The Motley Fool’s Beyers: Apple needs to dump exclusive U.S. iPhone contract with AT&T

“Apple must do whatever is necessary to buy off AT&T. Ma Bell is killing the iPhone,” Tim Beyers writes for The Motley Fool.

“Twice last week, the Mac’s daddy debuted — and then pulled — a tethering application called NetShare from the digital shelves of its App Store. As of Monday, software developer Nullriver said that email problems on both ends led to the interruptions,” Beyers writes. “Really? I find that barely plausible at best… It seems more likely to me that AT&T objected to what NetShare does.”

“Tethering allows a cell phone’s connections to the Web to be shared with other devices. NetShare would allow a MacBook to plug into AT&T’s 3G network when Wi-Fi is unavailable. Alas, Ma Bell’s iPhone usage terms prohibit exactly this sort of activity,” Beyers writes.

“Tethering is an extra… AT&T sells it for $15 a month to customers whose use Motorola , Nokia, and Research In Motion handsets, but not to iPhone users like me,” Beyers writes. “Think about the consequences of that: Apple may have just blunted innovation on the iPhone for the sake of a partner that wants to sell more stuff. It’d be unthinkable if it weren’t so logical. (AT&T has also twice hung up on on free Wi-Fi for iPhone owners.)”

Beyers writes, “Apple should use whatever portion of its $20 billion war chest is necessary to buy off AT&T and escape from their exclusive iPhone deal. Only then will the iPhone grow to be the pervasive platform that the company and its investors desire.”

Full article here.

While we fully understand Beyers’ angst, it’s completely overblown. Ma Bell isn’t killing the iPhone; they’re killing tethering. Tethering or the lack thereof simply has no real effect on iPhone’s ability to grow to be a pervasive platform.

That said, the number one reason people tell us they can’t get an iPhone today is: AT&T. Due to no or poor network coverage where they live and work. If Apple offered the iPhone through other carriers, sales would explode even more than they are currently. Carrier exclusivity limiting sales is a good reason why Apple might want to try to dump out of their U.S. contract with AT&T, not tethering.

Of course, If Apple were to let more carriers into the iPhone party, the carriers might be less willing to subsidize so dramatically (like AT&T), which would result in higher iPhone retail prices that would also limit sales. Therefore, it’s probably best to do it the way Apple is doing it now until economy of scale kicks in enough to drive down iPhone’s unsubsidized cost to levels within the reach of the mass market.

68 Comments

  1. As far as I know, Apple went with AT&T;because it had not only the most suitable network setup for the iPhone, but it also agreed to Steve’s revenue sharing.

    And until other carriers have similar (or better) deals for Apple and the right tech, the iPhone will probably remain AT&T;’s finest product.

  2. I would love to have Verizon on the iPhone list. I have terrible reception with ATT- my whole company would end up switching from our current phones if the iPhone was available through Verizon. Tethering would be great, I hope they bring the app back.

  3. It would be great if they branched off from AT&T;and went to sell at verizon and sprint too. But could apple keep up with the demand if they did that? They are only with one carrier now and they are having trouble making enough to get to the stores who seem to sell out of them rather quickly. Another idea is, why do I have to wait ages to get my phone through AT&T;when others can get them at apple stores much easier? I’m putting this on a business account, why cant AT&T;just call up an apple store and have them ship over some phones to them exclusively only for business customers? or is that already possible?

  4. Verizon just ain’t (yes ain’t) going to happen in the short term.

    Period.

    Now by 2011 with verizon on a 4g network and apple out of a exclusive with apple. Who knows.

    All I know is that I am not waiting till 2011 for my iPhone. Got one last year and have not looked back ever since.

  5. What the hell does this guy think would happen if Verizon carries the iPhone? Does he believe that THEY would be more willing to allow this kind of thing?

    Those control freaks would probably want to cut off the whole friggin’ App Store.

  6. Tim Beyers/MDN are the type that bring one girl to a party and leave with another.

    ATT agreed to Apple’s terms BEFORE Apple had a handset to show them. No one else did that. Not Verizon, not T-Mobile, not Sprint. No one.

    Can ATT’s coverage be better? Sure, but keep in mind that ATT’s coverage is the best in the US. Adding more carriers to fill in gaps isn’t the answer.

    If all those OTHER carriers are so good, why aren’t they as large as ATT?

    If all those OTHER carriers are so good, why are people leaving them to get an iPhone?

    In less than two years the iPhone will be the #1 selling ‘smart’ phone in the world. Sales of ‘smart’ phones are growing 3X faster than cheap do nothing phones.

    Sheesh, when will all the “I know better than Apple” dummies wise up. None of you could manage a small department at Apple, let alone the entire company.

  7. If Apple offered the phone on every carrier in the US, they’d probably have to triple production. I don’t think they’re ready to become a big player in the wireless industry like that. I mean we’re talking the iPhone being so big that it could be spun off as its own separate company.

    Apple seems to have enough growing pains as it is. I can’t imagine what happens when the iPhone turns into a family of handsets sold in every country around the world. How will they deal with it without becoming the large beuracracy they seem to dread?

  8. “Apple would have to use a different 3g chip for use in th US with other carriers. ATT uses a GSM based 3G.”

    Thank you.

    Case closed. EDGE iPhones could work with T-Mobile. Not 3G iPhones. Only AT&T;is compatible with most of the rest of the planet’s 3G. (It’s actually the frequencies specifically that differ.)

    So when T-Mobile and Verizon join the rest of the world, THEN you can whine at Apple. Until then, whine at T-Mobile and Verizon. (Verizon who, by the way, turned the iPhone down. Brilliant.)

  9. This will come in time. Tethering will first be tested in Europe and other countries of the world. When optimized, it will get to be used in USA as well after AT&T;’s contract will be off and gone.

  10. Verizon will NEVER carry the iPhone. As Sir Bill Gates said, they are absolute control freaks. Verizon intentionally limits the features of phones they sell, so that people have to pay to unlock them. The iPhone would take business away from their V CAST music/video service due to iTunes and the App Store, not to mention other things. Don’t get me wrong, Apple are control freaks as well, but in the case of the iPhone, I’d much rather side with Apple. Two control freaks can’t work together, it just won’t happen.

  11. I don’t think is fear to try to scape from AT&T;deal. Cingular, now AT&T;was the only one who blindly believe in Apple to pull out the iphone, you could say that they were a key parthner in the iphone revolution.

    Verizon had his chance and they trow it away, too bad for them.

  12. i completely agree.

    i have to pay 525 euros (over 800 dollars) for the iPhone, because subsidizing is forbidden in Belgium, but my iPhone if i ever get one, will still be limited by Apple’s deal with AT&T;!

    unacceptable.

    it’s not just about Tethering, but VOIP, access to the file system etc…

  13. “Ma Bell is killing the iPhone”. Oh clueless idiot. The iPhone sell out faster than Apple can restock them.

    Apple just has to sell them with and without contracts. I would rather just buy the iPhone and get a check sent to me after I signed up with AT&T;. Make it say $360 more without a contract. Apple gets $360 now instead of $10 or $15 a month for 2 years. If I sign up, AT&T;sends me $360 or credits the phone account that much.

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