Found this article on the Register quoting an article on the Telco 2.0 site. The Telco article is pretty well written, but the Register folks have misread a ton of stuff including:
“we learn that networks who partner with Apple must install Apple gear at the data centre to support its services - specifically, the Push Notification service that wakes up the Jesus Phone.”
Which is mentioned nowhere in the original article and simply isn’t true in any case. The only Apple equipment required on the operators’ internal network is the visual voice mail gateway if the operator decides to support that feature. Apple is not “sitting in the middle of their network, capturing customer data”. All of the other potential data mining options come from when the customer becomes an Apple customer for the MobileMe service. In which case, Apple is providing a service to a paying customer so what does the carrier have to do in this equation?
Now there’s some truth to the comment in the original article without the Register’s distortion of the facts:
Apple have resisted calls to allow what are known as ‘background apps’ on the iPhone. Letting applications run continuously in the background can suck up battery power, deplete memory resources, and generally make things treacle slow. Instead, Apple have launched a Push Notification service to wake up the phone, and you have to initiate that request through an Apple platform.
Note that the Apple platform doesn’t need to be installed on the operator’s network - it lives on the internet. Of course, this is exactly the same thing that RIM has been doing for years, running all of the push connection traffic through their Network Operations Center. Now in some cases RIM does have equipment deployed on operator networks, but in those cases we’re usually dealing with business contracts with stringent Service Level Agreements concerning performance and availability. In many cases RIM has private dedicated connections to the operator networks for security and performance reasons.
Apple’s MobileMe and third party push alert is a consumer level service and as such will be offered directly from Apple to the consumer, without any concern to the pipe that I’m currently using to connect to the internet. All of the push services are based on plain-jane TCP/IP connections. How do you think that they work when you’re connected via Wifi or when you’re using an iPod Touch with the 2.0 software? These are not pager based push communications that get loaded in the cellular side channel.
So there will be an interesting traffic stream to be analyzed, but it is in no way dependent or unique to a device’s network connection. Even iPod Touch users can participate.
Besides, the carriers are allergic to the kind of service that is actually useful to the end users since it means that they are less dependent on the carrier’s custom offerings that are designed to empty your wallet for the least amount of effort on their part. Disable bluetooth syncing since you want the user to use your paid service for address book backup for example… With MobileMe, I can take an unlocked iPhone and use it with any carrier, or with none, via my own Wifi network.
The Telco article does a good job of pointing out the obvious changes that the iPhone makes in the current balance of power in the cellular industry. The iPhone is a lot more like a computer than a telephone and it’s communications roots are predominantly in the world of TCP/IP rather than the packet radio world. The translation is that the iPhone is the first mass market device that is designed to get most of its data from the internet rather than the the telco’s walled garden data offering. This is true and it’s a good thing for consumers.
From the telcos point of view this is bad thing since it means that they are no longer the gatekeepers to what the iPhone users see and access. Apple is the one that will be managing this. Now I have some reticence about the current Apple offering since it’s basically another walled garden from the application distribution standpoint but there are several key differences:
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Apple will be offering the possibility for developers to offer free applications
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The walled garden is global rather than limited to a specific market
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Safari allows me to step outside the walled garden and go directly to the web in a usable fashion
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Apple has a much better track record in executing this kind of thing than the telcos
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Jailbreaking remains an option
Honestly, the telcos have had a ton of opportunities to create the kinds of services talked about in the article, but have fallen down completely on the execution. They still haven’t really absorbed the idea of the internet and spend too much time and effort trying to build a subset of the internet in their little walled garden instead of just encouraging direct access in the way that the iPhone does. They still seem to feel entitled to extra money if the packet transiting their network happens to represent a file containing music. Why in the world would this be the case? It’s like Ford demanding a cut of every purchase that I bring home in the car since they are the transportation mechanism. Although I probably shouldn’t try and give the automakers any ideas.
The carriers need to come to terms, like the phone companies, with the fact that their value adds are bandwidth, reliability, price and coverage. People just want a pipe to the internet first and foremost. Yes, carriers are going to lose out on many potential business opportunities but that’s more their own fault on having done nothing but sloppy execution on anything outside their core competency of network management.
Update: Electric Pig has jumped on the bandwagon and gone even further stating that not only does Apple require equipment on the operators’ networks and that
_"_Network operators have to install Apple hardware in their data centres, giving the iPhone maker access to information on exactly what iPhones are used for."
And they give the impression that every packet going in and out of the iPhone is being sent directly back to Apple.
Reality check here folks. The analyst at STL in the Telco 2.0 article had a pretty good idea what he was talking about. You do not. The quotation “Apple can data mine the application message stream” is referring to two things:
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Your MobileMe activity
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Your third party application push messages
Now if you go look at the WWDC announcement, you’ll see that what transits the Apple servers will be a very simple message containing the following: - A source application (say, NetNewsWire)
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A destination (your phone - still unsure how the identification will be done, probably wide area bonjour)
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An alert with a text message or a badge update (eg. “4 new articles”)
The push datastream will give Apple some idea of the general usage of applications, and more information about which applications are in high volume usage but little more than that.
“The thinking is that, once Apple understands exactly how iPhone owners use the web on their phone, they can start to sell on the back of it.”
Uhh - the thinking isn’t. Apple still has no direct link to the browser use of iPhone users, any more than they have the browser use from Safari users on OS X or Windows.
All of the technical silliness aside, when has Apple ever insinuated that they are interested in the advertising market? The lack of adware and spyware on the default install of a Mac or an iPhone is a feature that sets it apart from the pre-load subsidized mess of cheap PCs. Apple has clearly pointed out that this approach is antithetical to their views on delivering the best user experience.
Unlike Microsoft, Apple does not feel the need to enter every single market that exists simply because it exists. The advertising market on the iPhone is well served by Google and ad-funded applications are simply not in Apple’s DNA. Their approach is consistently to aim for a best of breed pay for applications or funded by ancillary purchases like music or photo books.