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Appeared on: Tuesday, May 01, 2012
Strategist Sees Apple To Become Direct Mobile Service Provider

Apple?s next big move will be to provide wireless service directly to its iPad and iPhone customers, according to veteran wireless industry strategist Whitey Bluestein.

Bluestein told an international gathering of wireless operators, resellers and suppliers that Apple has all of the critical elements - the world's leading brand, distribution through 363 Apple Stores, digital content (music, video and apps) - which will allow it to exploit its 250 million iTunes accounts with credit cards on file.

He added that Apple has a patent-pending network architecture to enter the wireless industry as a service provider. Apple filed a patent application in October 2006, shortly before the first iPhone announcement, with a diagram on how it would offer wireless service directly to customers using networks of several mobile operators. The patent application was extended in fall 2011. Bluestein said that the patent confirms that Apple has thought through how it would offer service directly to customers.

At a presentation at the Informa MVNO Industry Summit in Barcelona Bluestein also said that Apple would begin providing cellular service, data, voice and roaming, directly to its customers, along with mobile data plans bundled with iPads. He added that Apple would offer iPhone customers activation, data and international roaming plans through the iTunes Store, plus voice, data and messaging plans directly to its iPhone customers, on an ala carte basis as an alternative to their current mobile operator

"The battleground is set, but Apple will be the first mover," said Bluestein. "Google will have to scramble because it lacks retail distribution, experience with subscriber services and the iTunes ecosystem of content. iTunes and the iTunes Store provide Apple with one-click buying and customer care. Google can acquire most of these capabilities, as it has before, but it is not a core competency of the company."

Bluestein also predicted that Google will acquire a back-office provider to help it get into the mobile business.

What has been holding Apple back from becoming a wireless provider already, according to Bluestein, are the enormous handset subsidies paid by mobile operators (AT&T, VZW and Sprint in the US), which amount to about $381 for each iPhone sold today. That has been a short-term stumbling block for Apple, but the company has its well-known cash reserves and could seize the initiative at any point.


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