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6/29/2007
03:27 PM
Mitch Wagner
Mitch Wagner
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Should The iPhone Make Telcos Tremble In Fear?

The iPhone is a stylish gadget, but it kowtows to the established telecom industry, Slate Magazine argues. But Slate dangles an intriguing possibility as an afterthought: Is the iPhone a Trojan horse?

The iPhone is a stylish gadget, but it kowtows to the established telecom industry, Slate Magazine argues. But Slate dangles an intriguing possibility as an afterthought: Is the iPhone a Trojan horse?

If Apple really wanted to be revolutionary, it could make a cell phone that switched networks on the fly based on whatever company offered the best service locally -- Verizon one day in one location, AT&T the next day elsewhere. It would automatically switch from a cell phone to wireless VoiP where Wi-Fi is available. But doing those things would make the telcos unhappy, and Apple apparently doesn't want to risk that.

We're left to wonder, then, why the iPhone plays by the rules. Isn't this Apple, the company of "Think Different"? You could argue that the iPhone proves that Apple is no longer a company interested in transforming industries. Once Big Brother's foe, it's now more like Little Brother, happy to sell cute little devices that are easy to use, make money, and spread false consciousness.

If you're an optimist, the more intriguing possibility is that Apple's iPhone is a Trojan horse. The iPhone is fatally attractive to AT&T, since it gives the firm a chance to steal tens of thousands of new customers from rivals like Verizon. But Apple may be betting that, once it has its customers, they'll be more loyal to Apple than AT&T. With its foothold in the wireless world, Apple may be planning to slowly but inexorably demand more room. If iPhone 2.0 is a 3G phone that works with any carrier and supports third-party apps, then industry power will begin to move away from the carrier oligopoly and toward Apple and other Silicon Valley firms. Now, that would be a revolution.

The Trojan horse option is a distinct possibility -- Apple's done it before. When Apple launched the iPod and iTunes, Apple needed to satisfy the recording industry to make the service work. Now, the conventional recording industry is imploding, iTunes is the only bright spot, and it's Apple, not the record companies that has the power. The recording industry already fears that the iPhone will help Apple consolidate its power in the industry. Should telcos tremble, too?

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