Apple: No Plans To Be A Mobile Operator

Apple has shut down industry rumors citing the company's plans to build its own virtual network service.

Kelly Sheridan, Staff Editor, Dark Reading

August 5, 2015

3 Min Read
<p align="left">(Image: Apple)</p>

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It isn't unusual for Apple to be at the center of tech's rumor mill, but it is odd for the company to speak out against industry speculation.

This is what happened today, when Apple openly denied rumors suggesting its plans to create its own virtual network service to provide mobile communications. The company claims it has never planned to offer communications services to consumers, as reported by Reuters on August 4.

"We have not discussed nor do we have any plans to launch an MVNO," an Apple spokeswoman said in a statement.

[More on mobile: Is your smartphone battery tracking you?]

The news arrives amidst industry-wide reports claiming Apple was privately testing a mobile virtual network operator (MVNO) service. News outlets including Business Insider and Fortune reported Apple was in talks with telecommunications companies to launch its cellular service throughout the US and Europe.

An MVNO pays a cellular carrier, such as Verizon or AT&T, for access to their networks, and then packages and resells the services to consumers or businesses. Examples of existing US MVNOs include TracFone, Cricket Wireless, and Net10 Wireless.

According to the Apple rumors, customers would be able to purchase iPhones and cellular service directly from Apple, instead of buying an iPhone and choosing a wireless carrier's service plan. According to Business Insider, the Apple SIM card would be designed to switch between carrier networks in order to provide users with optimal service.

If Apple had been testing such a project, it wouldn't have been the first tech company to do so.

Competitor Google challenged mobile industry norms in January, when it announced plans to become an MVNO with a wireless service called Project Fi. The service, which was created in partnership with Sprint and T-Mobile, will scan cellular and WiFi networks to find the best available connections for each user.

Could Apple someday build its own mobile virtual network? History suggests yes.

Back in 2006, before the iPhone launched, Apple filed a patent for an MVNO offering. It extended the patent in 2011 with the additional capability of working with more carriers.

The ability to switch between services from different cellular network operators became reality with the Apple SIM card, which launched last year. It offers cellular iPad users limited options for switching from one network to another. In the future, more advanced versions of the Apple SIM could be used to support an MVNO service for Apple.

There are a few reasons building a mobile virtual network could prove risky for Cupertino. Ever since the launch of the first iPhone, wireless carriers have played a crucial role in Apple's mobile success by purchasing its iPhones and selling devices and wireless contracts to consumers.

As an MVNO, Apple would have to iron out agreements with cellular carriers to gain access to their services. The potential for loss would likely cause telecom giants Verizon and AT&T to shy away from such deals.

Even if it could get smaller US carriers, such as Sprint and T-Mobile, to agree with its strategy, Apple could lose its presence in thousands of Verizon and AT&T stores and online retail outlets -- as well as access to their nationwide cellular networks. While this may not seem like a big deal at first -- after all, Apple has its own stores, and plenty of people shop online -- it could prove harmful. Many customers visit their wireless carrier's store, or go to their carrier's website, to purchase a new device. The absence of iPhones in the retail outlets of major US wireless carriers could cost Apple customers.

About the Author(s)

Kelly Sheridan

Staff Editor, Dark Reading

Kelly Sheridan is the Staff Editor at Dark Reading, where she focuses on cybersecurity news and analysis. She is a business technology journalist who previously reported for InformationWeek, where she covered Microsoft, and Insurance & Technology, where she covered financial services. Sheridan earned her BA in English at Villanova University. You can follow her on Twitter @kellymsheridan.

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