Last week I asked “Will AT&T use their iPad and iPhone data plans to attack net neutrality?” Today, Steve Jobs stood on stage and did exactly as predicted, he showed that Apple will be a preferential media delivery partner of AT&T. This is an opening shot in what I suspect will be the unraveling of net neutrality. When a significant percentage of internet browsing devices are iOS (the new name for Apple’s iPhone OS), the internet will have been co-opted by a device and software maker – scary times indeed.

So what did Steve announce? The new iBooks app on iPad and iPhone will not incur any additional data charges against your plan on either the iPad or iPhone. Your digital books will remain synced and accessible from any Apple device, free of AT&T data limitations. If you use the Kindle app (or any other reading app), tough shnookies. The Kindle app, already playing in an unfair game (in that it has to send people from their iPhone/iPad app over to the browser for purchasing thanks to Apple’s exorbitant in-app shopping experience) now also has to contend against data caps that Apple gets to workaround. Apple and AT&T are moving quickly to lock users onto their ecosystem for all media delivery.

I still love Apple products but this is something to watch closely. At what point will this become anti-competitive monopolistic behavior? When Apple moves movies and music to the cloud and gives themselves the same preferential treatment, people will be talking about this a lot more – I guarantee it.

I’ve had an iPad for a couple of weeks now and I love it. I’m finding new ways each day that it’s insinuating its way into my routines. While it’s an unnecessary device, it’s a seriously enjoyable one and it’s been getting better already thanks to the efforts of talented developers contributing new applications. It’s super enjoyable to lay down on my couch, fire up the Netflix app, and watch a movie. Unfortunately, thanks to AT&T and their monumental bait and switch (removing a 2-month old unlimited data plan), the product’s promise has just taken a sizeable ding.

The unlimited data plan for the iPad was a large factor in my purchase decision and I’m going to keep it for now (AT&T is allowing current users to keep using the plan with no access to tethering), but the death knell has already sounded. The impact of this decision will ripple through to every content service. Any streaming video app developers are now going to have to re-run the numbers on their apps and see if it’s worth developing or maintaining. If I were Netflix, I’d be seriously pissed at AT&T right now.

So here is where I cross the line into idle speculation about what we should all be afraid of – the Apple and AT&T domination of media delivery and the unraveling of net neutrality. It’s no secret that AT&T isn’t a huge fan of net neutrality (and neither is Verizon if you were looking for them to help bail us out of this). They’ve been searching for ways to charge people for the convenience of delivering content on their pipes. Now they have a blunt tool for doing just that. With an unlimited data plan available to any consumer willing to pay $30/month, paying users could stream as much content as they wanted, gated only by the data transmission speeds. That promise is dead after only two months. I’m not surprised at the end result, just the speed of the backtracking.

Imagine the following plausible scenario: the iPad (and iPhone) continues to sell like hotcakes reaching an even more sizable presence in the market. Now imagine that Apple announces a whole host of web-accessible media services for streaming music and video to your iPhones and iPads (and this could happen within the next month or so with iPhone OS 4 about to drop). At that announcement, Apple announces that they’ve worked out a great deal with AT&T where streams from Apple do not impact your monthly data caps. AT&T would of course make this “service” available to companies like Netflix or Skype as well – for a price. The damage will have been done. AT&T will become a toll-booth on the information superhighway, taking money from both content producers and consumers. Welcome to the unraveling of net neutrality!

Far fetched?

The data

I’m going to go out on a limb and guess that the soon-to-be-released iPads coming on April 3rd will include an onboard camera and video chart enabled via iChat [NOTE: I Am wrong. See update at bottom of post]. I think Apple just hinted it very strongly with the commercial that aired during the Academy Awards last night (and which you can view on their website right here). 3 seconds into the commercial, if you focus on the upper bezel, front and center, you will see a camera appear and then disappear in the next shot. I have an image below but if you actually watch the video, you can see it appear and disappear quite distinctly.

So that’s one little data tidbit, but when you look at some of Apple’s other recent actions, I think it gets even more compelling. Let’s start with the SDK. PLCameraController.h shows this:

There are also two icons:

(last two images from iphonealley.com)

And another big one, the iPad replacement parts have a frame with a quite obvious hole for a camera.

And this last one is perhaps a bit too far-fetched but last week we also had notification that Apple was pulling Wi-Fi hotspot detectors from their app store. Not all wifi detection apps were pulled, just the ones that actively scan for spots rather than passive data based on GPS/cell location. Apple claims to be removing them since they rely on “private frameworks.” Makes sense right? What also makes sense is that Apple, on the eve of announcing a major Wi-Fi hog in video chat via their latest device, would angle to limit possible negative press from owners of insecure private networks who would be pissed to have their wireless networks bogged down by people standing outside of the homes and offices iChatting. Like I said, now I’m straying far into the realm of guess-dom.

And one more thing…

So, all of this adds up to the fact that the iPad will have a front-facing camera, it’s just a question of when. I think the ad from Apple last night is a big Lost-style clue that this is coming for launch. For Apple, who already had to change a hastily produced ad showing Flash content to so quickly follow up with a gaffe surfacing a new feature would be too much to believe. I think this is real and it is intentional. Steve is a huge fan of the big surprise reveal. What better way could there be to provide more launch buzz for the iPad than it showing up with video chat on Day 1? Take that, Microsoft Courier!

Boom!

[Updated 3/10/2010]: Apple’s newest SDK is pulling the references to the front facing camera and the icons for support. While this is not an iron-clad indication that they won’t be the camera for launch, it’s a pretty big indication that they they’re not progressively tipping their hand as a I suggested. Hey, when I’m wrong, I admit it.

Charlie Rose spent a little more than 20 minutes discussing the iPad and what it means for users, the media markets, and competitors. So why am I posting this to TPN? I think that this device will be defining our relations to much of the media that we consume in the years ahead. This comes with some new levels of freedom regarding what we consume, when we consume it, and where we consume it (whether it be music, video, books or the web) but it also progressively ties us to Apple as our new gatekeeper. Should we embrace this future or be frightened by it? The famous Apple 1984 commercial feels like it might be inverting. Who is going to create the disruptive technology that unhooks us from the Apple media borg?

I, for one, think that the iPad will be a massive success. v1 is compelling and will get people drooling, even if it doesn’t have all of the features that everyone would want. Early tear downs of the product show that Apple is making really healthy margins on the device, somewhere around $220 profit on the $499 model. That means if Apple wants to crank up sales on the device, they could be selling at a $299 price point, still make a profit, and blow the doors off of holiday. Since Apple makes money off search on the device as well as via iTunes and the App Store, selling the product for near to cost neutral could make sense as long as they have a great supply chain. I expect that the device will be available in lower price points by holiday. As the product develops and becomes available on multiple carriers and adds features such as camera and GPS, sales will also accelerate. The future of Apple seems pretty darn healthy to me.

As of Friday night, the MobileMe website controls have been giving me errors everytime I try to configure my personal domain. I keep getting an error stating the following:

We are unable to configure domains at this time. Please try again later.

Has anybody else experienced a similar issue? Is there a possibility that this funk is related to the MacWorld Expo this week and emergent new MobileMe functionality? Let’s hope so as I was just charged by $99 renewal fee for a flaky service that hasn’t been all it’s cracked up to be.

…but if this Gizmodo article proves true that Apple will iPhone will allow iPhone tethering to the Macbook Air, then I called it in January.

I want, I want. Papa needs a better MacBook Air!

I will if this rumor is true.