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How Will the iPad Transform Telecom?

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By now, you know that Apple (Nasdaq: AAPL  ) on Wednesday introduced the unfortunately named but still interesting iPad. Let's take a look at how it might impact the telecom industry.

What happened?
Apple designed the iPad for comprehensive connectivity. The Wi-Fi + 3G model begins at $629 for the 16 gigabyte edition. Users who want to keep connected to the Web will pay $14.99 monthly at minimum, up to $29.99 for an unlimited data plan.

With the way Chief Operating Officer Tim Cook defended AT&T (NYSE: T  ) during Apple's earnings call on Monday, no one should be surprised to see the carrier assigned the job of delivering data to the iPad. (Though no contract is required.)

Of all the carriers, Deutsche Telekom's (NYSE: DT  ) T-Mobile is acting the most desperate. It's also the one Apple could have helped most by designing the iPad for its GSM network. The iEmpire went with its old pal, AT&T, instead.

That's also bad news for Verizon (NYSE: VZ  ) , which has long been rumored as a future Apple i-partner. But T-Mobile takes the bigger hit of the two. Verizon has a huge network and a big partnership with Research In Motion (NYSE: RIMM  ) and other handset providers. T-Mobile, by contrast, is left with Google's (Nasdaq: GOOG  ) soft-selling Nexus One.

How to play it
For as much as I've made out of shorting the entire telecom industry, I'd be remiss if I didn't admit that AT&T is an interesting play on the iPad.

This week's earnings report makes clear that the former Ms. Bell has every intention of moving feature phone customers up-market to either the iPhone or some other data-consuming device. Fixed-fee data plans -- precisely the sort you can buy with the iPad -- could yield healthy profits, so long as AT&T's network is up for the task of delivering a tsunami of bits.

Do you agree? Disagree? Make your voice heard using the comment box below, then check out the rest of our series on how the iPad could change the world.

Apple is a Motley Fool Stock Advisor selection. Google is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He had stock and options positions in Apple and a stock position in Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy likes that ensemble on you. Well done.

Read/Post Comments (3) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 29, 2010, at 4:36 PM, XMFTom7 wrote:

    I'm confused: I thought Jobs announced that the iPad would use mini-GSM chips, meaning that you could have the option of going with other telecoms if you wanted, but AT&T was the one offering the a la carte discount data deal.

  • Report this Comment On January 29, 2010, at 5:26 PM, demodave wrote:

    mini-*SIM* cards, which identify the iPad to the network and essentially say "here's who's using it and here's who to charge". The deal with AT&T will presumably require a similar mini-SIM. The billing structure is only currently being described for AT&T, but surely others will follow - though not necessarily in the Unites States.

  • Report this Comment On January 30, 2010, at 8:59 AM, Austintatious53 wrote:

    The analogy of color TVs vs. black & white TVs is absurd. Go back to kindergarden.

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How Will the iPad Change the World?

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