” phones for use with their prepaid (what much of the rest of the world calls “pay as you go”) accounts. For a lot of usage patterns these accounts are cheaper then the normal contract accounts.

      If you happen to have an unlocked iPhone, you can slap it on a prepayed account, and if your usage pattern works out you could pay a lot less then half as much as the normal contract monthly price.

      Of corse with the wrong usage patterns prepayed costs a lot MORE then the monthly contract prices, so think carefully about how you really use your phone before you try it.

      (I think pay as you go data rates are a lot worse then the contract ones, when you can even get it, but that isn’t always the case)

      “It is not a free market. It is an oligopoly in the USA”

      Yep, and shortage of useful cell phone type frequency is going to pretty much ensure that forever. Or until there is some significant radio or encoding breakthroughs.

      That is one really good reason it would be nice to have the phone makers compete with each other on how awesome the phones can be without having the cell service providers deciding what features can and can’t exist, and how much they cost.

  15. Wow I went to a Tmobile store and asked for the Nexus, he said “Google doesn’t want us to sell their hand sets” (Not a direct quote). Would not be surprised if the rep was told to say that to customers

  16. One scenario that I think is possible — and that troubles me greatly — is this:
    after the telcos eviscerate Android (and, thereby, Google) and pimp it into their own
    semi-proprietary system, they’ll go after Apple and try to do likewise.

    That would be the tragedy of all of this “open v. closed” nonsense.

  17. Whole heartedly agree with your position Elias.

    You write “The carriers, after giving up ground initially, are fighting back. They are using Android’s openness against the company.”

    I’m wondering if it is possible to replace a Carrier crippled Android build with a custom Android build. Open source aikido?

  18. One question: How did Google allow the Bing fiasco to happen?

    Another question: What can Google do now? Will we see rewritten Terms of Use for Android in the near future? Or will the platform’s openness keep Google from fighting back against the carriers?

  19. NO the real fight is like all other new mediums.
    Whether Corporate interests trump societal.
    Whether we going to let Corporations spoon
    feed us with dumb ads (free) and pure propaganda.
    Just like Radio, TV, Web is head the same direction
    where only way to fight it is buy not buying.

  20. The real worry for me about Android is that if it is perceived as a success, the carriers will use that as leverage against Apple. Apple is the ONLY one who has stood up to the carriers, but they can only do that while iPhone is a premium brand and brings in customers and convinces them to sign up for expensive two-year data plans.

    Basically, if Android succeeds, the carriers don’t need Apple, and then Apple would have to capitulate to the carrier’s crazy demands just to get them to carry the iPhone. The day of nationwide wifi can’t come too soon for Steve Jobs.

    • Hasn’t Apple already conceded to AT&T’s ridiculous demand that tethering is a monthly paid service rather than an app (in the US)? I assume it took so long not for any technical reason (tethering is magically more challenging in the US rather than anywhere else in the world?), but rather because Apple had a standoff with AT&T and finally blinked.

  21. The solution may be Wi-Fi only phones;
    like iPod Touch with FaceTime.
    and future iPads with FaceTime;
    and probably future Apple TVs
    and MacBooks and iMacs;
    all capable of videoconferencing
    worldwide for free over wi-fi
    without cellular carriers involved:
    that could be the future of mobile communications.

  22. “And maybe, I thought, this will get Nokia and RIM to finally grow a pair and butt heads with the carriers.”

    Nokia *DID* butt heads with the carriers who simply refused to take their smartphones and candybar phones. Nokia then decided they’d sell their phones directly without subsidy. Look where that got them in the USA!

  23. Thank you for refocusing us. I believe apple could be doing more to assert its own power over the iPhone. I feel that AT&T has too much control over the type of apps that apple can approve and that they are the ones that blocked google voice. You should also be able to unlock your iPhone once your contract finishes.

  24. You had me hook line and sinker up to the Apple reference. Then you totally went south. Apple IS the reason why carriers are trying to exert control again. They see that someone (apple) can LOCK down the entire mobile experience. They’re greed is such that they want it ALL now! They want to be the profit sucking bottleneck that leeches off of everybody in the mobile telecom world while NOT building out their networks and striving to kill this customer expectation that Android wants to build.

    You thought you despaired a few years ago, just you wait until metered mobile web and carrier skinned UI’s becomes ubiquitious for EVERYONE.

    • Your argument presupposes that the carriers did not have control BEFORE the iPhone (otherwise why would it be necessary for them to “exert control again”?). Care to cite some evidence for this?

  25. Elia,

    Interesting points. The thing that jumps out to me is how a lot of this actually rests with the notion of “brick and mortar” stores. You’re right, the carriers are doing all the selling – they have all the people on the street that do the hard sell, maintain the stores and kiosks, etc. And thus they exert a lot of soft and hard control over that process and their supply chain (both of physical devices and software on them).

    Apple is somewhat of an aberration in this regard. They have physical stores I can go to an buy a phone at, but have that phone run on someone else’s network. Eventually this will probably work on more than one network.

    My mind goes to other traditional supply chains and outlets, and of course quickly asks “what’s the Walmart lesson here”. Is this really all that different than Walmart picking and choosing what books or movies to sell? What price they want for the next round of products that they purchase from a supplier? They command these concessions because they own the distribution channel – stores/trucks/stats. Carriers are essentially in the same position but with stores/billing/networks.

    The war you’re setting up has more parallels outside of a traditional technology battle than people seem to be considering.

    • You make a great point. Walmart, too, makes demands on their suppliers. But for the most part the same thing you buy at Walmart is the same thing you get at Target and other stores across the country.

      So how do we apply this to smartphones? I think iPod. Assume that in a year or so the iPod will have a 3G antenna in it that gives you optional connection to AT&T (or other carrier) plans when not in wifi range. And assume that that data connection transfers seamlessly between 3G and wifi and both work with Skype, Facetime, Google Voice, etc. That device, an iPod touch, will be sold by Walmart, Costco, Target, Apple, Amazon, Best Buy and a million mom-and-pop shops across the country. Sure, AT&T and Verizon could sell it also but, if given the choice, would you shop there with their locked-down version or at any other location for their standard one?

      (The same could very well be true for any Android or WP7 or HP or Nokia or anyone else who chooses to go this route. And thus the way out for Google.) Take away the channel, change the expectations, win the war.

      p.s. I must have missed it. Congrats on moving to Urban Airship!

      • Elia,

        Thanks! Look for some great iOS libraries in the future from UA ;)

        It is a little ironic that the hardware is now so cheap that there is no brand allegiance to the device manufacturers (other than Apple) – it’s all rolled up with the carrier. That’s changing a little bit which is actually thanks to Google/Android (see Droid, as a brand). But I think that’s only because Motorola is the best device/brand company outside of Apple.

        You bring up another interesting point indirectly – WiFi. Carriers have made no secret that they’re basically requiring devices to work on WiFi because of the network strain it relieves. I tend to think that it will always “be a mess” but that it will increasingly become feasible to get wireless internet in lots of places without having a carrier contract, and that most (all?) of the typical phone services I want will work on said network. Much like your iPod Touch argument.

        Which to me says Net Neutrality easily dwarfs the size of the original carrier war you brought up.

    • As an entrepreneur who tried to do business w the carriers for ~15 years before the iPhone debuted, I know first hand that it’s the carriers that act actively against innovation and consumer interest. It’s the carriers who must be stopped.

  26. Could not agree more! And the only thing that will change this, is when the actual law prohibits these thieves from dominating every other player. Which is why, the telcos spend a whole lot of their huge piles of money, on buying politicians.

    • In my mind, we don’t need laws to regulate this. We need equally big players –which we have — to decide that it is not in their best interest to be beholden to the carriers. This can be played out in the market.

      • Thank you for making this point. It is not the government’s job to regulate EVERY industry, despite what bureaucrats may want us to believe. As you said, if companies make the logical long term decisions (and are big enough to back them up), and the government doesn’t meddle, then the market can handle this on it’s own

  27. >>>
    You must be joking.

    “the only companies that are incented to look after the customer are the carriers.”
    By look after you mean lock in.

    I don’t want a carrier to ‘support’ me. I want them to be a reliable dumb bitpipe. That’s it.
    <<<

    Bingo!

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  29. In reality Apple’s reliance on AT&T results in a miserable user experience for many customers.

    It’s a no-win situation as it’s clear that only an uncompetitive carrier like AT&T would agree to Apple’s terms and the consumer ends up suffering from poor network quality. In the end it’s poor experience just the same.

    • 1) There is as much anecdotal evidence on the other side that Verizon provides its share of miserable user experience. For every negative story I read about AT&T, I read one about Verizon too.

      2) There is no evidence to suggest that Verizon or others would have any better network quality if they had to handle the traffic of the iPhone. For example, there are plenty of studies showing the iPhone accounts for some 60% or 70% of mobile web browsing in different markets.

      3) Given 1 & 2, it is not clear that Verizon would not also offer “uncompetitive” plans were it to be able to offer the iPhone — to cover stuff like the visual voice mail. etc.

      4) the entire point of the article and all the comments up to yours, is that the US mobile industry is ENTIRELY uncompetitive. There are something like two GSM carriers and two CDMA carriers and they all equally lock their customers in every way they can.

      5) Apple “reliance on AT&T” isn’t the issue. For one thing, the exclusive deal won’t last forever. For another thing, the deal has served its purpose: the launch with AT&T proved the desirability of the iPhone and Apple’s model, and it has set the tone for dealings with loads of carriers around the world. AT&T is comparatively insignificant when compared to the deals Apple is making and will continue to make around the world (especially as cellphone technologies in the US finally converge toward LTE and become more compatible with the rest of the world).

      6) Apple does care a lot about user experience of its devices. In fact, that is always stated as their primary aim. Unfortunately, some aspects of the cellphone network infrastructure and capabilities are obviously out of their hands. The fact that Apple, in contrast to every other handset maker, has tried to deal with as much of the relationship as they can (sales, activations, syncing, direct software upgrades, software and hardware support) is only testament to Apple’s commitment to the consumer. Apple’s new data center and social networks hint that there is much more yet to come.

      Apple has spoken supportively of AT&T, but it is obvious that Apple is getting increasingly frustrated with AT&T. This would be no different on any other carrier in the US. In Europe and elsewhere there is a little more regulation of the industry, and the playing field is more level — either the infrastructure is shared or their is more opportunity for competition and less barriers to entry for new, international, carriers.

      7) Finally, Apple sells every iPhone it can make: in other words it, however “reliant” on AT&T Apple may or may not be, Apple’s “success” DOES NOT RELY on getting onto other carriers like Verizon or T-Mobile. Apple does have a strong negotiating position in regards to carriers. Google dropped the ball a bit here.

  30. The only real war is between Apple and the carriers. The other manufacturers know who their customers are (the carriers). Additionally, the carriers do NOT want to just become dumb pipes to their customers (us) because that indeed will make them virtually irrelevant as they become a commodity with its pricing scheme. They know they have to have more than just the pipe to remain expensive and relevant.

  31. There is NOTHING that Google can do against the carriers.

    After all, Google’s real customers are the carriers – not people who use their phones. Google is very corporate friendly with its policies, not people friendly. After all, they even did not have a human being to talk to when customers had problems with their Nexus phones.

    When it comes to Android, the carriers control Android. Android is “open” only to the carriers.

    Watch it unfold.

    Verizon will totally replace the Android Marketplace with the VCast Marketplace. Why give money away to Google when it can get the money for itself?

    Verizon will replace Google search with Bing. After all, why use Google search – which makes NO money for Verizon, when Microsoft is willing to give them millions of dollars to install Bing on every Android phone.

    I love what Verizon is doing. It is taking control of its own destiny.

    The only company that can demand things of Verizon is Apple.

  32. Apple does pretty well with AT&T.

    After all, we don’t have adware and crapware on the iPhone. But these are showing up on Android phones. And you can’t even remove them. They are hardwired to the Android phones since the developers for adware and crapware PAY for their placement.

    Apple’s customers are people.
    Google’s real customers are the carriers. And it is bending over for them and taking it in the rear.

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    • @Neville I’m certain it wasn’t pre-meditated regarding Android. Google did what they thought was right for their business: develop an open source operating system and put it in the hands of device makers. If Android became the default then Google would make the money via advertising. And if hardware vendors compete down to the penny on devices, great! Google makes their money off of using it, not selling it.

      What comes to mind: the law of unintended consequences.

      • But it seems like Google is determined to make the mistake that Microsoft made (with Windows mobile AND Windows), targeting ubiquitous-ness over quality of user experience. Although to be fair to Google, I’m sure they thought they could have both and this is, as you put it, an ‘unintended consequence.’ With that said, while it may have been ‘unintended’ I don’t believe it should have been (or was) ‘unforeseen.’

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  37. In my imagined universe, Google, Apple, and Microsoft form a co-op to invest billions in winning spectrum auctions across the world over the next decade. The co-op would have no majority shareholder among its investor companies. Its strict mandate would be to undercut carrier oligopolies with a no-lock-in, device-agnostic, cheap data network.

    It’d mean steady returns for them in the long run, but at first they’d be subsidizing a market for their next generation of devices to compete in sans interference.

    A midseptember day’s dream…

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  40. Before iPhone it has been common wisdom that “no one will ever install apps on phones. it’s to difficult and only nerds do so”. apple changed that completely. Before android only few hackers installed their phone operating system themselves. Now most people I know do try out new ROMs like they change their clothes. Flashing an android device is really no more difficult than installing an app.

    Of course carriers use openness to build their own tightly controlled crippled closed environments (like they did for ever) but at least now people become aware of it. “hey why are you able to skype and I am not..” At least now we begin to talk about the real fight…

    Is it really unimaginable that it will become common practice for people to decide what to run on their hardware? (if you don’t feel comfortable to flash your phone you can still walk to a pitstop or ask a friend like most people do with their pcs.)

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  44. Maybe you can follow India’s model- no contracts, carriers have no say in selling phones, and people jump carriers as frequently as possible. The only problem with that is you won’t get the so called “subsidized” phones

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  49. Not that I am any fan of the tier 1 wireless carriers in the US however after reading this article and the majority of the comments I’m left wondering if anyone has considered the fact that the carriers invested enormous amounts of money in their networks and the spectrum which is the conduit. It’s really not fair for all of us to sit here and say ‘dang carriers, why won’t you just be a dumb pipe like I want you too’. They are not regulated monopolies like power companies ( in most places ). There is at least the appearance of competition. While it might not be the the most competitive marketplace out there you’d be hard pressed to argue there is no competition in wireless in the aggregate.

    Great thing about this country. If you truly believe you have a better business model for the wireless service provider market you can go raise money and build. Look at Leap ( Cricket ) and Metro PCS. They are both well on their way to having true national footprint.

    In the end these issues will be settled by the market. Might take awhile but it will happen.

    • The market will settle it as long as the government doesn’t get involved. and screw it up by ‘regulating’ to the point that new business CAN’T enter or compete in the market.

  50. Having worked on the carrier side of the business for 20 years it’s funny to see that they still have the predivesture mind set that every hand set provider should be their own little western electric. The old LECs are so poorly run that they can barely keep their networks running let alone define deploy and manage the end user interface. I wish that the FCC would force them to divest their noncore business’ which would not succeed with out revenue subsides from their core business’. I don’t want crapware on my phone or service degradation if I don’t access the shitay media that they have (poorly) invested in (Financial MPLS). I bought the iPhone because It had no trace of AT&T on it and, if I was lucky, I would never have to deal with AT&T out side of an automated bill payment. If Google screws up net neutrality and the FCC backs down on mobile services neutrality then the USA will continue to be a second rate market.

    • Well said. I don’t want to deal with a carrier either, if I can help it. I barely remember which ISP I use at home, and that’s the way it should be. I can’t imagine having to deal with some jerry-rigged UI and carrier-moderated experience every time I looked at my phone.

      For 26 years, Apple have proven to me the superiority of their UIs, their support, their attention to detail, their concern for user experience and their commitment to be the best they can be. They have earned my loyalty. The carriers have a lot to learn, and they haven’t yet earned any loyalty whatsoever.

      On the last point. It is funny how Americans all talk about freedoms from govt interference and regulation, but that ends up being more freedoms for the big businesses and not for consumers or individuals.

      I don’t know why guaranteeing net or mobile neutrality would constitute an overstepping by the government.

      Maybe the thinking is that “I am a shareholder, therefore Google or ATT or Verizon is MY company”; or, “I could have the next big idea and start the next multi-billion company, so Mr CEO Google or AT&T could have been me, therefore ‘good for him’, screw my neighbor”. That’s all very well, but having lived outside the US for most of my life, in many ways I sure FEEL a lot more free over here in Europe.

      Maybe it is right to think that the market doesn’t need any help from the govt and that people will just naturally look out for each other, whether that person is now the CEO of a cellphone carrier or not. Sounds hopeful but a little unlikely to me. No wait, maybe it is the ultimate in cynicism — “there is no way that an elected or unelected government official is really looking out for me, but I can totally rely on the person I am giving my dollars to”; or, “if I don’t look out for number one, who is going to?” Wow, Americans as the world’s biggest cynics, who’dathunkit?

  51. I’ve commented on other’s comments (and even comments on comments) but I also wanted to thank you for a well articulated article which I agree with. (and those just happen to be my favorite kind of article) :-)

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  53. Elia,

    I disagree with the words in your blog post but I think I agree with the intent. I don’t think the fight is manufacturers vs carriers. This is a war around ideology and beliefs around control and ownership (a much higher level battle than the “mainstream” Google vs Apple battle).

    My stand on, for example, the iPhone isn’t negative. But I am a vocal opponent of Apple and their push to control your (the users) user experience. The iPhone is, in my opinion, a great device that is severly limited by the control nature of Apple’s business model. It is not up to the user how they want to use their $1500 to $2000 device (over 2 years), it is up to Apple. Not even web apps are open on the iPhone (no Flash support for example). For the longest time I was a bigger opponent of Verizon because of their closed network. Same with Qualcomm and their Brew platform.

    Over time things have changed. Verizon is now a much more open network, even now officially a GSM carrier (LTE) so that you can purchase any phone anywhere in the world and use it on Verizon’s network without begging them for permission (okay, not today, once you have multiband LTE phones available).

    What hasn’t changed is the battle of control. Often I think this is as much internal battle within companies as it is external. How much control are we (company X) needing to have and how much are we willing to give out?

    But this isn’t just a carrier vs device maker. Yes, AT&T, Verizon, Sprint, T-Mobile, etc all are working hard not to become the “dumb pipes” their landline counterparts have become. Device manufacturers want to build a brand recognition with you. Apple wants to do so by controlling user experience to keep it to their standards while Nokia wants to do so by becoming an active software and service provider.

    This battle is long overdue and I honestly don’t think this battle will ever end. But the lack of regulations allows this battle to be a lot more heated AND DILUTED to “my OS is better than yours”, or “my device is shiner than yours”. I suspect over the next 2-3 years we will see legislation in most countries regulating who owns what? Europe is ahead in that game. For example the DRM-free music in the iTune store is a direct result of Apple’s iTunes store being at the verge of being banned in several European countries after (starting with) Norway’s Consumer Protection Agency (Forbrukerråadet) found that a consumer who pays for content has the right to play the content on any device they may own (same reason why DVD-Jon didn’t lose the lawsuits against him.).

    Question is what regulations will be put in place here in the United States. At the end of the day the question is: Who owns what? Cause you can only control what you own :)

    And this is a loaded question because it goes beyond the device. In addition to the device you’re getting connection service from your carrier and content from content producers. So what of that do you own, what don’t you own, and what are you just “leasing”?

    I don’t think there will ever be a definite answers to those question. That’s why this needs government regulations to set a framework or standards or whatever you want to call it.

    • You have some good points. And certainly, a large part of any “battle” is about “control.”

      Quote: “My stand on, for example, the iPhone isn’t negative. But I am a vocal opponent of Apple and their push to control your (the users) user experience. The iPhone is, in my opinion, a great device that is severly limited by the control nature of Apple’s business model.”

      Funny thing is, your criticism about Apple is the reason that most people LIKE the iPhone; precisely because there IS a disruptive battle for control between handset makers and the carriers providing the service that constitutes the device’s very raison-d’être and that degrades the user experience. That someone has to take “control”, or shall we say “responsibility” somewhere, is a given; unfortunately it is the nature of the beast. People are buying the iPhone precisely because of its User Experience, which to another person equals “control”.

      You can’t have your cake and eat it too. You can’t have the perfect device and the perfect user experience unless someone, somewhere along the lines, takes some responsibility and creates it. Are you going to do it? Are you going to create the user experience for you own virgin device? Be my guest. Go start your own platform and store and social network and I might join you. Are you instead going to leave it to a whole room full of cooks who are spoiling the broth? That’s not my cup of tea, thank you very much.

      In this we can let the market decide, because it is all about who is “controlling” the device BEST: the device assembler, the OS writer who wants to sell out privacy, the middleman, the seller, the service provider; or the visionary and innovative company which tries to take upon itself some responsibility for several of these things at once and actually seems to care about the end user?

      Bottom line is, Apple is more Open than you think, and your conceptions of Open and Control are a little flawed. Right now, the FULL POTENTIAL of most devices IS held up by some battle or other, as you say. Very few have a clear vision or a clear strategy to achieve that vision — and even fewer have a vision that places the considerations of the end user very high up in the equation.

      Right now, iOS devices are most nearly, more than any others, what they ARE MEANT TO BE, despite the various battle lines drawn up here there and everywhere. This IS PRECISELY WHY people are buying Apple products! You decide which device you want. That’s your freedom. And since you bought it, if you want to use it as a door stop that is your freedom to. But since you are not responsible for the iPhone device, the software, the features, the support and the user experience, then I guess you shouldn’t begrudge Apple’s “control”.

      As you say, it’s all about control. The rest of us recognize this “control” is something that Apple does better than anyone else, and everyone else wishes they had the “control”, the strategy and execution, that Apple is able to exercise; we also recognize that we are much more comfortable with Apple’s “control” than with “Do-no-evil” Google’s or with a carrier’s.

      If Google does NOT take control, we have the situation we now have, only getting worse. Fragmentation and restrictions of Android features that mean that some Android can access some Android stores but not others or use some Android programs but not others.

      If Google DOES “take control”, there may be a pretty decent competitor to Apple’s platform. And there may be all kinds of other serious complaints about “control” that you should really be able to have a field day with, as I am sure there will be, if there aren’t already.

      Right now, many disparate groups ARE fighting for control of your one device, as you say. And none are winning. And the user experience is crappy.

      The other points you raise are red herrings. Should Apple be FORCED to run Flash on the iPhone, things like that? Well, however prevalent Flash is on the internet, it is not Open by any real definition. MP3, MPEG2 video, M4A, etc. are open standards (maybe not free in every way, but they are open). Sure you can make Flash material pretty easily, but you can’t play it back without Adobe. And Adobe are pretty abysmal at doing even that.

      If it came to it, Apple would not have closed the iTunes store in Norway and elsewhere — Apple would have dropped the record labels like hot potatoes and waited until they came crawling back (and one label which played games with Apple over non-DRM eventually did after the label tried to stick it to the consumer and failed).

      I really think you need to read up on the details of this whole saga and the part Apple has played. Apple always has and always will play and promote open standards. Yes, Web Apps are open on iOS, just not the proprietary Flash (sounds like you equate web apps with Flash). Not only that, on the desktop the Apple OS and software have built-in support to for me to export work to other formats, whether PDF, multiple media formats, MS Office formats, whatever. I have far more file and networking compatibilities and freedoms with Apple. The fact that the formats I export to can’t support all the great features I incorporate in my work before I export it does not in any way diminish what Apple has accomplished. When others finally adopt open standards more completely, you would see that Apple has helped its customers to be more free and creative all along.

  54. Well, yes and no to this. I disagree with Apple’s censorship policies, and their restrictions on developers tools. They have recently relaxed those restrictions as it is going to end up suiting them in the long run but still. Somebody should not have to jailbreak their phone just so that can run non-sanctioned apps. It should be more like an advanced user setting. I’m all for android, its going to be the #1 mobile OS in 2011 passing Nokia. Watch for many Android tablets to launch in Oct 2010 also…. =)

  55. “we don’t need laws to regulate this.. This can be played out in the market.”

    How’s that working out for us, so far? When do you think this magical “bigger fish” will step in and save us from being perpetually gouged by the carriers?

    “It is not the government’s job to regulate EVERY industry, despite what bureaucrats may want us to believe.”

    NOBODY was talking about “EVERY industry.” I’m talking about a utility provider, same as the electric and water companies, which is exactly how the cell phone carriers should be required, by law, to operate.

    If the power company weren’t somewhat restricted, they’d drain your wallet dry too. Remember Enron?

    Both of these comments smell suspiciously like “libertarianism,” or, “trying to provide a reliable, safe ‘commons’, without taxes or regulations…” There’s a whole lot of things I’d still like the gov’t to butt-out of, but keeping the cell phone carriers from robbing us all, isn’t one of them.

    And oh yeah, gosh-darn that law that forced the cell phone companies from letting us keep our numbers when we change providers. I’m sure it would’ve been only another week, before some “new, bigger player” would’ve rode in on his white horse to make everything better for the consumer.

    “Free market, free market, Ron Paul… blah blah blah”

  56. “The market will settle it as long as the government doesn’t get involved. and screw it up by ‘regulating’ to the point that new business CAN’T enter or compete in the market.”

    There are no competitors coming, the barrier of entry is the same as someone who might want to install a competing water supply system. Your assumption is pure delusion, and not one bit of history will prop up your belief.

    More of the “free market/libertarianism” cult, I see. And never grounded in reality or examples. The “free market” is the false panacea you’ve been fed by the right-wing, but it’s nothing but a scam concept, whipped up to convince people that letting corp’s do whatever they want will always work out best for the consumers.

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  58. You know there is a simple solution to this…people quite buying cell phone plans. How long do you think it would take the telcos if people didn’t buy into these plans anymore?
    Will this ever happen, of course not. People are addicted to their cell phones like drugs. So the telcos have us and they know it.
    We the people have the power, we just have to be willing to use it.

  59. When someone makes a phone that is able to transmit and recieve phone calls and messages completely without using the existing cellular networks and providers, that will be the day that the sunlight shines on this argument. The only real stranglehold they have is the areacodes and phone numbers. The rest is only limited by the technology of the day.

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  63. I wholeheartedly agree! Forever I have wondered why I cannot just purchase a cellular phone and have it connected to whatever carrier I want? We do that for our landlines, why not cellular?
    Why should anyone tell us what we can have on our mobile devices and how we may use it?
    I own my device, the choice should be mine.

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  68. Hi,

    A small correction to your “And who is punished? We, the consumers, with lousy [waaay overpriced] service and controlled devices with crappy experiences.”

    #1.
    US customers are paying twice for every mobile phone call: once by the caller, once by the called party, and the mobile phone service is the ONLY one that’s doubly-paid. Not even the phone companies charge twice for calls made from fixed (wired) to fixed phones! And, this certainly is not true of mail carriers or any other courier service!

    #2.
    US customers are paying waaaay too much for SMS/MMS messages!
    – Those messages are compacted to the smallest lossless size.
    – Transmission of such compacted packets requires fractions of a second.
    – With a typical rate of $0.10/message SMS/MMS is paid many times (10x?, 100x?) over the rate of voice calls—and then it’s doubled (both the sender and the recipient pay).

    So, YESSS: the phone carrier companies are fleecing us, the US customers so much we’re practically being shaved 6″ under our skin. Comparison-wise, my cousin in Vienna, Austria never pays more than 10 EUR/month.

  69. i’m in the UK. I paid £540 for my 3GS, got it unlocked for an additional £15. My contract with my network is a rolling (month-by-month) contract which costs me £10 per month and gives me 600 any network minutes, 600 SMS, unlimited landline and unlimited (fair use) data.

    I also have an iPad, pay £15 per month for 10GB data.

    The total monthly cost for iPhone & iPad is LESS than what I used to pay for just 300 minutes, 100 SMS, free landline and no data.

    • Hi, SiP:

      Do you pay for answering a call—that is, for the minutes you spend answering someone’s call?

      BTW, I’m paying typically about $180/month for 700 “Anytime minutes” shared between two iPhones, w/unlimited “night & weekend minutes”, unlimited “mobile to mobile” minutes, unlimited data plan and 1500 SMS.

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  71. To those that want network providers to just provide a dumb pipe: I want the cellphone manufacturers to provide a dumb device that gives me access to the pipe. They need to design it to be a universal device that I, the consumer, can decide what operating system to load (just like a PC); whether I want Symbian, iOS, Android, MeeGo, Linux, Windows, that should be entirely up to me.

    Devices should conform to a open standard that would enable any company or individual to develop their own operating system. I think the only company so far pushing hardest for such an environment is Nokia. Thanksfully they are still by far the largest smartphone seller though, a fact many people in the US seem to miss, so maybe hope isn’t completely lost.

  72. When someone makes a phone that is able to transmit and receive phone calls and messages completely without using the existing cellular networks and providers, that will be the day that the sunlight shines on this argument.

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