A series of events is happening, or about to happen, that threaten the business models of big wireless carriers such as Verizon Wireless and AT&T.
Keep in mind that these storm clouds are just now building and the story will take years to play out. And don't expect financial upheaval to appear just yet.
But the signs are there and they add up to turmoil in the wireless industry. The clouds that are brewing include:
Unlocked phones: If the iPhone doesn't sell another unit it will have accomplished one thing: It has motivated folks to unlock their phones via hacks. Amazing how an exclusive deal tethering the iPhone to AT&T can get hackers rolling.
The unlocking of the iPhone, detailed by Engadget, Jason O'Grady and others, sends a strong signal. The walled garden approach of wireless carriers may not work over the long term. Sure, we'll pay an access fee, but don't limit my browser and what I can do with my smartphone. The Web surfing in the iPhone illustrates the future it's just the network you use stinks. Unlocking phones everywhere--via paid and open source software--changes that equation.
UBS analyst John Hodulik said in a research note on Tuesday that AT&T is expected to gain market share courtesy of iPhone additions. That projection, however, assumes that iPhone buyers stick with AT&T. What happens if people buy the iPhone at an Apple store, use some open source software and hop onto T-Mobile or Verizon Wireless? We're not there yet since most of us won't play with the hacks, but it is a threat. If unlocked phones go mainstream look out.
As Michael Krigsman notes the silence from Apple is deafening even though AT&T iPhone buyers are contractually obligated to stick with Ma Bell. Apple has done nothing to deter these unlocking hacks and it would be shocking if this partnership ends well. Why?
Newfangled data devices and Wi-Fi: Apple's launch of the iPod touch reveals the company's strategy, which is more like iTrojan Horse, a phrase coined by RealMoney's Cody Willard (subscription required). Willard opined that Apple is learning from AT&T and then taking its business. Apple did the same thing to Motorola. He's right.
Look at your wireless phone bill. My usage is all data and very little voice. In fact, I'd be better off getting a wireless card and a prepaid phone for the four times a month I actually call someone. I may be an extreme case, but data will increasingly dominate. And once you put voice in its play Wi-Fi looks like an option.
If you can use your iPod to hop on the Net via Wi-Fi, surf and maybe even use a little VOIP to call someone do you really need to pay a wireless carrier's tolls? What happens when you get Wimax coverage everywhere? Suddenly, 3G--if you're lucky enough to have it--looks pretty damn pokey.
Sure, the iPod may cannibalize the iPhone, but Apple doesn't care.
The FCC's auction of 700 MHz wireless spectrum: The auction of the spectrum given up by television broadcasters is critical to the first two points actually working.
If Google, Apple or eBay actually win a piece of this auction it'll be very interesting to see what they do with it. My hunch: They'll try to build a walled garden too. Google wants to advertise. Apple wants to connect--and sell--its devices. And eBay wants to push Skype.
In the end though, an auction that goes to a non-incumbent may be bad news for wireless giants. These revolutionaries can upend existing business models and more importantly take away spectrum that would be used for next generation networks.
Bottom line: The stakes are high and the storm clouds are brewing. It won't happen overnight, but we have an interesting few years ahead.