Analyst says iPhone is lifeblood of AT&T success

[AppleInsider]

If the iPhone's exclusivity with AT&T were to expire, one market research firm predicts that the cell phone carrier would suffer due to the superior network offered by competitor Verizon Wireless.

This week, Pali Research released a prediction that AT&T will net less than 1 million new subscribers in 2010, compared with the 4 million it gained in 2008. The report operates under the assumption that the iPhone will leap to Verizon's network once the contract has expired.

The statement comes as AT&T is pushing to keep Apple's phone exclusively on their network through 2011. The Wall Street Journal has reported, through anonymous sources, that CEO Randall Stephenson is currently negotiating with Apple. iPhone-AT&T exclusivity in the U.S. expires next year.

If Pali Research is to be believed, AT&T's future could depend on retention of the iPhone, making Stephenson's alleged negotiations all the more crucial.

"As the iPhone exclusivity period rolls off between AT&T Wireless and Apple, a material number of AT&T customers will flock to Verizon’s superior network," the firm states. "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."

The market research firm based its conclusion on two recent studies that show AT&T has 3G speeds that lag behind Verizon, T-Mobile and Sprint. The study from Wired, with a sampling of 12,000 mobile phone customers, demonstrated that AT&T has an average download speed of 901 Kbps. Another survey from PC World corroborated those results.

This, despite numerous attempts by the company to boost bandwidth capacity for the iPhone and the network's influx of users.

This year, it was estimated that a third of AT&T's new customers are switching solely because of the iPhone. The same study from ChangeWave suggests that AT&T customers are also less likely to switch carriers.

Pali Research recently gave investors a buy rating for Verizon and sell for AT&T, based on the latter's dependence on the iPhone.

"Our Buy rating on Verizon is based on our view that its market share gains will lead to profit growth that tops other telecom companies and Wall Street consensus estimates," the firm said in June. "Our Sell rating on AT&T is based primarily on our belief that its wireless business will enter a prolonged period of erosion after being propped up by the iPhone for the past two years."

[bitzandbitez]

BRING IT ON VERIZON.. i would switch to them in a heartbeat . ATT has THE WORST coverage in my city New York City and I am sick of the bad reception and dropped calls , plus all my friends and family members have verizon and i could take advantage of my current verizon DSL plan by bundling it with my iphone ... bye bye ATT, HELLO VERIZON ... can you hear me now???

[cmf2]

It isn't that simple. The iPhone increases the strain on anyones 3G network, since it ups usage. Thus speeds are lower. I'm in Canada, so really don't know how the two stack up, but Verizons average 3G speeds will drop if they get the iPhone. On the flip side, AT&T's speeds will increase as iPhone users vacate the carrier, so there should be a floor where AT&T would stop losing users due to 3G speeds.

[lkrupp]

Originally Posted by bitzandbitez

BRING IT ON VERIZON.. i would switch to them in a heartbeat . ATT has THE WORST coverage in my city New York City and I am sick of the bad reception and dropped calls , plus all my friends and family members have verizon and i could take advantage of my current verizon DSL plan by bundling it with my iphone ... bye bye ATT, HELLO VERIZON ... can you hear me now???

Get out of your fantasy world. Verizon sucks the big one. At&t rules the roost in terms of reliability and service. For every one of you there two at&t customers who are perfectly satisfied. The "grass is always greener" syndrome is alive and well.

[Dogcow]

This article completely ignores that fact that the current hardware will not work on Verizon. Sure people might switch as contracts expire with AT&T if there is new, subsidized hardware on verizon. I would not expect the stampede they seem to be implying. At least not in switchers from AT&T, maybe Verizon will see a stampede in upgrades.

[mstone]

I'm okay with AT&T for the most part. They have been a pretty good provider for our businss phone needs over the years. I am not entirely satisfied with the voice quality of their cell network but the coverage is improving. If iPhone had all the same features on Verizon and the call quality was better, then I would probably switch back to them on my next iPhone. I don't do much international travel and I am not in rural areas very often either, so for me it is all about the voice quality.

[davebarnes]

Why would Apple manufacture a CDMA iPhone?
R&D expense for a phone that would only work on one carrier in the entire world.
More complicated supply chain issues.

[polvadis]

Originally Posted by lkrupp

Get out of your fantasy world. Verizon sucks the big one. At&t rules the roost in terms of reliability and service. For every one of you there two at&t customers who are perfectly satisfied. The "grass is always greener" syndrome is alive and well.

While I agree that the grass is always greener on the other side, you're way off the mark on saying "Verizon sucks the big one". Something about being the biggest, having the least complaints, and most reliable service states otherwise. I like Verizon for their coverage, hate them for trying to monopolize everything like the app store I read about yesterday. I can't image ATT without the iPhone. Someone's gonna pocket a ton load of money to get that exclusive deal extended as much as possible.

[crees!]

"As the iPhone exclusivity period rolls off between AT&T Wireless and Apple, a material number of AT&T customers will flock to Verizon’s superior network."

Consider me one of those material customers. Reason being all my family is on VZW and I was too prior to buying an iPhone.

[ZenTigerpaw]

I may not have an iPhone. Only experienced the iPod Touch, and, I can clearly say that I don't doubt it.

[walshbj]

The "which network is better" discussion is kind of pointless as everyone's experience varies by geography.

In my brief experience with my iPhone 3GS and new AT&T service I've experienced extremes. Full bars EVERYWHERE I went in Miami. Dropped calls and No-Service messages all over Charlotte. Granted, Charlotte is no Miami, but it's a decent sized city - and I live right on the edge of downtown and the inner loop.
One of Charlotte's most populous areas - Southpark - has horrible coverage. AT&T would have a hard time explaining to me why it's so bad.

I never had dropped calls with Verizon, but I didn't have data service either so I can't compare.

And like I said, Miami had phenomenal coverage.

So - who's to say which is better??

[floccus]

Two important flaws I can see:

1. Assuming that 1/3 of all post-paid subscribers are only using ATT because of the iPhone and would leave if they had the option seems egregiously inflated. This obviously can't tally just actual iPhone users, and has to be extended to include people who simply want an iPhone but don't have the option/ability to upgrade to one yet.

2. Since Apple won't make a CDMA iPhone (face it people, they won't, end of discussion, unless its for China...), even if they did switch over to making a LTE version next year only for Verizon, it would technically be usable with ATT when they build out their LTE network. While Verizon may have the blanket coverage title, each particular region is either better with Verizon or ATT depending on a number of factors.

I also doubt Verizon would give up as much control as ATT has over what goes on the phone. We're still reading stories about how they are trying to set up their own app store that developers for any model phone they offer would have to go through as opposed to a manufacturer specific store.

[adam937]

Another issue I've recently faced with AT&T was the execution of their heavily-discussed 35% discount on iPhones through Bing Cashback. For many customers these cashback transactions are being denied after the fact without valid cause. It is not clear who is ultimately responsible for this, since at this time neither company is talking. There is a Get Satisfaction post where affected customers are gathering and we would appreciate hearing from anyone who has successfully or unsuccessfully responded to this promotion:

http://getsatisfaction.com/bingcashb...on_at_t_phones

[segastyle]

From what I understand, CDMA signals are stronger and better at going through obstacles (this is simplifying) so they don't need as many towers to penetrate an area. But since Apple is likely not to make a CMDA iPhone, but instead wait for LTE, since that will be for both Verizon and at&t, we have no way of knowing who's network will be stronger. LTE is a completely different signal than CDMA. It could very well be, that when everyone switches over, at&t's towers will have better LTE penetration than Verizon's.

[MacKrazyinKC]

Originally Posted by Dogcow

This article completely ignores that fact that the current hardware will not work on Verizon. Sure people might switch as contracts expire with AT&T if there is new, subsidized hardware on verizon. I would not expect the stampede they seem to be implying. At least not in switchers from AT&T, maybe Verizon will see a stampede in upgrades.

Completely agree. Analyst here is missing the boat - the only easy shift here is to T-Mobile, which has problems of its own in the USA. That is the choice today - at&t on regular service - or T-Mobile for no contract / jailbroke iPhones. Sprint or Verizon are fairy tales with the iPhone. Not that Apple is not above dropping its customers cold - but the backlash on cell phones would not be worth the risk to change to a non-compatible space with the majority of the rest of the world.

[Jerseymac]

We just want choice. Give us a phone for each carrier. Give us non glossy options on the Mac. You know we'll pay extra for it.

I see some of the AT@T defenders have returned. Not mad about MMS and tethering anymore?

[johnmcboston]

with 4G on the horizon, how much is anyone going to spend getting a better 3G experience for users??? (as an interesting side note - with VoIP, why are we still building cell networks anyway - just wifi and wiMax everywhere...)

I've loved Verizon's coverage while I was with them, but they are notorious for hobbling their phones and trying to nickel and dime you to death. If (when?) iphone goes over there, I'm curious what they'd try to disable...

[GSMozart]

I WOULD NOT hesitate to move to Verizon. I am SO SICK of dropped calls & lousy coverage. Whenever I walk in a building...I get the "No Service" line at the top of my iPhone, and dropped calls are an EVERYDAY occurrence. I already had 2 dropped calls today, where the person starts breaking up, and the GONE...........I think AT&T's sales moniker should be "AT&T, CALL FAILED". The iPhone is a masterpiece, and that's why people deal with the LOUSY LOUSY phone service. If AT&T loses it's exclusivity deal, then customers will leave in droves NO DOUBT. I will admit the AT&T's customer service is good, this is no reflection on their employees. but the service is down right frustrating to the core. Especially when I'm doing business on my phone and I have to be causious to make those calls where I feel confident I won't lose them to the proverbial "Call Failed" crap.

[DimMok]

Dont care, either one....but they should lower the prices....I pay too much, just to have the iPhone.

[walshbj]

I agree with the premise that AT&T needs the iPhone. Look at how many new subscribers to AT&T came for iPhones and that's clear. My knee-jerk reaction to the poor service I get in Charlotte: AT&T is sitting back on their existing network and counting the iPhone money. They don't HAVE to deliver top-level service because they have a phone people crave with a high-profit plan.

Hard to tell how serious AT&T is about their femtocell project but it seems like they've had years to beef up the network and aren't committed to doing that. Maybe femtocell is their preferred bridge to 4G.

I admit I was hesitant to give up Verizon, and I hoped all the complainers were just complainers being louder than satisfied customers. But at least in Charlotte they have a point about AT&T coverage.

What I really want to know: How much will Apple be able to collect per phone from the carriers once the exclusive is over...

[leftcoast131]

Like all of you, I follow Apple/iPhone info on Gizmodo, Engadget, 9to5Mac, and here at AppleInsider, of course! I've been reading posts for quite some time and have a few thoughts to share:

1) If you haven't read the article about the iPhone in Wired, read it. Its a good read and give you insight to the Verizon/AT+T dilemma.
http://www.wired.com/gadgets/wireles...6-02/ff_iphone

2) Verizon, to this day, is still telling manufacturers how to build their phones. Apple will never submit to being told what to do. Until they change their fundamentals, Apple will not switch.

3) A more likely option if they break the exclusivity contract, and the SEC inquiries might, might play a role in this (but I believe highly unlikely), they'll expand to Sprint/T-Mobile.

4) If a Verizon stopped being stubborn and were to agree to an Apple/Verizon agreement, it would be late 2010/2011, when Verizon can universally support CDMA/TDMA/SIM-Based phones on their new network http://smart-data-centers.tmcnet.com...n-wireless.htm. I would like to think they would make the change so their core customers could make the switch when their contracts expire (and not have to pay a pentalty).

5) While AT+T's speeds are not good at all, we're hoping to see an increase in the network by the end of this year. I, for one, would be thrilled to see download test results around 3-4Mbps.

6) To those who complaints about US carriers not being able to provide speeds of Hong Kong, Taiwan, and some European countries, let me remind you, the United States is the size of Europe. Europe has multiple providers. US carriers had cable they had to upkeep, Fiber Optics they're installing AND expanding to build out/upgrade their digital services every 2-3 years. I'd be really interested to see what the bill per customer of Europeans would be if there were 1-2 providers. We have a huge country and our size, when it comes to digital networks, hurts us because providers not only have to build new, but have to maintain existing platforms.

7) Customer Service. Verizon's wireless customer service (polite, helped you out), until about 2005, was phenomenal. At that point, the book was thrown out and they turned into "another corporate entity". Surprisingly, AT+T's customer service is quite good. Their agents are polite and the company is pretty flexible about altering your plan on a regular basis. I would only consider switching back to Verizon if they got an attitude adjustment, but I don't see that happening. Until then, I will stick with AT+T, MiPhone, or until

Just my thoughts. I encourage people to reply to this post with additional information/insights/corrections to share with the rest of us to points I've made here.
Thanks guys -
Left Coast

[jedialan]

Besides the reliability of the network, Verizon has vastly superior customer service over AT & T. My year with AT & T was the absolute worst customer service experience I have ever had with any company with any product/service. I've been with both and Verizon is by far the best.

[min_t]

Have we forgotten Verizons own app program announcement? The iPhone is not going to VZ.

[mrtotes]

Originally Posted by johnmcboston

with 4G on the horizon, how much is anyone going to spend getting a better 3G experience for users??? (as an interesting side note - with VoIP, why are we still building cell networks anyway - just wifi and wiMax everywhere...)

I'm still on GPRS (2.5G) 80% of my day with about 10% EDGE (2.75G) and 10% 3G here in the UK on O2. The iPhone 3GS was my first 3G phone.. 6 years after 3G phones started going. If 4G standards are yet ratified globally then investing in 3G makes sense. And there will be millions of 3G phones out there for years to come.



I wonder how other networks performance would compare if they actually had a usable mobile internet devices for sale on their networks.

Originally Posted by johnmcboston

I've loved Verizon's coverage while I was with them, but they are notorious for hobbling their phones and trying to nickel and dime you to death. If (when?) iphone goes over there, I'm curious what they'd try to disable...

I can't see Apple putting up with that. Although some of the old limitations we used to see like bluetooth file transfer haven't made it to iPhone yet anyhow...

[teckstud]

Haven't I been telling ya this for years?
But no one listens!! Especially my buddy solipism!

[leftcoast131]

can't see Apple putting up with that. Although some of the old limitations we used to see like bluetooth file transfer haven't made it to iPhone yet anyhow...

agreed. they would try to charge for every service - google maps, weather, data transfers from iTunes/App Store.

[teckstud]

Originally Posted by lkrupp

Get out of your fantasy world. Verizon sucks the big one. At&t rules the roost in terms of reliability and service. For every one of you there two at&t customers who are perfectly satisfied. The "grass is always greener" syndrome is alive and well.

Not in NY my friend.
Having said that, I wouldn't trade in my iPhone for anything in the world. It's much better than anything Verizon has or will have because like to previous poster noted if they control the APP store and other stuff, Apple won't be going there.

[libertyforall]

I have had a consistent problem with dropped calls on AT&T on my 3GS, and even on original iPhone. AT&T pricing is far higher than its level of service deserves. The data rate in my area is only 540K avg. bleh!

[Ronbo]

Originally Posted by cmf2

It isn't that simple. The iPhone increases the strain on anyones 3G network, since it ups usage. Thus speeds are lower. I'm in Canada, so really don't know how the two stack up, but Verizons average 3G speeds will drop if they get the iPhone. On the flip side, AT&T's speeds will increase as iPhone users vacate the carrier, so there should be a floor where AT&T would stop losing users due to 3G speeds.

That's what I was thinking. I wonder if anyone knows what that actual capacity of the two carriers is?

[arougthopher]

Originally Posted by bitzandbitez

BRING IT ON VERIZON.. i would switch to them in a heartbeat . ATT has THE WORST coverage in my city New York City and I am sick of the bad reception and dropped calls , plus all my friends and family members have verizon and i could take advantage of my current verizon DSL plan by bundling it with my iphone ... bye bye ATT, HELLO VERIZON ... can you hear me now???

See, I'm the exact opposite. I had Verizon, and could not use my phone in my house. Step outside, and I had 3 bars, step inside, no signal. AT&T, however, I have 3 bars in and out of the house (I'm in rural PA, so I rarely get really great coverage, and don't have 3G in my town, but the next town over does)

It would be better if Apple just openned up to all carriers, then you could choose Verizon since it is better for you, and I could choose ATT, since that is better for me.

[MacTel]

I hope AT&T doesn't get the extension. If they did then that would mean they'd have no motivation to expidite fixing their network problems. I say part ways on exclusitivity and let AT&T scramble to make good on their coverage and bandwidth. Who cares if they have the faster network if you cannot even get any signal.

[MacTripper]

Analyst says iPhone is lifeblood of AT&T success

TARP for AT&T more like it.

I would like to see the iPhone opened up to more carriers and let them fight it out for our dollars in better quality and service.

[Judgegavel]

Originally Posted by jedialan

Besides the reliability of the network, Verizon has vastly superior customer service over AT & T. My year with AT & T was the absolute worst customer service experience I have ever had with any company with any product/service. I've been with both and Verizon is by far the best.

I find just the opposite, if I go to the VZ store I sometimes had to wait 1 hr to talk to someone. I've never had any problems with/at AT&T. I also get horrible reception on VZ phones in my house (and I'm in the middle of NYC) while AT&T comes in crystal clear.

TDMA is a dying technology, until VZ switches their service is dated.

[Jsyedinak]

They won't - It will need to be an LTE (4G) version that ATT and Verizon will be going to starting Next Year - at least as far as Verizon is concerned.

Originally Posted by davebarnes

Why would Apple manufacture a CDMA iPhone?
R&D expense for a phone that would only work on one carrier in the entire world.
More complicated supply chain issues.

[Jsyedinak]

Originally Posted by Judgegavel

I find just the opposite, if I go to the VZ store I sometimes had to wait 1 hr to talk to someone. I've never had any problems with/at AT&T. I also get horrible reception on VZ phones in my house (and I'm in the middle of NYC) while AT&T comes in crystal clear.

TDMA is a dying technology, until VZ switches their service is dated.

It's CDMA, not TDMA! On Verizon Customer Service there is a BIG Difference between the Personal Side and the Coporate Side. In my opinion being a telecom manager for a large manufacturer Verizon's Corporate Systems and Service are very good / easy to work with, but agree that on the Personal Side a big majority of Verizon Store employees are clueless and what's worse pretend like they know what they are talking about.

[telemaque]

Here, here, Jerseymac: a little choice would be nice.

Hopefully the FCC will step in, because rumor has it that AT&T got another 2 years of exclusivity with the iPhone 3GS.

[Ronbo]

Originally Posted by Jerseymac

We just want choice. Give us a phone for each carrier. Give us non glossy options on the Mac. You know we'll pay extra for it.

I see some of the AT@T defenders have returned. Not mad about MMS and tethering anymore?

I'd like a choice. I think that would erase the biggest complaint about the iPhone in the US.

I've always been a little surprised at both the people who hated AT&T and the people who loved them. Maybe it's a blind spot of mine, but prior to the iPhone, I used Sprint, AT&T, T-mobile. I didn't especially like any of them, but I didn't much see them being different from one another either.

The following comments are from someone who could switch carriers and forget it the next day...

At least AT&T was flexible enough to sign with Apple. Verizon, if I recall, was so stuck in the old mindset of uber-control that they refused. AT&T has gotten a few black eyes during their iPhone years, and I think they pretty much earned some of them (MMS and tethering). But on the other hand, sometimes when I hear them being criticized, I find myself thinking "Don't the other guys pretty much play the same game?"

I don't tether, but I'd imagine that tethering would suck lots more of AT&T's bandwidth. And they'll no doubt get criticized for that too. I have an unlimited data plan. But it's not unreasonable to admit that the cost for this data plan were based on a very calculated prediction of how much bandwidth the average user would consume. I suspect that (1) they were surprised at how much bandwidth we really DO use, and that (2) the extra bandwidth entailed with tethering is quite terrifying to them. They know it'll be a huge hit on their network, and they know people are gonna throw the "unlimited" word in their face. I imagine the real stalling point is just trying to find a way to limit it and monetize it.

The MMS problem seems to be a different matter, and I think that counts as a genuine black eye for them, but I don't understand the roadblock from there standpoint. But the tethering thing... that just doesn't sound all that evil, to me. It just sounds like pragmatism. And personally, I don't look forward to tethering becoming widespread, because it seems like my iPhone speeds will go down.

Maybe I'm wrong. Like I say, I'm not too much into the partisan stuff between carriers. I'm far too distracted by my own partisan issues between the OS vendors

[dasein]

Originally Posted by floccus

Two important flaws I can see:

2. Since Apple won't make a CDMA iPhone (face it people, they won't, end of discussion, unless its for China...), even if they did switch over to making a LTE version next year only for Verizon,

They most probably already have CDMA prototypes up and working, just as they did for ATT before they sold them on it years ago. Things get complicated with LTE, because all carriers will be moving to that well before whatever 4G turns out to become...that includes BOTH ATT and Verizon. You want to get your best deal when ATT comes asking for an extension? Show up with a fully functioning CDMA iPhone.

[solipsism]

Originally Posted by telemaque

Here, here, Jerseymac: a little choice would be nice.

Hopefully the FCC will step in, because rumor has it that AT&T got another 2 years of exclusivity with the iPhone 3GS.

Choice is great, but exactly what would this do for consumers if Apple was not allowed to offer an exclusivity for the iPhone to a carrier? Would this prevent other vendors and carriers from also having exclusivity, or just Apple? Would this prevent AT&T from selling the iPhone and/or marketing the iPhone in their stores? Would this prevent AT&T from subsidizing the iPhone? Would this prevent Apple working with AT&T to bring new services to the device that otherwise would not get developed? Would this require Apple to make another device that works on T-Mobile’s 3G, Sprint and Verizon?

I don’t see any viable change coming about from such a motion with the disconnected US mobile setup. The government should have stepped in a long time ago to get the US on mobile technology path. Now we have to wait until LTE is in place and GSM, WCDMA, CDMA, and CDMA2000 are near obsolesced before it’s resolved. I say ’near’ because I figure by then there will be small, power-freindly chips that have all those radios in one. It seems like such a decision would merely make the iPhone sold in Apple Stores unlocked at an inflated full retail price. Since there is no discount for the iPhone being in or out of contract there is no benefit for the average US consumer, regardless of the carrier they use.

Originally Posted by dasein

They most probably already have CDMA prototypes up and working, just as they did for ATT before they sold them on it years ago. Things get complicated with LTE, because all carriers will be moving to that well before whatever 4G turns out to become...that includes BOTH ATT and Verizon.

I think Sprint is still banking on WiMAX for their 4G tech at this point. Though they’ll probably be absorbed before LTE is prominent enough to make an impact on mobile phones.

You want to get your best deal when ATT comes asking for an extension? Show up with a fully functioning CDMA iPhone.

That is what I’d do. There is no SIM card required with CDMA, the voice algorithm is better than GSM, and use CDMA for voice with CDMA2000 for data does assist in battery usage when measuring talk time with 3G turned on.

[telemaque]

Originally Posted by solipsism

There is no SIM card required with CDMA

That's an advantage? Then how do you use a phone with more than one provider? GSM allows me to use my phone with different providers all over the world just by changing the SIM.