European Carriers Claim Apple Should Pay for Network Infrastructure

[3282868]

It makes no sense.

I believe the comment is suggesting that due to Apple's CONTENT supplied to its iPhone users, increased data usage has plagued mobile providers. Apple has increased content through its iTunes store, from simply providing music to applications and now movies. Couple this with an unparalleled demand for general data usage due to the iPhone's popularity and mobile providers are screwed.

I never thought of this take. Think about it: Apple has had a GENIUS long term business model revolving around its iTunes store. It's been stated that Apple earns a larger profit margin through hardware sales. Evolving from iPods to mobile devices such as iPhones and iPads, Apple has created a closed ecosystem with their devices through iTunes (iTunes permits full syncing/usage of only approved Apple devices). Provide more content with iTunes, entice more iDevice owners, and make more profit through those sales. The strain of the content provided by Apple through its iTunes model has taxed mobile providers' networks to an unforeseen level. I'm certain Apple is concerned with mobile service quality, however the bottom line for Apple is in sales of their mobile devices, supported by content through its iTunes store. An exclusive contract with one mobile provider in the nation (the U.S. in this instance) means a greater chance of market growth due to trends in product demand over quality of service (as is the current case with AT&T). This model locked in sales for Apple, gaining them a huge cash reserve through selling iDevices, which then lead to owners purchasing Mac OS X based systems and Apple gaining even greater market-share. Perhaps Apple never revealed its intention of increasing content supply to mobile service providers for it's products, as a result mobile carriers were not prepared.

A rather poor comparison, but let's state that I'm a guest at your home. You agreed to let me stay for an x amount of time. Suddenly, I've invited a friend over, and another, and another. Soon we're consuming your food, electricity, water, etc. This wasn't agreed upon and as such you have unforeseen financial consequences. Should I pay for those expenses or should you?

I'm certain that mobile providers have gained a great deal of wealth from the sales of Apple mobile devices, so in my opinion this is basic human greed. However, objectively I can understand given this business model why mobile providers may feel shafted by Apple.

 

[splashnader]

That's like car manufacturers paying for the roads or TV manufacturers paying for the power lines. Ridiculous. If you can't handle the heat then get out of the kitchen.

That's because roadways are generally, in most countries, owned and maintained by the state or federal government. Which means that you pay for the roads with tax dollars. So unless you would like to see the government completely take over the cell phone industry, it seems to me that the request by the carriers is not completely unreasonable.

 

[reactions]

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Whatever it is - consumers will pay dearly

 

[ibosie]

In the UK like elsewhere in Europe, prices have fallen to unsustainable levels. Now we're seeing a scramble to the bottom for bandwidth caps too. I suspect it's probably too late to put the prices up as the gulf between investment needed and consumers willing to pay, is too great.

 

[reactions]

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Delete

 

[eyhk]

That's because roadways are generally, in most countries, owned and maintained by the state or federal government. Which means that you pay for the roads with tax dollars. So unless you would like to see the government completely take over the cell phone industry, it seems to me that the request by the carriers is not completely unreasonable.

Toll roads. Think about a toll road operator charging the NFL for hosting the Super Bowl along their toll highway for increasing traffic, as well as charging toll for the drivers. What do you think of that? What do you think would happen if the NFL refused, and simply blocked the entrance to the stadium accessed by that toll road, and opened it to another different toll road? Would the people stop watching the Super Bowl? Or would they just use the different toll road?

Think about it.

People are not loyal to their pipes, they are loyal to services.
They are loyal to pipes as long as they provide reliable access to the services they are loyal to.
Once the pipes stop doing their job, as long as the consumer has a choice, the consumer will simply switch pipes.
It's not the pipes, its the services.

As long as there is a choice.

 

[TheRealTVGuy]

This is the new cost of being a cellular/bandwidth provider. These kinds of companies are going to have to continue to evolve their business models. If you can't figure out how to be competitive and profitable with your contracts and plans... step aside. Someone will see the need and figure out how to make a successful business out of it. Or, the current providers can just choose not to allow data-consuming devices on their network (see how long they last then!).

Hopefully they'll simplify their plans as well. With Google Voice, Skype, and some of the other VOIP applications out there, I'm almost to the point where I just want a large, unrestricted, non-throttled, guaranteed, nationwide pipe that I can pump 1's and 0's through.

 

[samab]

Agreed. I'm also incredibly concerned with Net Neutrality. I DO NOT want our government and cable providers dictating what content I have access to online. This is upsetting as it's tantamount to a communistic regime, and yet no one seems to be interested in the fact that certain carriers are working with our appointed political figures to pass such laws. I am much more concerned about Comcast dictating what laws are needed to further THEIR agenda, which is most likely helped by The Supreme Court deciding that corporations can support a politician with unlimited finances. I do not understand why more American's are not infuriated with this, even Pres. Obama lectured the Supreme Court for this horrendous decision during his SOTU address (and received a standing ovation by both parties it seemed).

The problem is that Google and Apple are much larger than the carriers and cable companies --- and they have their corporate agendas as well.

Google used to be "do no evil" and now faithful followers got burned with Google's deal with Verizon. Apple is the enemy number 1 --- by the law professor who coined the term net neutrality.

 

[TheRealTVGuy]

People are not loyal to their pipes, they are loyal to services.
They are loyal to pipes as long as they provide reliable access to the services they are loyal to.
Once the pipes stop doing their job, as long as the consumer has a choice, the consumer will simply switch pipes.
It's not the pipes, its the services.

As long as there is a choice.

+1

-Problem is (at least here in the U.S. until January 31st) we DON'T have a choice. But I hear that will be changing in the first quarter of 2011.

 

[res1233]

Typical. It's just a bunch of europeans asking for more handouts. What? The ones from your government not enough for you? Sorry, but this is an American company, so excuse us for not being used to such nonsense, even though a certain president of ours seems to think it's perfectly fine to give companies bailouts, believe it or not, it isn't. It breeds this type of businessman. The handout monkey.

 

[nxent]

CUT TO:

Apple and Google buying the wireless providers.


or an Alternate scene...

CUT TO:

Apple and Google build their own networks.

THE END
-roll credits-​

an interesting scenario. apple and google do have a lot of cash...
the anti trust agencies would have a field day though.

 

[donlphi]

The same could be said for Apple.

So I suppose Google should start paying money to Comcast because I watch a lot of videos that I find on YouTube? I don't think it works that way.

Apple is simply providing the device, a device that they wanted. Apple didn't force anything on them. If they don't charge their consumers enough money for the service that's their problem, not Apple's. Apple should not have to raise their prices to compensate for an infrastructure upgrade.

 

[Thunderhawks]

an interesting scenario. apple and google do have a lot of cash...
the anti trust agencies would have a field day though.

Looks like the providers didn't look into the future.

One could see the need for pipe capacity coming years ago.

What were they doing?

Even after the iphone they were sleeping, not take this as a serious business shift.

Let the market decide who pays for what (It's us)
or like somebody wrote step aside and somebody will figure out how to do this well.

 

[donlphi]

they absolutely should contribute if their phones take up that much bandwidth. with that though, they should get special treatment in the form or better subsidies, sim-less phones, everything that they've been trying to negotiate for.

Technically, the phones are property of the consumer, not Apple. So it isn't Apple's phone at the time of usage. The consumer is paying for service.

I don't see Apple doing this, not even for sim-less phones. However, I do see Apple 'greasing the palms' of these providers in order to make it happen. Perhaps this is the way the dance is going to be played out.

 

[3282868]

Technically, the phones are property of the consumer, not Apple. So it isn't Apple's phone at the time of usage. The consumer is paying for service.

Actually, the iPhone is sold as a subsidized product paid in part by the mobile provider. The consumer agrees to a yearly contract as a result of the carrier footing the initial cost of the device.

 

[blahblah100]

So I suppose Google should start paying money to Comcast because I watch a lot of videos that I find on YouTube? I don't think it works that way.

Apple is simply providing the device, a device that they wanted. Apple didn't force anything on them. If they don't charge their consumers enough money for the service that's their problem, not Apple's. Apple should not have to raise their prices to compensate for an infrastructure upgrade.

You aren't even putting this in context. One poster dismissed this under the claim that "Like the providers aren't making enough money".

I was simply saying the same exact thing could always be said for Apple. It goes back to another post, why is it ok for Apple to make boatloads of profit, but not anybody else?

For example, other posters are saying the prices are just going to vacation homes and cars. Last I check Apple has $50 billion in the bank and still hasn't paid a dividend. Why is it that the telco's are using their money for self-indulgent purposes but Apple is not?

It is a rinse and repeat cycle with some people on this board. It's always ok for Apple to sue, to make gobs of profit, etc, but everybody else who does it is either a patent troll, stealing from customers, etc...

Like I also said before, if I was the carriers, I would just stop subsidizing the iPhone. If everybody in a particular country bargains the hard-noised Apple-approach, and just pull subsidies and tells Apple to eff-off, Apple will take the hit. When people see they can buy a Droid or WP7 for $199 and an iPhone for $499 or $599, they might think twice about the iPhone, thus hurting Apple's profits...

 

[qtx43]

...
A rather poor comparison, but let's state that I'm a guest at your home. You agreed to let me stay for an x amount of time. Suddenly, I've invited a friend over, and another, and another. Soon we're consuming your food, electricity, water, etc. This wasn't agreed upon and as such you have unforeseen financial consequences. Should I pay for those expenses or should you?
...

You have an inkling that it's a poor comparison, here's why: It certainly was "agreed upon". If the carriers don't like the agreements they made, if they can't foresee network usage, they have nobody to blame but themselves. If they don't want to raise prices for fear of losing customers, too bad, that's what competition is all about. It's not like their competition can magically build infrastructure without paying for it by charging customers.

I agree with the guy who says just charge X $/MB, except they'll probably have to have a minimum charge. They should be just like utility companies, except it's much easier to have competition.

 

[MrMoore]

As long as the same carriers are willing to give a piece of their profits to Apple, Google et al, for all these subscribers, then no problem.

 

[QuarterSwede]

It certainly was "agreed upon". If the carriers don't like the agreements they made, if they can't foresee network usage, they have nobody to blame but themselves. If they don't want to raise prices for fear of losing customers, too bad, that's what competition is all about. It's not like their competition can magically build infrastructure without paying for it by charging customers.

The European carriers can't even claim they didn't know the iPhone would bog down their network because of what it had already done to at&t.

 

[whooleytoo]

The carriers are not demanding the money from Apple because it sells iPhone, they want the money from Apple (and others) as a content provider. Some one has to pay for distribution of data from Apple to end customer. It could be either Apple or us (or both in some ratio). I think it makes perfect sense.

The customer is already paying for it. And that makes sense. Apple pays their hosting companies for hosting, customers pay their mobile networks for data usage. Everyone is paying for what they use.

 

[840quadra]

Like others have said. In the end, we, the customers end up paying for it all anyway. So does it really matter?

 

[Rocketman]

Apple actually addressed this since day one.

By having "exclusive carriers" Apple was able to funnel premium post-pay customers to specific carriers using the spectacularly innovative and popular iPhone and later the iPad.

This happened on a very large and unprecedented scale and pace. That money has been used to rapidly increase bandwidth and geographic coverage of specific carriers. Even with that growth those carriers have been on a constant tip of a wave barely able to service the traffic.

Had either iPhone or iPad been released to all carriers the problem of increasing bandwith capitalization would have been far worse with no one carrier having sufficient net capital to achieve it.

We are going to see another wave of networks crippled by bandwidth hungry customers and devices when LTE deploys, but at least herein the USA we will now have two major carriers, AT&T and Verizon, and they will use their crippled exclusivity to more rapidly funnel money to capital expansion that otherwise possible without limited exclusivity.

Therefore EU should not only allow but encourage limited exclusivity for smartphone vendors and networks, and let folks with voice/dumbphone not on that bandwagon, enjoy the clarity and capacity of their own separate networks.

Rocketman

"Be careful what you wish for. You WILL get it."

 

[dempson]

I think it is Apple that disabled it [tethering] when your phone is activated.

If you are using an officially supported carrier, it is the carrier settings in the iPhone which control whether tethering is allowed. Apple supplies whatever the carrier specifies, so it is the carrier which decides whether to allow tethering.

For other carriers you need to enter settings manually and as far as I know there is no way for the carrier to prevent the iPhone doing tethering (since about iOS 3.0.2, when the user interface to set the tethering APN was added).

Technically the cell phone carrier only knows the phone is asking some data on the internet. It does not know whether the request is originated from another device connected to the smartphone.

The carrier can know when you are using tethering, by using different APNs. The APN used for tethering on officially supported carriers cannot be edited by the end user, while the one used for data access by the iPhone itself can be.

My carrier (Vodafone NZ) does this. The tethering APN is known by the iPhone and cannot be edited (short of jailbreaking). It is "www.vodafone.net.nz", which is the same one they use for cellular modems. The cellular data APN (for the iPhone's own usage) can be edited, and the default is "www.iphone-vodafone.net.nz". I can see both items on my monthly bill, so I can see how much data I used via tethering vs on the iPhone itself (typically a 10:1 ratio).

If I changed the cellular data APN to match the tethering one, Vodafone would not be able to tell the two apart - it would think everything was tethering (or just a cellular modem on a computer).

I have observed the two APNs behaving differently. Vodafone has a transparent HTTP proxy on their cellular data APN, and at times it can get overloaded. This prevents my computer (via tethering) from accessing web pages, but other things like e-mail still work, and I can still get to web sites using Safari on the iPhone, or by establishing a VPN from my computer (via tethering) to my server at home and going out again via another ISP.

For comparison, another carrier here (Telecom NZ) is not officially supported by the iPhone so manual configuration is required. The APN they ask you to use is the same one for both cellular data and tethering, so they can't tell the two methods apart.

 

[sinsin07]

If these third world countries can't handle the traffic why are the offering smartphones? Is Google and Apple holding them at gun point?

 

[stoplis]

Personally I think it is rediculous for these companies to ask/demand money from the manufactures.
In the UK we have had a 3G network for a long time, probably about 8+ years now. Since then the networks have been happily taking our £30+ a month for all these years, and instead of investing it into the network infrastructure just putting it into their pockets. Then, along comes the iPhone and suddenly people want to use the 3G network they have been paying for all these years and the networks start moaning about how they can't cope with the load.
Let's face it, even if the iPhone hadn't come along, before long someone else would have started the mobile Internet revolution and the networks would still be in the same position. If they had only invested a little money each year into building up the networks they would be in such a state and have to shell out massive amounts now to dig their way out.
The next step is the 4G network, there hasn't been any mention of any UK networks picking it up, so again there will be a slow investment which will quickly become overloaded.
I have no sympathy for these companies, I just want them to get their acts together so the 3G speeds pick backup again.