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Apple's iPad wireless service to be unlocked, partnered with AT&T

From Washington, the most interesting part of Apple's iPad tablet announcement was that the company was again partnering with AT&T to carry wireless Internet service for the device. And analysts are touting the partnership as a big win for AT&T, which has enjoyed a boon in subscriber growth from iPhone customers.

But this time, the device will be unlocked. What that means, we believe, is that a user can bring it to other GSM network operators like T-Mobile USA. But by partnering with AT&T, the vast majority of users will likely be subscribers of the carrier, analyst said.

"With today's announcement that the iPad will operate on (AT&T's) network (no indication on exclusivity), the company is likely to maintain its position as a device leader," Jeffries & Co. analyst Jonathan Schildkraut said in a research note.

The move comes after consternation by some iPhone users of network congestion on AT&T, Apple's exclusive partner on the phone. By unlocking the iPad, Apple is moving in the direction of Google with its Nexus One phone, which it said would be sold unlocked and would run on both GSM and CDMA networks.

The whole debate over handset exclusivity contracts has been a thorny one for regulators. The Federal Communications Commission is reviewing the practice as part of a bigger look into competition in the wireless industry. Smaller wireless carriers like Cellular South complain that the deals are anti-competitive because they leave companies like theirs with less attractive offerings than the biggest wireless Internet service providers.

AT&T, Verizon Wireless and other argue that the deals help them distinguish themselves over competitors. You buy the iPhone or the Palm Pre for the device, not necessarily because you want to go to AT&T or Sprint Nextel, analysts say. And the phone makers like the predictability of selling their phones to a captive subscriber base held by the carriers. It's gravy that the carrier markets and sells the phones, picking up those costs.

By Cecilia Kang  |  January 27, 2010; 2:28 PM ET
Categories:  AT&T , Apple , Mobile  
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Comments

Yes, the iPad will be unlocked, but that's not sufficient as the radio in the device won't be able to access T-Mobile's 3G network. This is all too common in the US wireless market.

You see, AT&T uses 850MHz (UTMS Band V) and 1900MHz (UTMS Band II) for their 3G service, T-Mobile uses 1700MHz (UTMS Band IV). Europe, Africa and Asia are 2100MHz (UTMS Band I). 3G handset sold in the US support EITHER AT&T's 850 & 1900 frequencies OR T-Mobile's 1700, but rarely both. If the handset is marketed as a "world phone", it will also support 2100.

For example, the Nexus One supports T-Mobile's 1700 band, but not the AT&T frequencies. The iPhone and iPad support AT&T's 850 & 1900, but not T-Mobile's 1700. Both support the 2100 band used elsewhere around the world.

The result is that the consumer cannot independently choose a handset and a carrier, nor can he move a handset from one carrier to another. It is easier to move from a US to a European carrier than it is to switch between AT&T and T-Mobile. Sure, we can move the unlocked iPad to T-Mobile and use the much slower 2G (EDGE) network, but that's hardly a competitive option.

There will not be true carrier competition until the FCC ensures carrier interoperability either by requiring all frequencies in handsets or by putting all the carriers on the same frequencies. Until then, carriers will continue to focus on their handset offerings, not on their own strengths, knowing full well the customer has give up his preferred phone to move to a cheaper or more reliable or more customer friendly competitor.

The worst part is how this hurts the US telecom as a whole. Any company that relies on their partners to drive sales is no longer innovating. Lucky us, we have a whole industry of them.

Posted by: wpjf | January 30, 2010 6:57 AM | Report abuse

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