Will Carriers Finally Get Their Piece of the Apple Pie?

“Better coverage… fastest network… fewest dropped calls…” Which mobile carrier am I talking about?

ALL OF THEM

There is a huge gap in the current capacity and the demand that is being created by new high-bandwidth mobile devices like the iPhone, iPad, RIM smart-phones, Androids, Nokia Nxxx’s, MiFi/RocketStick 3.5G/4G devices used with laptops/netbooks, and Kindles. This capacity gap is inspiring another internet arms-race, just like the catastrophic that contributed to the ‘.com bubble burst’ of 2000/1. All of these competing wireless carriers are upgrading their wireless network capacity many-times over (10-100x+). The main difference –this time– is that demand exceeds supply… for now.

Right now, customers are very much choosing carriers based on the phones available, but this will soon change as cachet devices like the iPhone are made available on multiple networks. Then people will start switching from one to another because they are dissatisfied with the service (probably because a carrier is picking up high bandwidth users faster than their network engineers can deploy capacity). Then we will reach an equilibrium…

Then What?

Well, until recently, the answer would be –like any commodity market– a race to the bottom. The raging ‘red ocean’ of the wireless market would lead to the survival of the cost-cutting fittest. Just like pork-bellies, barrels of oil & even computer RAM, the winners will be those that produce a common unit for the lowest cost. The only people making real money (margin anyway) in this scenario will be those who can create differentiated products: handset makers & those that own the content (Apple and Apple respectively – I kid).

But then ‘net neutrality’ & the FCC got a big kick in the nuts courtesy of Comcast.

People who don’t care about FCC regulations (probably 99.99999% of you) may have missed the recent ruling in favour of Comcast on their ability to control how their customers use the internet (whether they were ‘neutral’ or could treat data from different sources differently).

Comcast, by challenging the FCC’s right to control neutrality, has now set a precedent that would allow carriers to be less ‘neutral’ when providing these over-the-top services (particularly those that make it hard to identify the source of all the bandwidth, like BitTorrent, etc.). This could potentially mean that they can have more control over the internet experience the user has. They could treat websites preferentially (higher speed) that agree to do revenue sharing, or block/restrict the bandwidth to those they don’t like.

The wireless and wireline carriers now have another way to differentiate from each other, aside from the “Better coverage… fastest network… fewest dropped calls…” mantra they all currently drone.

The internet experience could end up being VERY different from one carrier to the next, with an infinite combination of content/carrier/geography relationships possible. A very basic example would be a carrier winning business based on allowing BitTorrent traffic to your cell phone vs. one that does not allow it.

Things just got a whole lot more complicated… will carriers finally get a piece of the Apple pie?

AAPL: Sold the Shares I Picked Up Yesterday

Since I really didn’t want to have to pay for them, I wanted to sell and take the gains from my shares I purchased yesterday, and left the rest in to take advantage of gains that will hopefully come over the next few weeks.

Based on pre-market trading, I was hoping for more of a pop in the stock, but I always find that pre-market numbers don’t give you much idea of what is going to happen at market open.  I will take the 9% gain for one day, and return to a more long-term view on this stock.

My biggest struggle when considering if to sell or not is really more to do with the CDN-USD exhange rate.  Since I have been buying AAPL stock, the $USD has ramped from close to parity to a +26% rate.  This gain in the USD would make transferring the USD held in Apple stock back to Canadian dollars attractive.

Generally, based on how soundily AAPL trounced their estimates, I was hoping for more.  RIM is climbing like crazy, but the only explanation I can see is that Obama has one.  This just doesn’t make any sense.

Increasing My Stake in AAPL, Just Prior to Earnings…

I am (almost) doubling my number of shares by picking up a bunch today at $80.  Yesterday, the stock traded at its lowest value in 52 weeks.

Earnings are announced at the close of the markets today, and the analysts are very split on what the news will be.  The stock has been seriously depressed by the recent news about Job’s health issues, and the continued negative sentiment on the world economy.  I think this is a buying opportunity ahead of what I think will be strong results beating the estimates.

If they don’t or the stocks tanks for other reasons, I will be making a quick run for the toilet.  Based on selling RIM shares to buy AAPL stock at $90, and watching RIM run up 32% since, I really need some good news (NT news didn’t exactly help either).

I keep telling myself “you have to stick with your plan, you have to stick with your plan…”