MVNO: The Future of the iPhone?

In just a couple of days, Verizon Wireless customers – both old and new – will have the ability to purchase and use an iPhone 4 handset on what is easily one of America’s largest mobile carriers.  This availability not only marks a huge opportunity for Verizon who will have the potential to gain countless new customers, but also marks the success of a larger movement.  You see, anyone who has followed the iPhone through the last few years knows that users have been flat-out desperate to be able to purchase the iPhone on carriers besides AT&T – a company that has become looked down upon since the beginning of the iPhone craze.

Hands down, one of the biggest factors that have made AT&T customers frustrated with the mobile network is the fact that many see it to be lacking in speed and reliability.  This – especially for a bandwidth-intensive device such as the iPhone – is simply unacceptable.  But even as we inch closer and closer to the release of Verizon iPhones, a number of more recent developments have put a bit of doubt on Verizon’s ability to handle the iPhone’s traffic any better than AT&T.  With Verizon at risk of following AT&T’s footsteps, the one entity that really stands to suffer from future failures is Apple; the company that manufactures and sells the iconic iPhone.

So what options does Apple have in order to protect their image and ultimately their success?  Apple Insider is now reporting that Apple has been granted a patent for MVNO (Mobile Virtual Network Operator) technology that would allow Apple themselves to act as a “carrier” for the iPhone without needing to invest in the infrastructure or back-ends that they would need if they were setting up a network from scratch.

More or less, what this type of setup would do would allow users to contract with Apple for their mobile contracts.  In turn, Apple would make contracts and arrangements with a handful of regional and national mobile networks to subsidize the actual bandwidth and mobile connections at a “dynamic” level that allowed for the iPhone handset to take advantage of the strongest nearby network based on their geographical location at any given time.  For an end-user such as you or myself, this would mean that one could travel throughout the country and take advantage of the leading networks in different regions without (necessarily) incurring overage or roaming.

Even for users who were relatively stationary, this type of technology – which Apple appears to be working on – would serve as a “load balancer” of sorts by pairing users with the best fit network at any given time.  While this concept may sound suspiciously like LTE, the fact that traffic would be handled across multiple networks would help to take advantage of a much wider range of network resources, meaning that the bandwidth for iPhone customers would be more equally divided amongst participating networks; ultimately leading to faster and more reliable connections.

One of the other advantages for this type of setup would be that different mobile providers would be able to bid on mobile traffic, theoretically driving the prices of wireless service down significantly.  While this can be seen as a great upside – especially in a sluggish economy – there would also be the potential for bandwidth loads to be awarded to mobile networks simply based on rock-bottom pricing instead of the quality and/or reliability of service.  However, I am confident that Apple would set high standards for participating mobile networks in order to provide the most bulletproof service to their customers.  After all, their company image – and bank account – would depend heavily on it.

From a business point of view, Apple could do great wonders with this type of setup.  Not only would they be able to establish and enforce their own service standards, but they would also be able to serve as the middleman between consumers and mobile networks as well.  In theory, this would allow Apple to collect a surcharge of some sort and profit from the mobile service instead of simply the handset itself.  And, by shoehorning themselves into the mobile network side of things, they would have the potential to better offset the cost of the iPhone and ultimately lower the price to consumes.

At the end of the day, we still don’t know what Apple intends to do with MVNO technology or even if they intend to do anything with it at all.  However the fact that they have been granted a patent shows that they definitely see a potential in the technology and may be utilizing it in the near future.