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Apple MVNO Rumors Resurface With a Twist

Sarah Thomas
8/3/2015
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In a case of old rumors becoming new again, Apple is in talks to launch a mobile virtual network operator (MVNO) service in both the US and Europe, Business Insider reported on Monday.

Business Insider reporter James Cook [Ed. Note: Tim Cook's British nephew? Nah.] suggests that Apple Inc. (Nasdaq: AAPL) is privately trialing the mobile service in the US, and is in talks with telecom companies in Europe to bring it there as well.

As an MVNO, Apple would wholesale capacity on various operators' wireless networks and sell service directly to consumers, much like FreedomPop , Republic Wireless , Google (Nasdaq: GOOG) and a number of other companies do. (See FreedomPop Gets a $10M Asian Infusion, What the Helio? MVNO Is Back After First Flop and Google's WiFi-First Mobile Service 'Fi' Is Here.)

It could take Apple five years or more to get its MVNO off the ground, if it ever does, Business Insider suggests. But, it says, its plans are moving along now that it's testing iCloud Message, a service to automatically transcribe voicemail messages using Siri, rather than store voicemail services with the wireless operators.


For more on wireless MVNOs, visit the mobile content section here on Light Reading.


Apple MVNO rumors have been circulating for a decade now, resurfacing most recently last year when Apple launched its global SIM to let customers connect to multiple networks, but only on the iPad Air 2 or iPad Mini 3. (See Apple Global SIM Could Drive Connected Cars, iPad Air 2 Lets Users Switch Carriers Any Time and Apple as Mobile Operator?)

Industry consultant Whitey Bluestein has also long believed an Apple MVNO is inevitable, though he sees it shaping up a bit differently to what Business Insider suggests.

Rather than launch a fully fledged wireless service that competes with the wireless operators that sell its iPhone, Bluestein sees Apple selling the connectivity into non-smartphone devices like the iPad and its line of Mac computers. It already makes so much money on its iPhones in the carrier channel that the need to go around them just isn't there.

"To me, adding connectivity to non-phone devices and letting the iPhone juggernaut continue to generate the kinds of profit it does is probably the way for them to optimize their business," Bluestein says.

In this model, Apple would buy data in bulk from wireless operators across the globe and bill for it -- by time used or gigabytes -- through iTunes. This is something it could get up and running immediately if it wanted to, Bluestein says. It already has iTunes as a proven billing mechanism; a patent it filed in 2006 covers its need to use multiple networks; and it has already developed a global SIM.

"I also think they don't upset their carrier relationships if they provide connectivity options outside the carrier roaming areas where data roaming charges are so high," Bluestein adds. "That could be a fairly large business. It's not that a lot of US people travel internationally with iPads, but the ones that do are desperate for options."

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

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nasimson
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nasimson,
User Rank: Light Sabre
8/26/2015 | 12:28:29 PM
Disruption
Apple MVNO or ESIM makes perfect sense both for iphones and ipads. Apple will disrupt the telecom industry just as it disrupted the music, publishing and phone industries.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
8/4/2015 | 2:05:33 PM
Re: Apple denies MVNO talk
I didn't think it bothered to publicly deny a lot of rumors or even acknowledge them. 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
8/4/2015 | 2:02:56 PM
Re: Apple denies MVNO talk
Apple has a tendency to deny it's doing things until it does them. 
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
8/4/2015 | 11:53:10 AM
Apple denies MVNO talk
Apple has responded to the rumors, saying it has not discussed & is not planning an MVNO cellular service. Not sure if this rules out the data-only non-smartphone idea that Bluestein presented though.
Rahul_atri
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Rahul_atri,
User Rank: Light Beer
8/4/2015 | 1:52:54 AM
Re: Here's a perspective
As said, for Apple this seems to be an attempt to be in the race. Being a closed box (software iOS), not as open as android OS / phones are, it comes natural to offer MVNO services rather than OTT applications. The smart decisions to switch operators with built in services is the new form contracts with e-Sims i guess.
Rahul_atri
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50%
Rahul_atri,
User Rank: Light Beer
8/4/2015 | 1:52:54 AM
Re: Here's a perspective
As said, for Apple this seems to be an attempt to be in the race. Being a closed box (software iOS), not as open as android OS / phones are, it comes natural to offer MVNO services rather than OTT applications. The smart decisions to switch operators with built in services is the new form contracts with e-Sims i guess.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
8/3/2015 | 7:20:33 PM
Makes sense

An MVNO for Macs makes sense. Users carrying iPhones, iPads, and MacBook Airs in their briefcases wonder why only two of those devices have non-WiFi wireless connections. 

Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
8/3/2015 | 4:15:47 PM
Re: Here's a perspective
Really interesting perspective. Thank you for sharing.

If spectrum is such a finite resource, the wireless operators are in big trouble too. That's why we've seen them rely on WiFi so much more than they have in the past (alongside small cells, refarming, auctions, 5G and everything else they're doing). More competition -- from Apple or anyone -- is good for consumers, but I'm not sure I see Apple views it as necessary to survive. WiFi can only go so far, so it's still in trouble if it's wholesaling cellular networks that are in trouble, as you say.
CEO&Chai78815
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CEO&Chai78815,
User Rank: Lightning
8/3/2015 | 4:08:14 PM
Here's a perspective
So here's what's changed since the last time such rumours hit the headlines: The 'do nothing' option (meaning staying out of the service provider business) is likely wearing thin. If it is true (as was recently suggested) that Verizon will run out of cellular capacity in a couple of years, then companies like Apple have real problem. Google's Project Fi is another indicator that the 'do nothing' won't work any more. In other words: If the regular service provider market cannot provide the amount of connectivity at the right price that Apple needs to sustain growth, then Apple will need to do something. 

The best best (as alluded to here) is to include Wi-Fi in the mix, as Republic, etc. are doing already. Look at the numbers: Ruckus Wireless just posted stellar Q2 results, while cellular vendors are doing - well - not much in terms of growth at all. High-quality Wi-Fi is going up everywhere including in public places. That's the network that Apple needs to tap into. It's growing both in footprint & performance - much faster than celluar, at af fraction of the deployment cost. BTW it will take another 6-8 years for anything along the lines of cellular 5G to emerge. Nobody will want to wait that long. 

Apple will very likely need to do something on the connectivity front fairly soon. One approach would be like that of Amazon - bundle connectivity with content/services. Microsoft will likely do the same with their new Wi-Fi service. 

 

 
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
8/3/2015 | 3:59:20 PM
Apple v Google
A lot of comparisons have been made between Apple and Google, which recently launched an MVNO, but the business drivers are very different. Google is all about extending its search business and lowering the cost of connectivity across the board, whereas Apple is sitting pretty when it comes to its partnerships with the wireless operators. Apple also doesn't have a big WiFi business like Google does. I think Bluestein's prediction for an Apple MVNO is the only one that makes sense.
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