A $6/mo. Global iPhone

A $6 a month global iPhone: Sounds too good to be true, doesn't it? Well, scoff no more! Here's how to put together a recession-bustin', jet-settin' VOIP phone using the Apple Inc. (Nasdaq: AAPL) iPod Touch and a touch of imagination, as well other tips on saving money when you go a'roaming.

The background
In September last year, I wrote a piece entitled "Apple, Operator War Averted (for now)." My basic premise was that Apple made a strategic decision to leave out microphone capability from the second-gen iPod touch, which in all respects was basically a stripped down iPhone, less microphone and camera capabilities.

But lo and behold, there was a piece of the puzzle I missed in my original article. Apple announced, and began shipping in December, two iPod Touch accessory earpieces with Microphones, available for $29 and $79 respectively. Now – with a few other pieces falling into place in the last 45 to 60 days – you can replicate a "Poor Man’s iPhone," or, more accurately, an "Economy VoIP WiFi iPhone," that works around the globe. All for the price of an iPod Touch, the effort of integrating a few services, and a few dollars more each month.

So, what did I do?

Step 1: Buy
I took my iPod Touch, in my case the 32GB device I bought a few months ago, and love to travel with. The 32GB iPod Touch is $399, and the 16GB is $299. No subsidies, no contracts, no data overages, just buy the sucker.

Step 2: Email
Pull up Microsoft Corp. (Nasdaq: MSFT) Active Sync for Exchange-based email. There's lots of discussion on how this works for iPhones, but a little known fact is that it works fine on the second-generation iPod Touch with Active Sync added into the mix. I use a large Hosted Exchange Service for my desktop, laptop, and BlackBerry. Adding Active Sync for my 32GB iPod Touch with WiFi syncing costs $2.00 per month. The nice thing with 32GB, is that I can have my whole mailbox, attachments and all, resident offline on my iPod Touch.

Step 3: Talk
I bought the higher-end Apple Earphones with Microphone for $79. Of course, the Apple Site talks about using these headphones for "Voice Memos" but they can do soooooo much more. Next, you go to the iPod Touch App store and download the TruPhone client for the iPod Touch. This is a pretty well implemented VoIP iPod Touch Client (some glitches, but that’s true of most iPod Apps), that allows you to call, domestically or internationally, from your iPod Touch, using the Apple Headphones with mike. A bit more latency, a bit lower voice quality depending on your WiFi connection, but it works. After setting up an account on-line with TruPhone, it costs about $0.06 per minute for calls on the iPod Touch, or less than 2 cents a minute if you sign up for their $4.00 per month discount plan.

Step 4: Play
Downloading applications, games, NY Times, no problem – just like an iPhone, my iPod Touch handles it great. Google maps over WiFi, no problem. So, what can I do for $6 per month, no contract? Make international calls for a fiftieth the cost of what my wireless operator charges. Get my Exchange-based email, contacts, and calendars, play my games, browse on Safari to my heart’s content. When I roam internationally, I won’t have to worry about $1,000 per gigabyte data charges, as long as I have access to WiFi.

What's missing?
My iPod Touch does not have a camera, it does not have GPS. I never said this was a panacea, I said it was an Economy Solution! In my case, I'm still keeping my BlackBerry. If folks know me well, they know I understand the limits of WiFi, and if you need to stay in contact, you better have a device that allows you to stay in touch and make phone calls everywhere.

There’s a trick to this, too, however: My last time in the U.K., I bought an unlocked global LG Shine phone for about US$70. I bought a Talk Mobile SIM, which let me call the U.S. for about $0.03 per minute, and paid for the phone and SIM in a few calls. In the U.S., I got a "SIM Only" plan from a U.S. carrier (no phone, no contract), which lets me call on my unlocked LG Shine for $0.10 a minute; or I can use my "Prepaid International Calling Card" from my major U.S. wireline carrier for my international calls at $0.06 per minute! More on this in a future post.

Bottom line
My original article in September 2008 said, “in my view, an iPhone 3G is not simply 'twice as fast, and half the cost,' but yet another device locking people into multiyear contracts with a two-year cost of ownership of over $1,500 for a device with 8 or 16 GBytes of storage, which in reality doesn’t cut it for music and video, versus $399 for a 32-GB iPod Touch. Ouch.” Four months later, I’ve been able to do everything I wanted to be able to do on my iPod Touch, without paying $80 to $100 per month. Six dollars a month is much better.

I clearly understand the operator’s dilemma, of differentiating tariffs across varied user types to maximize revenues. However, consumers and business customers are going to find their way to these solutions. You can’t charge $1.25 a minute for international voice calls when it is getting easier and easier to find 6 cent solutions, especially when there are 6 cent solutions from the wireline side of the same operator! You can’t charge $1.00 per MB ($1,000 per GB) for roaming data, when a consumer or business traveler can go into the store and buy "pay as you go" data for about $10 per GB with no contract.

As I’ve always stated, there are tradeoffs with "wide area mobile broadband," "WiFi," and people’s personal tolerance for alternative solutions to their communications and data needs. But the wider the gulf in pricing, the deeper the pain of the consumer or business’s finances, the more rapidly people will find ways to arbitrage the situation.

I really like my newly supercharged iPod Touch plus my LG Shine for pre-paid calls. I really like my BlackBerry, and still carry it everywhere. In my personal situation, I’m gonna keep them all. But others will choose.

— Jeff Belk is a principal at ICT168 Capital LLC, focused on developing and guiding global growth opportunities in the Information and Communication Technology space. He can be reached at jeffrey.belk@gmail.com. Special to Unstrung

P.S. My pursuit all of this was a result of travelling to the U.K. for biz two weeks ago, and having my BlackBerry, which I pay extra for international data – and having it not work for international data. So I was flying blind, and I did not like it. Although my provider assures me that I’m all better now, I now have a bunch of new alternatives for when I travel – and will save a bunch of money to boot.

P.P.S. Operators, keep in mind, in the long run, I don’t think Apple cares what pipe is being used for getting content – mail, music, games, and even voice bits – to their wonderful toys. Such products will ultimately help wrest control at the margin from your business and give it to your partners, albeit an Apple, Google, or others. This might not be a bad thing, it depends on your long-term strategy, but be aware: The old adage may apply that it's better to eat your own lunch before somebody else eats it, especially if being aggressive on innovative voice services and more economical data keeps customers around, reduces churn, and ultimately raises ARPU!