Tuesday, August 4, 2009

Apple, tethering and ARPU

Girtby blogged on Apple allowing carriers to detect and block tethering, affronted that Apple would act so unfairly to its users, because the carriers are all 'Apple's bitches', right?

Unfortunately the carriers are not all Apple's bitches, as you put it. As per the normal business negotiation, each side brings their cards to the table. Apple had the iPhone, for which it wanted moolah. The carriers had moolah, for which they wanted the iPhone and as many restrictions they could get. For each restriction they will be willing to offer more money, so if Apple want to be nice to a small group of users that want to use tethering they have to be willing to give up some revenue for that.

In creating restrictions, carriers push a larger proportion of users into buying addons to their contracts or into using the expensive bit of the tariff (international calls by banning net phone apps, etc), so driving up their Average Revenue Per User. Remember, the better the iPhone, the more Apple can squeeze out of the carrier and the more the carrier has to raise the ARPU to get their profit margin back. So Apple leverage the hype they can build to get a better deal from the carrier. And the carrier know that if you're spending $40/m on a contract, you probably won't mind another $5 for tethering.

Yes, they are all there to take your money. That's Big Business at work. The terms of the deal to prevent tethering, to quietly throttle certain apps, were all written into the contracts at the negotiating table. This was a done deal a long time ago. As time goes on, and more apps and uses are prevented, the terms of that deal will be slowly revealed, clause by clause. Apple has not just turned on its loving fans, it has already sold them. Did you expect anything else?

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