Which network will Apple’s tablet flood?

Apple adapts the tablet for all wireless operators—or none

If Apple does bite the bullet and builds a multi-mode device, it could end its exclusivity practices entirely, selling the tablet independently with WiFi as its primary connection and allowing customers to connect to the network of their choice as a secondary option. It could do so through partnerships with various operators, which could bundle a contract in with a subsidized device, or it could leave the connectivity decisions entirely up to the customer and focus solely on the hardware side of the equation.

Apple could pursue the same strategy by excising cellular connectivity from the device altogether, embedding only WiFi into the device. Customers who wanted 3G or WiMax connectivity would purchase their USB dongles and data plans separately from the 3G operators or Clearwire, or Apple and specific operators could take the same subsidy approach used with connected netbooks, bundling the tablet and modem into a single mobile data plan.

Jeff Orr, ABI Research senior analyst for mobile devices, pointed out that most tablets in the market don’t have to have wide-area network access. Orr strongly recommends a device like Apple’s tablet have some provision for 3G connectivity, but Apple is by no means required to embed it. And by freeing itself of a specific radio technology, Apple could free itself from dependence on the operators, allowing it to market its devices to HPSA, CDMA and WiMax customers alike as well of the huge potential pool of customers who are satisfied merely with WiFi connectivity.

“There are advantages and disadvantages to having specific carrier relationships,” Orr said. “Apple has said publicly that the benefits of carrier relationships are that there could be carrier-specific features like visual voicemail.” The operators, too, see plenty of advantage in having device and brand exclusives—while Apple has taken a network hit from the iPhone and seen its margins fall due to its high subsidy cost, its data revenues and subscriber numbers have skyrocketed. Unless Apple takes a share of that monthly data revenue, though, it might see the benefit of extending an exclusivity model designed for mobile phones to solidly Internet devices.

Apple: the new face of MVNOs?

A final, and much more risky, scenario for Apple would be to take advantage of the new open and emerging device initiatives to become a mobile virtual network operator (MVNO) on the operators’ networks. Essentially it would resell access from one or multiple operators, becoming the customer-facing service provider that faces the customer not only for the device and applications but also connectivity.

While this would put all of the control and all of the revenues in Apple’s hands, it opens it up to type of criticism AT&T has faced since it launched the iPhone. Apple has for the most part escaped the onslaught—even Verizon’s ‘There’s a map for that’ campaign largely targets the network experience over the iPhone, not the iPhone itself—but if it placed itself in front of some nameless operator, it would ultimately be the one responsible for any network problems.

The operators, too, might not be willing to allow themselves to be circumvented. While they have ostensibly opened their networks, they probably wouldn’t be willing to tolerate the massive bandwidth demands of an Apple Internet tablet if they weren’t taking a sizable share of the data revenue. Operators would most certainly impose data caps on the tablet much as they do on their connected netbook and laptop customers today. Apple would be forced to pass those caps along to its customers.