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Mobile New iPhone Means We'll Soon Escape the Captivity of Carriers

When Steve Perlman looks at the latest iPhones, he doesn’t see the newfangled 3D Touch interface. He sees the fine print that lists all the wireless spectra these phones can talk to. The list is long, and it includes Band 39, the spectrum used by the unusually powerful wireless network Perlman and his company, Artemis Research, are building in the San Francisco Bay Area. The new iPhone 6s and 6s Plus are built to run on practically any network in the world, he says, and this means consumers soon will have the freedom to move between wireless carriers as they please.

For years, jumping from one carrier to another was more than a hassle. Using smartphone subsidies and longterm service contracts, wireless companies like Verizon and AT&T shackled consumers to one and only one service for years at a time. If you were unhappy with your service, you couldn’t choose another. You couldn’t move from service to service as you moved from place to place. But this is changing, says Perlman, a serial Silicon Valley inventor and entrepreneur best known for selling his web TV startup to Microsoft. “The thing that people may or may not notice is that if you build a phone that supports every band in the world, ” he says of Apple and the new iPhones, “you make it easy for for people to migrate from operator to operator.”

A few obstacles still stand in the way to this new wireless order, but they’re gradually falling away. Amid all the hullabaloo at its product extravaganza in San Francisco last week, Apple announced that it will finance phone purchases, letting you pay for hardware with monthly installments without the help of a carrier like Verizon or AT&T. As the Wall Street Journal explains, this gives Apple greater control of the consumer relationship and encourages frequent iPhone upgrades. But it also makes it easier for consumers to move among carriers. If you’re not paying Verizon a monthly fee for your phone, you can switch to T-Mobile or Sprint or AT&T. “They’ve opened up the floodgates, ” Perlman says of Tim Cook and company.

The rub is that switching carriers in this way often requires a new SIM card, that thumbnail-size wafer that slips into the back of your phone. But this will soon change too. Apple already offers a multi-carrier SIM in the iPad, the “Apple SIM”—a SIM that lets you change carriers without any hardware changes. You simply tap the change into your touchscreen. Eventually, this kind of SIM will come to the iPhone as well. There’s no good reason it wouldn’t. “For a device manufacturer, it’s the most ideal situation. There’s no hassle. There’s just a single SIM to sell to your customers, ” says Robert Schouwenburg, the chief operating officer of Karma, a startup whose mobile “hotspot” devices operates via Sprint’s wireless network. “And on top of that, there’s a big consumer benefit as well.”

No, Apple hasn’t said it will add the Apple SIM to the iPhone. But it did just spread the technology across a wider collection of iPads, including the new iPad Pro, letting you connect to carriers in over 90 countries and territories. And this is where all phones, not just iPhones, are headed. Now that the big carriers have dropped longterm contacts—and Apple is offering to finance phones without the carriers—we’ve nearly reached a world where you can move between carriers from month to month, or perhaps even more often. Google is now testing a wireless service, Google Fi, that lets you switch from T-Mobile to Sprint and back again as a stronger signal becomes available. In tandem with Apple and Samsung, the broader wireless industry is exploring a standard “e-SIM” that works across carriers. The days of single-carrier lock-in are numbered.

Market Forces

How did it come to this? In the past, wireless carriers so effectively locked consumers into their services that the two-year contract was a fact of life. But Apple and Google ended up building better phones than the carriers ever would have—or could have—on their own. And in myriad ways, these two tech titans forced carriers to open their networks to these superior devices. (Google, for instance, was instrumental in pushing the FCC to license spectrum that required this sort of open access.)

For a while, carriers continued to lock consumers into contracts by subsidizing phone purchases. But that became an enormous financial burden, and eventually, one carrier, T-Mobile, struggling for marketshare, let go of contracts. “No one wanted to do it first, ” says technology and strategy consultant Chetan Sharma, who closely tracks how consumers are buying and upgrading phones. “But once T-Mobile did it, all the others did.”

Some carriers still lock people in by financing phones. But now Apple has broken that grip too—as have FCC rules that require carriers to unlock phones that are fully paid for. “The strongest tie that an operator has to a user is a financial one, where there’s either a pre-paid plan or an installment plan, ” Perlman says. “With this new Apple thing, that goes away.”

‘Good Quality Service’

All we need now is that Apple SIM—or some other way of more seamlessly moving between carriers (like Google Fi). It should be said, however, that building such a thing isn’t easy. As Perlman points out, iPads are one thing (they don’t make phone calls), and iPhones are another (they do). “On the iPhone, it’s a more complicated thing. You have to be able to do handoffs and roaming, ” he says, referring to those times when a carrier will push you onto a another network with which it has an agreement. “If you’re doing data only, it’s a lot simpler.” But these challenges are hardly insurmountable.

Carriers must also agree to participate in the Apple SIM—and agree to a setup where consumers can freely switch between carriers. The same goes for a serivce like Google Fi. AT&T, T-Mobile, and Sprint are part of the Apple SIM, but Verizon is not. And AT&T has been reluctant to allow unfettered consumer switching. But they’ll fall in the line. They have to—or risk losing out to T-Mobile and Sprint. “If you want to succeed as an operator, ” Perlman says of today’s market, “you have to good quality service. And good prices. It’s not just about the brand and the long-term consumer relationship.”

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