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Optical/IP

Happy Dumb Pipes

One thing that the deals Apple Inc. (Nasdaq: AAPL) has cut with U.S. and European carriers show is that the operators are much happier to be "dumb pipes" than previously expected.

In a few short months, Apple has overturned some of the perceived norms in the U.S. wireless business. The iPod manufacturer has garnered much more control over content than many of handset rivals and made some sweet revenue-sharing deals to boot. The company also helped to break down U.S. carriers' resistance to WiFi in phones.

In short, the carriers are playing dumb for Apple, and they're loving it! The reason is that Apple has given the operators something that they expect to make lots of money for them -- the iPhone. (See iPhone Goes Nordic, iPhone, Oh La La, and iPhone Goes to Germany.)

Operators are expected to make more revenue per iPhone subscriber than they do off the Average Joe cellphone users. Wall Street sees ARPU as one of the most useful indicators of carrier health when earnings season rolls around. (See Peeling Back Apple's iPhone Revenue.)

So there you go. If you want to get over a wireless operator's "walled garden," get them something that makes them want to break it down.

Ironically, while it blazes a trail in some aspects of mobile, Apple is also helping to reinforce some of the traditional aspects of the U.S. cellular business model outside of the domestic -- notably in its insistance that users must sign on for two years with one carrier to get the iPhone and must not unlock their devices. (See Apple: Don't Unlock the iPhone.) — Dan Jones, Site Editor, Unstrung

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