iPhone on Verizon Another Step In A New Direction?

If the rumours are true, and the iPhone will be available on Verizon tomorrow, then this is simply a continuation in a sea change in the wireless world that has been underway for the past 3 years. It started in 2007 with the first iPhone, and gathered momentum when the first Android devices started to appear. What is the change? The role and the influence of the carriers has changed, and has diminished in some ways.

Prior to the iPhone and Android, carriers exclusively decided what devices would be allowed on your network, and what features and functions those devices would contain. While 2 different carriers would sell a Blackberry, and they could even be technically the same model, they didn’t necessarily contain the same set of apps, and didn’t necessarily offer exactly the same features. It offered the basics that made the device a Blackberry. But some carriers would add their own apps, or only allow certain apps on the device.

The iPhone was the first step in changing that. Basically, except for some functions like tethering, the carrier could not tell an iPhone user what apps they can or cannot run on their iPhone. They didn’t get to tell an iPhone user what version of the operating system they would be allowed to run. In fact, to carry the iPhone officially, the carrier had to offer a certain mix of plans and had to offered features to support things like visual voicemail. Where before the carriers set the terms for the devices, this time Apple set the terms. You wanted the iPhone, you played the game Apple’s way.

The appearance of Android phones has reinforced that to some extent. For now, the carriers still (sometimes) determine what level of Android the devices can run, but they cannot limit what apps are downloaded from Android Market. At some point, they will lose the ability to determine even the OS version. Some companies, like Verizon, are trying to get into the business a bit and offer their own app stores, but it has implications for people who buy an app from Verizon, and then decide to switch to someone else: what happens to updates to the app? If this becomes a problem, you can bet carrier-specific app stores will start to go away.

How does this affect the carriers business? The first thing it does is it start to turn bandwidth into a true commodity. It allows (eventually) a user to pick their smartphone, and then pick and choose their carrier as they see fit. It allows them to replace their carrier without having to change their device. The carrier’s service is interchangeable, seamlessly, with any other carrier. It puts pressure on the wireless companies to find ways to minimize cost, because at some point price becomes the deciding issue. I can see a concentration of wireless service coalescing into the hands of a few, large companies in various different regions.

However, there are still a few years before we see the day where carriers no longer tell the handset makers what can and cannot be done. Feature phones still rule the roost for the moment, and what features and functions those include are still largely dictated by the carriers. But, as more people start to move to smartphones, and as they start to expect more from the phone and less from the wireless providers (in the form of interference on what can and cannot go on their device), the influence of the carriers will change. Will it be good for the consumer? It will, because it means that there is a chance that the minimum standards for service and coverage will go up, and costs to them will go down. Will be be hard for the carriers? Certainly, because it pushes them further away from direct customer involvement, and remove their influence on how their networks get used. You can expect that the wireless companies won’t go down without a fight, but I think it is a fight they are doomed to lose.



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