For Carriers, Apple Taketh and Apple Giveth

Before you go, we thought you'd like these...
Before you go close icon

iPhone maker Apple's (NAS: AAPL) relationship with wireless carriers has always been give and take. Of course, the net result is that Apple takes more than it gives, particularly when it comes to the juicy subsidies it extracts from them.

Apple gives them loyal subscribers that generate more revenue on average thanks to data fees; it takes a massive subsidy estimated at 40% -- or $200 -- more than competing smartphones. It gives them a device that subscribers line up around the block for; it takes control back after carriers exerted control over handset makers for so long. It gives additional revenue sources through features like hotspot tethering that carriers can charge for; it takes revenue sources by providing iMessage, a direct threat to the lucrative and antiquated SMS text message business.

With the newest version of Apple's popular mobile operating system, iOS 6, the company may be giving some back to carriers again. One of the important new features in iOS 6 is the ability to use Apple's FaceTime video chatting service directly over cell networks. Up until now, FaceTime has only functioned over Wi-Fi.


It seems that AT&T (NYS: T) is set to levy an additional fee for this feature, much like it does with hotspot tethering. Some users that have installed an early beta of the software have received a message to contact AT&T to enable the feature when trying to test it out. Notably, they did not receive the same message when testing it on Verizon's (NYS: VZ) network.

Any potential fee isn't official quite yet, and AT&T's only official statement is expectedly vague: "We're working closely with Apple on the new developer build of iOS6 and we'll share more information with our customers as it becomes available." The next iPhone is widely expected to feature 4G LTE data speeds, which would make FaceTime more pleasant, since the speeds top many users' home Wi-Fi speeds.

I would expect Big Red and Ma Bell to adopt the same stance, since the two largest carriers compete pretty intensely. It's actually in both carriers' best interests not to charge for this feature, since it would discourage people from using it. If they allowed it for no extra charge, FaceTime would already inevitably suck down massive amounts of data, which while putting strain on networks would significantly boost data usage and fees along with them anyway.

Wireless carriers are desperate though to boost revenue as voice and text usage are on the decline and everything migrates to data. What better way to "diversify" revenue streams other than to charge eight different ways for the exact same data?

Apple's ability to grab control back from carriers has transformed the industry. Its disruptive ways are why Apple may have more room to run. Sign up for this brand-new premium Apple research service to get all the details you need on the iPhone maker.

The article For Carriers, Apple Taketh and Apple Giveth originally appeared on Fool.com.

Fool contributorEvan Niuowns shares of Apple, Verizon Communications, and AT&T, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of and creating a bull call spread position in Apple. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners