Rising Prospects for a New Competitive Battle

 
 
By Don Reisinger  |  Posted 2009-09-10
 
 
 

BlackBerry, iPhone and Palm Pre Reduce Mobile Carriers to Dumb Pipes


Just a few years ago, the mobile phone market was a different place than it is today. Back then, the carriers, especially Verizon Wireless, AT&T and Sprint, were controlling the marketplace.

Customers, looking to find the best deals for the best coverage, were forced to consider the carriers as differentiating factors. It was a time when the carrier name on your phone mattered about as much as the phone itself.

Fast forward to 2007 and all that changed. With the release of the iPhone, carriers took a backseat to the phone. People who were upset with AT&T or those that had never considered moving to the carrier were compelled to do so out of their desire to have an iPhone. It was a monumental change in the marketplace. It was also the beginning of what has caused those carriers to become dumb pipes.

Since then, the iPhone has become a staple on AT&T's network. Although rumors have suggested it will eventually be made available on multiple carriers, it has yet to happen. And until that happens, it will be one of the main draws to AT&T's service. The same is true for those who want to try out the Palm Pre on Sprint's network or HTC's myTouch 3G on T-Mobile. In order to get their hands on the product they want most, they will need to make a deal with the carrier.

Of course, becoming a dumb pipe isn't necessarily a bad thing for most carriers. The better the phones they offer, the greater the chances that they will attract more customers. It has proven to be an extremely powerful combination for AT&T and the iPhone. It has also helped Verizon Wireless through the BlackBerry Storm and the BlackBerry Tour- two BlackBerry devices offered exclusively on Verizon Wireless' network. In essence, the carriers are capitalizing on the shift in the market just as much as the vendors that are creating the devices and inking deals with those carriers.

But that doesn't mean there aren't serious risks at play. Google's Android platform could have up to 20 phones available to users by the end of 2009. Many of those phones will be offered on multiple carriers.  

Rising Prospects for a New Competitive Battle


  

The days of Android being available exclusively for T-Mobile customers are coming to an end. The same is true for BlackBerry products. Unless a user wants a specific product, they can get a BlackBerry on any major carrier. For consumers, that gives them the option to have the phone they want and the opportunity to choose the carrier they prefer.

Right now, Apple iPhone customers don't have that luxury. They're currently locked-down to AT&T. But as more rumors ignite speculation that the iPhone will become carrier-agnostic soon, the possibility of it seems more likely. And in the process, it's possible that AT&T and Verizon Wireless (the most likely recipient of an iPhone contract) will need to battle it out once again.

A vicious circle?

And perhaps that's the most interesting element of the mobile-phone market's transition over the past few years. The iPhone has ushered in a new way of doing business for carriers. Today, it's all about the phones. But if the iPhone is made available on multiple carriers, those companies are thrown right back into a battle for customers on the service they provide.

Perhaps that's why Sprint has instituted an unlimited-calling plan. Maybe that's why AT&T announced Thursday that it plans to boost data-transfer speeds in six cities around the United States by year's end.

It's possible that these companies, seeing the writing on the wall, are preparing for a carrier battle once again. The cell phone industry is an interesting space. Since the beginning, carriers have largely influenced how customers spend their money. If Verizon Wireless or AT&T had the best coverage in a particular area, chances are, those in that area would have opted to sign a contract with either carrier. But with the release of the iPhone, the market changed. And now, even a slight change in Apple's strategy could drastically alter how all the carriers in the mobile-phone market compete.

So for now it seems that the carriers really are dumb pipes, transferring calls from one person's favorite phone to another person's favorite device. But it won't last that way forever. Eventually, a major phone, whether it's the iPhone or a product that can supplant it as the dominant force in the industry, might be offered on multiple networks, forcing carriers to compete for the same customers who want that special device.

Get ready, AT&T, Verizon Wireless and the rest. The battle might be returning to your shores.




 

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