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Multiple US iPhone carriers may kill AT&T growth

updated 03:40 pm EDT, Thu July 16, 2009

Pali on iPhone, ATT future

Growth could come to a crawl at AT&T if the company loses its exclusive iPhone deal, argues Pali Research. The deal is nominally set to expire in 2010, after which the US may finally join other countries in supporting competing iPhone networks. The most likely candidate for a second iPhone carrier is thought to be Verizon, which has reportedly been in talks with Apple, and may be the only alternative in providing blanket coverage across the US.

Should AT&T not be able to win an extension of its iPhone contract, it is thought that just 1 million new customers could be added in 2010, as compared to the 4 million accrued in 2008. Many of the company's potential customers are expected to flee if a Verizon iPhone becomes available, due to the latter carrier's superior network. "We estimate that nearly a third of AT&T's post-paid customers are being retained by AT&T primarily because of the iPhone exclusivity," Pali analysts write.

Technical obstacles exist for a Verizon iPhone however, namely the need to build a CDMA variant, or alternately an LTE (4G) version which would have to wait until 2011. Both AT&T and Verizon are still constructing their LTE networks, and AT&T is not expected to be ready in 2010. A 4G-capable iPhone could be used interchangeably with either carrier.




by MacNN Staff

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Comments

  1. nowwhatareyoulookingat

    Joined: Dec 1969

    +3

    king of the obvious

    Really...if the other mobile company gains access to the iPhone, fewer people will choose to switch to AT&T.

    And 4G is years away from being available across the country.

  1. elykkyle

    Joined: Dec 1969

    +4

    uh, duh. lots of people want the iphone, but many don't want to switch to at&t...

  1. cmoney

    Joined: Dec 1969

    +4

    App Store

    Hasn't Verizon publicly announced that they are not installing manufacturer app stores on devices and instead will create their own? I don't see Apple agreeing with that!

    As for LTE, Apple would still have to support CDMA since it's doubtful LTE will completely replace CDMA anytime soon.

  1. Constable Odo

    Joined: Dec 1969

    +4

    Why is it such a big deal

    for Apple to build a variant model iPhone? Some people make it sound like it's the hardest thing in the world for Apple to do. Apple is already building a China variant iPhone without WiFi. It's probably a piece of cake to build a CDMA variant.

  1. LEStudios

    Joined: Dec 1969

    -4

    AT&T May keep iPhone.

    Lot of people got to remember in the beginning no of these carriers would give AT&T a chance because originally it was revenue sharing and now its a contract base to a lower price. Verizon laugh at Apple but now seeing AT&T getting large with customer base now they want to talk. Verizon may not be a better choice if they don't let Apple get their way with App Store and iPhone features. If that's the case mine well stay with lesser of the two evils. Yeah AT&T it is. Boy I really hate the feeling of being stuck between a rock and a hard place.

  1. Le Flaneur

    Joined: Dec 1969

    +2

    not so soon

    AT&T got another 2 years of exclusivity (until 2011) with the iPhone 3GS. So we're stuck unless the FCC intervenes...

  1. Jittery Jimmy

    Joined: Dec 1969

    0

    Bah.

    Obviously the iPhone has been good for AT&T. Without the iPhone, AT&T would have slower growth. Does it take a highly paid analyst to come to this conclusion?

    Of course, the next killer phone could be released next Tuesday on T-Mobile. Or maybe the iPhone will become non-exclusive, but the iPhone XGA will be exclusive. THEN what? I bet the analyst has no idea.

    The facts right now: iPhone is a 3G device. Unless Apple makes a non-3G device, AT&T is likely the big winner... even in a non-exclusivity situation.

  1. WiseWeasel

    Joined: Dec 1969

    +2

    agreed, not so soon

    LTE is rolling out for real in 2011 (being "trialed" in 2010), and the coverage won't be usable nationwide until 2012. This means there will be two more AT&T exclusive GSM iPhone models, followed by a possibility of change in June 2012. AT&T has exactly that long to get their act together and figure out how they're going to offer a better deal to potential customers than Verizon. On the plus side for them, Verizon completely loses their current coverage advantage with the transition to LTE, so they theoretically are on equal footing to get decent coverage installed. Add to this the phatty margins AT&T gets to make during the next three years of iPhone exclusivity, and they might be in a better position to invest in the LTE deployment than Verizon will be. Or they could just do what they've done before (the bare minimum infrastructure investment to qualify as "nationwide"), and get their asses handed to them at that point.

  1. LouZer

    Joined: Dec 1969

    -1

    Re: Agreed...

    On the plus side for them, Verizon completely loses their current coverage advantage with the transition to LTE, so they theoretically are on equal footing to get decent coverage installed.

    Um, no they don't. Any phone Verizon sells will still work on CDMA if LTE isn't available, so they still have the coverage like they do now (the same way ATT talks to EDGE if they can't get a 3G signal).

    Add to this the phatty margins AT&T gets to make during the next three years of iPhone exclusivity,

    Fat margins? What fat margins? Apple makes the fat margins. ATT has the same margins on the iPhone as any other phone. Probably less, since everyone says iPhone users suck up data plan bandwidth a lot more than other phone users.

    and they might be in a better position to invest in the LTE deployment than Verizon will be.

    Right, because the company the people here complain about nickel-and-diming you death has no fat margins or large income streams.

    Or they could just do what they've done before (the bare minimum infrastructure investment to qualify as "nationwide"), and get their asses handed to them at that point.

    You mean what they have right now?

  1. chris2519

    Joined: Dec 1969

    +3

    chris2519

    I will be the first to go. AT&T has miserable coverage in Los Angeles to the extent that taking my money every month borders on fraud on their part, because they do NOT provide the service they promise. I am incapable of having any sort of extended conversation while driving (along major streets in highly populated areas) without the call dropping 2, 3, 4 times. The ONLY reason I put up with this is to keep my iphone. AT&T should be bending over backwards to improve its infrastructure (something they should be doing ANYWAY, not just because they fear losing customers) because there will be a MASS EXODUS the MINUTE this phone is available with another carrier.

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