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Mac Corner: So, are they, or aren't they?  

  
By Larry Grinnell, Palm Beach Phoenix Apple Users Group

larry grinnellThe rumor mills are all abuzz about the possibility that Apple Inc. will be announcing (on Jan. 11) a new distribution partner for the iconic iPhone, with telecommunications giant Verizon. The Jan. 11 date is significant, as it heralds the end of the four-year exclusivity agreement Apple had with Cingular, a cellular carrier that was almost immediately gobbled up by AT&T Mobility. Lots of gobbling goes on in the telecommunications industry.

This makes perfect sense for Apple as it finally offers their customers, many of whom live in large metropolitan areas served — badly — by AT&T, a very viable alternative with Verizon, which has a very mature, data-friendly network that covers nearly every nook and cranny of these here United States of America.

Ask most iPhone users in the San Francisco Bay area or New York City, among others, what they think of AT&T, and the answers are far too often punctuated with words that would set your delicate ears afire. In short, AT&T never really built out their network to support the huge number of users who wanted to use the 3G (3rd generation) cellular network's data services as AT&T promised them they could.

Rather than spend the billions of dollars needed to expand the network to satisfy their customer's greedy demands for bandwidth, they chose a different path — eliminating the so-called unlimited data plans, and instead instituted new data plans limiting new users (existing users get to keep their unlimited plans) to 2GB of data transfers per month.

What this means is that users can forget about downloading video content from places like the iTunes Store. One or two movies will pretty much wipe out the monthly 2GB allocation even without taking into consideration other perhaps more conventional uses, such as email, web surfing, etc.

Enter Verizon with their big 3G network and their new 4G network, which is rapidly being built-out, again, at the cost of billions of dollars. They have already publicly stated that they have sufficient bandwidth in reserve to handle the needs of armies of happy iPhone users. So much so that Verizon plans to maintain their user-friendly unlimited data services for the foreseeable future.

From what I read online on the comment sections of blogs, and user forums, many iPhone users, especially those who live and work in large metropolitan areas with saturated AT&T wireless networks, will happily pay any early contract termination fees to move to Verizon (not to mention the cost of buying a new phone), or for that matter, any carrier who promises to make their iPhone experience more pleasant.

Why would you need a new phone for Verizon? The simple answer is that Verizon uses a completely different and incompatible digital telephony standard, called CDMA (also used by Sprint, Virgin, and several others), where AT&T uses the more world-friendly GSM standard (also used by T-Mobile). You cannot use a CDMA phone on a GSM network and vice-versa, though there are a few so-called “world phones” that support both standards. Therefore, you need a new phone if you plan to move to Verizon. This is going to be very, very good to Apple's bottom line as you might guess. So good that its stock has already run up to over $340 a share! Two years ago, this same stock was down to under $100. Good times ...

Apple already has agreements in place with Verizon for the iPad as a non-exclusive carrier partner, along with AT&T Mobility, so the relationship is certainly there.

The big potential loser in this deal could be Motorola Mobility, the consumer products spinoff of the once-great telecommunications giant, whose line of really nice, and really profitable Android phones could be hurt, at least in the short term, by the addition of iPhones on Verizon dealers' shelves.

This is where Motorola Mobility needs to step up and make sure their smartphone line remains competitive in the face of real, honest-to-goodness competition on their home turf. As a Motorola pensioner, and a former long-term employee, I wish them all the best.

Another thing to consider in all of these format wars is that in another year or two, with wider deployment of the new 4G (4th generation) cellular phone networks, there's going to be a convergence of compatible phones, with something called LTE (long term evolution). This is the emerging standard that will be shared by all US cellular carriers, CDMA and GSM alike, as well as most global providers, as they build out their own 4G networks.

Eventually, this will permit 4G phone users to transparently roam down the street or maybe halfway around the world using the same phone, accessing the services of multiple cellular networks when one carrier might have better coverage than the user’s preferred carrier — all for a “slight” additional fee, of course.

How Apple plans to play in this arena is anyone's guess. Their current M.O. is to establish strategic, exclusive deals with strong carriers, and only open to additional competition where the need and demand is great, and where necessary to keep governmental agencies off their backs, such as in Europe, where you can buy an unlocked iPhone, which you can then have provisioned by any carrier in the country where you purchased that phone.

There are interesting times ahead for phone manufacturers such as Apple, as well as the carriers. It will also be interesting to see which iPhone features Verizon forces Apple to disable — something carriers love to do, often just to show phone manufacturers who is really in charge — a unique feature of the U.S. cellular phone environment.

EDITOR'S NOTE: Readers are welcome to comment on this or any Mac Corner columns by visiting the Palm Beach Phoenix blog as well as by writing the editor of Palm Beach Business.com.

Mac Corner runs every Wednesday only in Palm Beach Business.com. Click to read the previous column.

About Larry Grinnell: Larry has been working with Macintosh and Windows PCs for over 25 years and worked as a senior technical writer and IT support professional for a major midwest-based consumer electronics and telecommunications equipment manufacturer here in South Florida. His musings on a wide variety of topics from computers to jazz guitar to strange foreign cars from the 1950s can be viewed at the MyMac.com website. Click here to reach him by email.

palm beach phoenix logoWriters of this column are members of the Palm Beach Phoenix Apple User Group, a nonprofit organization for Apple Computing Device Users, recognized by Apple Inc., with the purpose of providing educational training and coaching to its members (students, professionals and seniors alike) in a cordial social environment. The club meets the second Saturday (1-4 p.m.) and fourth Wednesday (6-8 p.m.) of each month at the Fire Station #2, 4301 Dixie Highway in West Palm Beach (just two block south of Southern Boulevard). Click here to visit their website. Click here to reach them by email.

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