If Only it Had Worked...
What if Apple operated an MNVO? It's a thought I've wondered for awhile and others have brought up sporadically since the iPhone was introduced. So I wanted to write a post posing this question but I felt I needed to do a bit of research first. Then I came across this article from Forbes which is an interview with an AT&T exec. It describes the initial discussions that led to the first AT&T deal. I was very excited to read this little nugget from Steve Jobs.
I am going to sell this device to my customers both online and through select Apple retail outlets. I want to offer unlimited voice and data contracts, open Internet access via Wi-Fi, and I’m going to provide all the service, billing, and support for $49.95 a month!
Obviously that didn't work out then but what about now? MNVOs are becoming popular again. There are choices for around $50 per month that offer unlimited everything. With those you need to either pay for the phone up front or spread it out. I did some calculations based off current plan options. For example AT&T Next single line costs ≈ $2840 for two years with a new 16gb phone each year. Of this Apple gets $1300. If Apple came out with a plan where you paid $400 up front and $60 per month they would get ≈ $2240 (the full plan cost plus phones). If their cost to their carrier for bandwidth was $30 per month they would bring in ≈ $1520 per customer every two years. I couldn't find much direct info on what MNVO operators pay but assuming the others need to make a profit on selling this to customers while Apple only wants to make money on phones, I could see them going even lower than this.
But that's not the only benefit to Apple. They would be in complete control of the customer experience. They could make deals with any carrier and customers wouldn't need to choose. They have a patent on switching networks seamlessly so they could insure a good connection anywhere if they made the proper deals. Best of all for them it would make it easy and more likely for people to upgrade yearly rather than bi-yearly.
On our side it would also be very welcome. Prices would be lower, coverage would be better and the purchasing experience would be clear and unambiguous. It would end the headache of comparing plans with hidden costs.
It could be a hard road still to get there but if carriers really hate paying those up front subsidies to Apple maybe it could happen. Apple could also offer this as an option for while still allowing carriers to offer larger subsidies to existing customers.
This is just a fun thought experiment. I'd love to see it happen but am not holding my breath. What are your thoughts.