The Trojan Horse iPhone

The Trojan Horse iPhone

Summary: The Telcos have become the biggest obstacle to the development of new technologies and services. They have become the most backward elements in our society when it comes to rolling out new technologies, applications, and services.


The Telcos have become the biggest obstacle to the development of new technologies and services. They have become the most backward elements in our society when it comes to rolling out new technologies, applications, and services.

They have filed lawsuits to stop public wireless networks, and they constantly seek to control anything that could threaten their markets. They maintain the digital divide by keeping Internet access prices far higher than they should be.

They control the cell phone and all of its features, disabling built-in functions when it suits them. And they control the services can be offered over their networks.

They don't compete against each other, their pricing is almost identical, almost cartel-like. The only competitive activity they engage in is in advertising campaigns.

Lower telco costs only for the Telcos...

I've long wondered why does my cell phone bill continue to increase year after year--yet the number of hours I have to talk hasn't increased, the same black-spots are still there, and the overall service hasn't improved one iota.

As a veteran journalist covering the business of technology, I know too well that the Telcos have been aggressively adopting powerful communications technologies, such as VOIP, that have lowered their key operating costs significantly. So how is it that our Telco bills continue to increase year after year?

It seems as if that cell phone in your pocket, nestled against your wallet or purse, is somehow sucking ever more money out and sending it to the Telcos--with little to show in terms of new services or added value.

(M)iPhone or AT&T's phone?

Like everyone else around here I've been fascinated by the coming of Apple's iPhone. But while many focused on keyboard issues, or battery life, my question has been: How will AT&T disable or enable the iPhone's Wi-Fi capabilities?

Other Telcos are very sensitive to the issue of Wi-Fi and disable it on phones, or demand $20 per month or more to enable the function. Because easy Wi-Fi opens the door to cheaper calls and cheaper everything else...

Reading the early reviews, it seems that AT&T hasn't done anything to prevent the iPhone from accessing Wi-Fi in public hotspots, or at home. And AT&T doesn't seem to have much control over what applications can be run on the iPhone.

This great news because it means we will see a tremendous amount of innovation, and disruption.

The innovation will come from Silicon Valley and beyond, as startups and others develop applications and services delivered over the wireless Internet directly into people's pockets. The barriers erected by the Telcos will be gradually removed as Wi-Fi hotspots become more common and eventually ubiquitous.

The disruption will hit the Telcos as they lose their control over the gateways to the Internet. Their pain will be compounded by the expensive licenses paid for wireless spectrum while Wi-Fi uses free unlicensed spectrum.

The disruption for the Telcos will accelerate as Wi-Fi networks are built out, and as roaming technologies for Wi-Fi, such as those from Packet Design and elsewhere come into play.

(BTW, Apple TV is Apple's flanking attack on the cable TV cartel...same arguments as above, similar strategy.)

Silicon Valley's Babe Ruth

Steve Jobs has hit another one out of the ball park. For Apple, its a win-win, and win again strategy. It represents brilliant positioning.

If you look at the the TV commercials for the iPhone you might even wonder if it Apple needs AT&T. There is nothing shown in those commercials that requires a cell phone connection. The TV commercials demonstrate the iPhone displaying family photos, allowing users to view a movie, search for a restaurant, view a Google-like map location. The AT&T logo appears for less than a second at the end of the ad.

And about a second of tech time is all that Apple requires from AT&T. Apple could have released the iPhone as a Wi-Fi phone but then its features would only work in Wi-Fi hotspots, which are patchy and unevenly distributed.

By linking up with AT&T Apple can offer the full integrated set of iPhone features in any urban location. As Wi-Fi is built out, as WiMax comes in, wireless Internet will be ubiquitous and AT&T's network becomes less and less necessary--without affecting the quality of iPhone services. The money that was paid to AT&T now becomes available for other services.

Interestingly, Apple stores are selling the iPhone without selling an AT&T two-year calling plan. I doubt AT&T stores will allow people to walk out with an iPhone without a calling plan.

Will others be able to mimic the success of the iPhone? It is doubtful that other carriers would allow a similar arrangement. But that won't stop companies such as Nokia, Samsung and others from selling unlocked phones with Wi-Fi enabled features directly to customers. They will benefit from Apple's lead.

Shake, rattle, and roll

Without the Telcos limiting access to the Internet, and trying to control handsets, services, and applications, we will see Silicon Valley launch into its next big boom cycle.

I've been here since 1984 and noticed that each Silicon Valley boom cycle is larger than the one before, and affects more people than the one before. This next one is going to be absolutely massive, more like a sonic boom, and it will shake things up the world over, imho.

Topics: AT&T, Apple, iPhone, Mobility, Wi-Fi

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  • One of the worst headlines yet on ZDNet

    • Agreed...

      First thing that came to mind when I read it: Someone's come out with an exploit and the iPhone's been "pwned"...
  • Finally. Another point of view at ZDNet.

    It's refreshing to read an opinion completely opposite from those expressed in the
    knee-jerk articles written by most ZDnet bloggers.

    The Trojan Horse idea aptly fits the description for the iPhone. Unlike the Trojan
    Horse strategy though, Apple knows this Troy can't be completely conquered. So
    Apple is content to let the competition innovate as well.

    Another disruptive quality about the iPhone is its tipping the scales in favor of Web
    2.0 applications. Now Web 2.0 applications will become mainstream, thanks to the
  • One minor correction to your story...

    The company is not AT&T, but NSAT&T as the wannabe-megacorp telco has openly whored itself for the NSA's domestic invasion-of-privacy program.

    Trojan Horse? More like the ultimate Big Brother tool the human cattle are all too willing to accept.
    Mr. Roboto
    • Give it a rest

      and shut up until you've actually either a) lived in a true police state, or b) sat down and had a conversation with someone who has. Then you'll realize what an ass you make of yourself every time you complain like this and remain outside of a gulag.
      • stop fighting for your rights!

        Yes, unless you're already in jail, your rights and concerns aren't worth fighting for.
      • Agree and Disagree

        While I agree that the post was not appropriate for this discussion, I must disagree with the rest of your contentions.

        Freedom is rarely lost in a fell swoop. It is nearly always lost incrementally, as has been occurring in this nation for the last five decades and change. It's true that we're not yet a police state, but it's foolishness at its very best to assume that it is safe to wait until the police state exists to fight it. Never, ever, let an enemy become entrenched, for it is then far more difficult to rout them.
        Dr. John
        • Police state

          Dr. John, since you are reading this, I presume you are in IT and therefore have some notion of how pervasive commercial and government databases are.

          At the moment we are a very few pieces of legislation (or executive orders) from having a police state the likes of which Stalin only dreamed about.

          It's like the old story about the ol' boy who started feeding the wild hogs out in the swamp. First he had to lure them out in the open. Then he planted fence posts all around where he was feeding them. Then he put up the fence and left the gates open. Then one fine day he fed 'em, closed the gates and took 'em to market. The fence is up, but the gates are still open.

          What will you do when some lunatic in Washington slams the gates?
        • Exactly...

          Very true. This "enemy" we face while not physical is very real. But, if I understand you correctly& like you point out, it's a SLOOOOW crawling one.

          People will likely brush this off as paranoia, but our communcation freedoms are very much at risk.

          From what I've seen over the years ever since communcation technology has become so widespread, We longer face physical freedom restrictions, but communcation ones.
        • Sorry, but no...

's mostly "one fell swoop" where true totalitarianism is concerned.

          The Commies took over one country after another, and "freedom" died on that day. The Fascists took over a few countries at least, and it probably took them about a week or so.

          The freedoms we've been losing over the last decade are real losses, it's true, but it's been more of a "back-and-forth" kind of thing, and driven by what sells to the voters, not deals struck in back-rooms.

          The fact is, it's the government's job to smash enemies to this nation, "foreign and domestic" (please read your standard armed forces oath of enlistment). The only people who can be complaining about doing now what we've been doing since this country began--intercepting our enemies' communications--are those sympathetic to the enemy.

          Or Democrats.

          Ah, but I repeat myself.
          • Aaah yes...

            ... following that thread made me almost think US still beeing a democracy with people in concern over how to preserve civil rights. But last message is more representative for America today: Security Nuts and Big Business lobbyists rule and don't care a thing about democracy, justice and moral, though permanently talking about bringing them to the rest of the world. But wasn' all that 'bout the iPhone? Well, another thing the world could easily get along without.
    • Windows people need talk about human cattle

      "All we like sheep", flocking to Windows just because everybody
      else is!
      • What makes you think...

        ...the OP is a "Windows person"? If I recall, this poster has been fairly anti-Microsoft in past talkbacks. It's AT&T he/she has a beef with. And not everyone with a complaint against Apple is a "Windows person", either. The whole world doesn't revolve around either loving or hating Microsoft.

        Carl Rapson
    • Message has been deleted.

  • AT&T screwed up big time

    The iPhone launch will be one giant advertisement for how bad AT&T's network is. People will be saying things like, "The iPhone is cool but the network sucks."
    • and that's the best thing that could happen to AT&T costumers!

      This will push AT&T to invest more time and money in their network.
      • Why is that?

        You will have already forked over your $500+ dollars and signed an expensive-to-break 2 year contract. They hold all the cards - where is the incentive to improve once the cash register closes?
        Confused by religion
        • Why AT&T will make it better

          Unless you've worked for AT&T (nee Southwest Bell Corp), you don't know just how sensitive they are to publicity - good or bad. When they and Bell Atlantic (now ALSO part of AT&T) formed Cingular, their network as almost as bad as the (then, the real) AT&T cellular network. They did two things - mostly because of bad publicity - upgrade their own network and buy AT&T Cellular (much to AT&T's relief!) I know how sensitive they are after spending two stretches (take that as you will) with SBC. They, being from Texas, must have lots in common with the Pres and VP, they like their privacy so much they'll go to extremes, too, to keep people from talking about them - good or bad.
        • Not quite...

          [b]You will have already forked over your $500+ dollars and signed an expensive-to-break 2 year contract. They hold all the cards - where is the incentive to improve once the cash register closes? [/b]

          Yes. You will have forked over $500 or $600 (if you opted for the 8 GB model). Yes, you would have forked over whatever activation fee, cancellation fee, and whatever fees are going to be associcated with the change.


          (And it's an awful big one.)

          There's this little law about giving the end user a trial period. It's the law most everywhere. So you'll have people signing up, then promptly terminating their contract and returning their iphones within 30 days (or whatever the local law dictates) if they find the service sucks as bad as people claim.
      • Um, not really

        ATT, Or Cingular or SBC or Pac Bell has been crap for decades. Why would the iPhone make them finally behave?