The Apple Watch Series 3 ripoff: how carriers want to charge for zero data use

The Apple Watch Series 3 can take phone calls. But you’ll pay for that. Photo by portalgda on Flickr.

On first trying the Apple Watch, in 2015, my reaction was that it did a lot of things pretty well. I still wished that it had an always-on screen. But earlier this year I started taking exercise more seriously. At that point, it suddenly comes into its own: the workout apps, the heart monitoring, the calorie estimator. Add AirPods – I was quick enough to snag a pair when they went on sale in the UK last Christmas – and you have a terrific combo for running: store some music on your watch, connect AirPods, go running. No wires, no phones, and no, they don’t fall out.

When I’m out I see other runners with phones strapped to their wrists, with headphone wires all over the place. They give me odd looks. I give them an odd look right back. Exercising without wires is how it’s meant to be. (If you’ve got a Watch then I recommend the HeartWatch app, which gives you the granular detail of your heart rate, especially during workouts.)

Since you can add Apple Pay, the Watch becomes a device that can do everything while you’re out and about, even without a phone. Except.. if you don’t have a phone you can’t take phone calls, or receive and respond to text and other forms of messages, or get new data for Maps, or activate Siri, etc, etc.

Adding mobile (“cellular”) capability makes perfect sense there. Now you really can leave the phone at home, because you can receive calls anywhere you get coverage – with good LTE this means plenty of places, such as the middle of a lake, as in the Apple demo – and make them, because your contacts list is in the phone, and failing that there’s a Big Buttoned Virtual Keypad.

And generally in technology, if someone can, someone will. Samsung had already gone there, but its device was big and bulky, and it didn’t have the same phone number as your phone. Apple has solved that.

Zero data, zero incentive

What doesn’t make sense is the price that carriers are looking to charge for hooking your Watch to their network. In the US, the price is put at $10/month; in the UK, at £5 per month, on EE.

These are outrageous prices, on a par with the ludicrous data charges that carriers used to apply before the iPhone. In those days, up to mid-2007, to want data on the move marked you out as someone with money to burn, or else a raging desire for debt.

Why outrageous? Because Watch cellular data use is not additive; it’s substitutive. If you’re pulling in data on your cellular Watch, you must have left your phone behind. Ergo, you’re doing nothing with the phone, so it’s consuming (next to) no data. The data consumption has shifted to your Watch.

(Just to be clear: Apple says that your Watch uses the best available connection with your phone. If you’re in Bluetooth range, it uses that. If you’re on the same Wi-Fi network (or even, magically, a Wi-Fi network that your phone knows how to connect to, even somewhere distant) then it’ll use Wi-Fi. Now, if you’re not in range of either of those, the Watch will connect to the data network when it has to. But most of the time, and especially when you have your phone with you, it won’t be connecting to the mobile network.)

If anything, you’ll be consuming less data while you’re Watching solo – you won’t be loading Facebook pages, or giant email attachments, or scrolling through Twitter, or watching YouTube. Sure, you might be listening to music streamed from Apple Music. But you might well have been doing that anyway; if you like streaming music while you run, you’ve probably been doing that already, but with a phone around your arm. (And you can get music onto the Watch just by downloading it from the phone, rather like one used to with iPods. This is probably the biggest use case of music on the Watch even if you can stream, because runner like to create their own playlists, not rely on stuff in the cloud.)

Nor do the carriers have to send you a physical SIM; it’s done in software, in the Watch. Nor do they have to open a new account; you’re already a customer. There might be a mild bit of back-end administration to inform the cell network that two different IMEIs (mobile device IDs) have the same phone number. (Side note: the fact this can be done implies that spying on your phone calls may be easier than it seems?)

But there’s nothing in there which justifies $10/month or £5/month. And think of what that adds to the cost of the device: $120 or £60 per year. That’s a substantial chunk of the upfront price, and it never stops. On Twitter, Marine Engelvuori points out that EE ties you to a 24-month contract if you buy the watch from them, and that you have to add VAT; suddenly that device which costs £399 on its own has added £200-odd of costs over the contract lifetime.

If the cost were $1 or £1 per month, that would be tolerable; one can concede that carriers could charge for the tiny bit of administration cost that might be involved, and maybe eke a profit on the fact of this device’s new qualities. But more than that is just absurd, and it will stifle purchases by anyone who might be a marginal buyer of the service.

This is a real pity. The Series 3 is a remarkable piece of engineering: turning the screen into the aerial (I don’t even know how they do this) and maintaining the thin profile is just amazing. All the software functionality, such as heart rate monitoring and so on, is top class. People could benefit from cell-connected smartwatches, and not only the ones made by Apple. (It might encourage people to spend less time staring at screens, weirdly enough.)

But the price that the carriers are trying to charge is stupid.

Third-party like it’s 2006

It really is 2006 in wearable land; the time before carriers woke up to the broader benefit of offering services at prices which encourage people to use them. Wearables are, arguably, still at the same stage in their evolution as the smartphone was in 2006. This doesn’t mean though that the carriers couldn’t act as the midwives to help things along a little.

Remember, they’re trying to charge this amount for something which will use no extra data over you using your phone, and for which they don’t have to provide a physical item.

There is a precedent for doing this well: Amazon and the Kindle. The deal it cut for “Whispernet” meant you could download books anywhere and all you paid for was the extra 3G functionality in the upfront price. No ongoing fees. I can imagine that Apple’s board gulped a bit at the potential cost of doing that for the Watch, when people would no doubt eagerly take the chance to stream music all day and all night long forever for the extra £70. Kindle files are pretty small compared with music files, and Amazon had a monopoly on that market. So it was probably a non-starter for Apple to shoulder the cost. (This doesn’t mean there’s a cost to the carriers – as I said above, it’s substitutive. But it would be all new costs for Apple to pay for Watch data.)

Maybe the first carriers are just hoping to rake it in before competition opens up and drives prices down. Here’s hoping.

It took the iPhone, and Steve Jobs’s negotiating genius, to get carriers to adopt a flat rate model for data. It’s a disappointment that Apple hasn’t managed to push the future of connectivity forward in the other place where it matters – not on your wrist, because they’ve solved that; but in your wallet.

8 thoughts on “The Apple Watch Series 3 ripoff: how carriers want to charge for zero data use

  1. I think people with Apple Music will stream more of it via the watch when on runs than if they were bringing their phone (this may take some time to be borne out) but yeah, of course

    The £5 charge on EE in UK seems pretty reasonable to me

    Unfortunately I don’t have the option to bemoan the minimal cost as the LTE Apple Watch version isn’t available in Ireland (according to Apple website)

  2. It matches well with the high brand premium Apple charges (sadly again, there was a phase, in about when the iPhone was released, when Apple actually had good and competitive prices for all their hardware). Just look at how ridiculously high the iPhone 8 and, particularly, the iPhone X, are priced! Think of how much Apple charges for the new MacBook Pros! Not even mentioning the ridiculous pricing for adapters, cables, accessories.

    Apple has a margin of about 40% on all hardware they sell. If there are apparently millions of people willing to pay the Apple premium, why wouldn’t the telcos not want to use and exploit this as well? And what exactly is Apple’s interest and leverage? They’re not the only smartphone and smartwatch producers and they’re neither willing to lower their own margin nor to shift towards a price-concious market segment. They want to be premium, they want people to pay premium.

    It’s sad, but it’s the truth.

    Yes, I for one would definitely fire Tim Cook for that strategy and lacking innovation & humour. He’s a boring accountant, nothing more. After yet another disappointment (the notch, the bezels, the Face ID, the TouchBar, the low performance, the high prices) I’m switching to Chinese no-name products, available at a fraction of Apple’s prices.

    • Nice that you’ve just noticed that Apple charges a premium price. This doesn’t explain though why cheaper smartwatches (including some with call capability) are selling poorly in comparison – IDC has the Apple Watch selling consistently above the whole of Android Wear.
      I also like the idea that it was Tim Cook who designed the iPhone X and 8. Remarkable. I guess he found time to design the Esssential phone with its notch too. What do you think of Essential’s pricing, then? Justifiable? Outrageous? How can that be justified?
      Another question on pricing: the iPhone X costs about the same as the Galax Note 8, except the X’s face unlock does work. Is Samsung’s premium justifiable?
      And Finally in pricing – Apple’s phone range goes down to (from memory) $350 for the SE. Justified? Too cheap? Pricing is such a complex beast.

      • There is also the privacy cost. I’m willing to pay more for good privacy as that’s more or less priceless. Android is still far behind on that score.

      • Not agreeing with the GP, but although there are complications like the camera, think one could argue the S8 and the G6 are more direct competitors to the X than the Note (ignoring the upcoming Pixel).

        In the US that’s a $250-$500 premium, which may be deserved to an extent, but is significant.

  3. As an Apple watch Version one owner i would not buy the version 3 with LTE. Instead i opted for the GW05 smart watch which has so much more use, ie you have a removable sim so use any carrier, removable battery so keep a couple spare in your pocket. you can facetime or video call on it by using messanger or skype. it has WIFI Bluetooth GPS, runs android 5.1 so loads off apps cost around £50 compared to the Apple watch£429 so no brainer here. Also if you dont want to talk to your wrist you can use bluetooth earpos to make and answer calls. Oh and it looks just like the apple watch and about the same size.Strange how apple cant manage that eh!!

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