“Apple will provide wireless service directly to its iPad and iPhone customers. First, Apple will sell data packages bundled with iPads. Then it will sell data and international roaming plans to iPhone customers through the iTunes Store. And in time — sooner than many think — Apple will strike wholesale deals with several mobile operators so that Apple can provide wireless service directly to its customers, as Apple Mobile.” So says Whitey Bluestein, a seasoned telecom veteran writing for GigaOM.

I can hardly disagree with such a bold observation having come to the same conclusion some time ago. But is it really possible, why would Apple even bother and would mobile operators would be keen to jump into bed further with Apple? After all, relationships between the two have been ‘unusual’ to say the least.

Apple’s negotiations and subsequent arrangements with earlier operator adopters of the iPhone broke many conventions with regard to exclusivity and revenue sharing. Although operators like AT&T may have rued they day they agreed to them, and the subsequent loads the device made on their network, they would have to agree it has paid massive dividends for them, and continues to do so. In the last quarter alone, 80 per cent of smartphones sold by AT&T were iPhones.

The unprecedented take up of smartphones like the iPhone has been the main reason for data traffic growth on mobile networks – something that the industry encouraged – but its failure to generate commensurate revenues has not been the fault of the devices. Traffic being generated by applications and OTT players’ products and services are the main culprits, and operators are not seeing revenues from either.

Should Apple follow the radical path of becoming an MVNO, it would certainly be one way for the networks to become part of the value chain, albeit with the chance of cannibalizing its customer base. As Bluestein points out, it would be very hard to say no to Apple knowing that any one of a number of competitors would jump at the opportunity to ride on the back of the world’s most successful brand.

Apple seems to have been preparing for this for some time as well. In 2006, even before the release of the iPhone, it filed a patent for “Dynamic Carrier Selection” that looked suspiciously like Apple acting as an MVNO and having the ability to connect its customers to multiple operators. If it could forge multiple MVNO relationships around the globe it could even offer ‘local roaming’ capability, providing data access at local pricing and overcoming the bane of all smartphone users, those extortionate roaming charges. This would also remove the fear of ‘bill shock’ and help Apple achieve smartphone nirvana for iPhone users – constant connectivity, and presumably a single data plan and pricing, wherever it has a presence.

Why else would Apple be aggressively trying to introduce a new and smaller NanoSIM to the industry, Many observers believe such a SIM would allow Apple to bypass carriers entirely, and activate a new customer through the iTunes Store.  Oh, and let’s not overlook it’s most recent patent filings for new femtocell/small cell technology that would extend the network of any hosting partner into the homes of Apple subscribers, effectively avoiding the mobile network altogether and channeling the wireless data through the users home fixed line broadband connection. Why they would want to do that against using existing wi-fi/broadband technology remains a mystery, but Apple may well be seeing a future we are not, and that wouldn’t be the first time.

Apple has certainly developed a loyal fan base and other popular brands such as Virgin have already proven they can make a business from being an MVNO. One can only presume that if Apple walked into a mobile operator today, anywhere in the world, and offered to buy or commit to terabytes of data traffic over the next say, five years, they would be very unlikely to say no.

And if Apple does it, how long before Google and other big brands with smartphones reliance do the same?

First published at TM Forum as The Insider, 2 May 2012