Apple's iPad: Unlocking the 3G Myth
The new Apple iPad will have a 3G connection, but U.S. consumers won't necessarily get to shop carriers to pick the best deal on bandwidth.
Apple Inc. (Nasdaq: AAPL) CEO Steve Jobs made mention of the fact that the GSM-based device is "unlocked" at its launch in San Francisco Wednesday. In theory, this means that users should be able to switch to another GSM carrier if they prefer the service. In practice, however, users are actually stuck with a single carrier choice if they want the best wireless performance: AT&T Inc. (NYSE: T).
The problem is that the radio technology in the iPad -- like the latest iPhone -- doesn't support the way that the other major GSM carrier in the U.S., T-Mobile US Inc. , offers 3G. T-Mobile uses 2100MHz for downlink and 1700MHz for uplink. The 3G radio in the forthcoming iPad won't support the T-Mobile uplink frequency, according to the technical specifications from Apple.
Consumers could potentially use the slower T-Mobile EDGE network and default to WiFi for heavy-duty downloads but the operator isn't even confirming if it will support this yet. "This is actually a question for Apple, as it's their product," a T-Mobile spokeswoman told Unstrung.
It seems even less likely that Apple will deliver a CDMA-compatible version that will work on Verizon Wireless 's network. "I don't think they're doing one," a Verizon spokesman said on Wednesday.
Back to AT&T So consumers can run the "unlocked" iPad on any 3G network they like as long as it's AT&T.
3G-enabled versions of the tablet start at $729 and the prepaid monthly data plan is either $14.99 for 250MBs worth of downloads or $29.99 for unlimited downloads. [Ed note: Unstrung has asked AT&T if there is any maximum download cap on the unlimited plan. No reply yet.] The device isn't subsidized, and AT&T has no revenue-sharing agreement in place on the data plans this time, unlike the original iPhone.
"I think the economics will be very positive," AT&T CFO Rick Lindner said of the iPad on the operator's fourth-quarter conference call Thursday morning.
There have already been questions about how well a major new broadband device will perform on AT&T's 3G network. The company admitted last year that it has already been over-stretched by 3G traffic in NYC and San Francisco. (See Will the Apple iPad Crush 3G Networks?)
AT&T, however, believes that the usage model for an iPad will be a bit different, somewhere between a laptop and a smartphone. This means more connections in the home or office, where the traffic can be off-loaded to WiFi, rather than on-the-move connectivity patterns like the iPhone.
AT&T has been steadily ramping up its WiFi hotspot network since it bought Wayport in December 2008. AT&T reported Wednesday that its customers made 85.5 million connections to the Internet in 2009 using AT&T’s WiFi network, four times the number of WiFi connections made in 2008. (See 85M AT&T WiFi Connections.)
Nonetheless, AT&T is still planning to spend big bucks on its 3G network in 2010, even if iPad users do turn out to be big WiFi fans. The company still added 3.1 million iPhone users in the fourth quarter and is launching a range of Android phones in 2010. The operator said that it will spend an additional $2 billion deploying and upgrading wireless in 2010, making its projected capex spend between $18 billion and $19 billion. (See AT&T to Spend $2B More on Wireless in 2010.) — Dan Jones, Site Editor, Unstrung