Smartphones are coming to the network which aims for the mass market – but Apple can expect some tough negotiations
Mobile operator 3 plans to offer the iPhone to its subscribers during 2010, according to the chief executive.
“I would take the iPhone, and I hope to have it in 2010,” 3’s chief executive Kevin Russell said told a seminar The Future of Mobile, run by Westminster eForum.
The iPhone would represent a major change for 3, which currently focuses on the mass market, and offers cheap data plans on dongles and lower-end phones.”We don’t currently have the iPhone, and we don’t really have any smartphones,” he said.
Apple came in for criticism at the event, for pushing operators into a business model where they become a “dumb pipe” for services on which Apple makes a profit. However, operators in the UK are keen to sign up, now its exclusive deal with O2 has lapsed, with Orange shipping the iPhone before Christmas and Vodafone in the new year. Apple has been criticised for charging heavily for its iPhones, including the new 3GS model
Russell expects Apple’s deal to improve to a level where 3 and its customers want to participate: “I want to build my business without reliance on an outside party,” he said. 3 is adopting other smartphones, including (soon) the Android-based HTC Hero.
In his talk he was remarkably frank about the roles of voice and data in 3’s world. Although data usage has been growing massively on the network, this has boosted costs much faster, and the company will only be profitable thanks to a cost restructure – the company’s cost will be30 percent less this year than in 2006, he said: “We need to be ruthless on cost.”
Although operators are looking to data to expand their business, he thinks that voice still has plenty of potential, but is restricted by the termination fees. At 5p a minute, mobile calls currently cost twelve times as much as fixed line calls, simply because of the cost of termination: “The mobile industry and the customer are subsidising the fixed industry at a rate of £750 million per year,” he said.
“Termination rates are a shocker,” he said. “Voice traffic should be four or five times hither. It is low because of termination rates.”