updated 05:20 pm EST, Wed December 13, 2006
Apple to offer MVNO?
Apple is planning to launch its own MVNO service by purchasing wholesale capacity from Cingular Wireless in an effort to enter the domestic wireless services market, according to UBS analyst John Hodulik. "This strategy would appear to indicate Apple's increasing desire for customer control, and potentially, store traffic," Hodulik said. "We believe if volume had been the most important variable, Apple would work with all the major vendors in the U.S. to support its new iPod phone (iPhone), enabling it to target the heart of the 225 [million] domestic wireless users." Numerous hurdles exist for the Cupertino-based company if it is planning such a move, however, from competition from low-cost family plans already offered by other carriers to distribution troubles stemming from less retail outlets than other carriers such as Verizon and Cingular, according to a report from Barron's.
"Stores are an integral part of the wireless offering, where subscribers go to fix or upgrade handsets and often to pay bills," the analyst said. "Having fewer stores will be a disadvantage." Apple may also be in for economic troubles as previous MVNO providers have experienced in the past. "While we believe Apple has been able to negotiate an attractive deal with Cingular, we do not know whether it will be attractive enough to allow it to compete for high volume users and still make money on the phone services (if that is its intention at all.)"