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Hoping Apple Allows Iphone Wifi Without Cellular Service

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by Yves Smith and Felix Salmon
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Economics Anonymous   Rupert Murdoch, Victorious

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Jul 31 2007 12:00am EDT

Hoping Apple Allows iPhone Wifi Without Cellular Service

John Guidon, the CEO of Row 44, is a big Apple fan, he tells me, and would love to be talking to Cupertino about the iPhone problem. He's responding to my blog entry last night, when I wrote that

I hope that Guidon is talking to Apple: he says that passengers can surf the web on their iPhones – but it seems that they'll only be allowed to do so, under current regulations, if Apple allows users to turn off the cellular capability while still using the wifi functionality. At the moment, that's not possible.

The way I see it, the problem is one of economics, not technology. Apple is very keen that people not use the iPhone as a video iPod with wifi capabilities – a competitor, if you will, to the Nokia N800. The reason is that Apple is getting paid a lot of money by AT&T – rumors put the total at somewhere in the $300 per phone range, over the course of two years. And AT&T isn't going to want to pay Apple lots of money if the devices aren't used as phones.

But the problem should not be insurmountable, all the same. Apple can still require iPhone buyers to enter into a 2-year contract with Apple, at a minimum cost of $60 per month, before the unit works at all. Once they've done that, they should be able to turn off the cellphone capabilities of their phone when they're airborne – or when they're roaming internationally. Or just when they want to be able to surf the web without necessarily being contactable by anybody with their cellphone number.

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