Analyst says iPhone is lifeblood of AT&T success

Posted:
in iPhone edited January 2014
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."
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Comments

  • Reply 1 of 140
    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???
  • Reply 2 of 140
    cmf2cmf2 Posts: 1,427member
    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.
  • Reply 3 of 140
    lkrupplkrupp Posts: 7,081member
    Quote:
    Originally Posted by bitzandbitez View Post


    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.
  • Reply 4 of 140
    dogcowdogcow Posts: 713member
    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.
  • Reply 5 of 140
    mstonemstone Posts: 11,510member
    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.
  • Reply 6 of 140
    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.
  • Reply 7 of 140
    Quote:
    Originally Posted by lkrupp View Post


    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.
  • Reply 8 of 140
    crees!crees! Posts: 501member
    Quote:

    "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.
  • Reply 9 of 140
    I may not have an iPhone. Only experienced the iPod Touch, and, I can clearly say that I don't doubt it.
  • Reply 10 of 140
    walshbjwalshbj Posts: 864member
    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??
  • Reply 11 of 140
    floccusfloccus Posts: 138member
    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.
  • Reply 12 of 140
    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
  • Reply 13 of 140
    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.
  • Reply 14 of 140
    Quote:
    Originally Posted by Dogcow View Post


    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.
  • Reply 15 of 140
    jerseymacjerseymac Posts: 408member
    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 [email protected] defenders have returned. Not mad about MMS and tethering anymore?
  • Reply 16 of 140
    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...
  • Reply 17 of 140
    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.
  • Reply 18 of 140
    dimmokdimmok Posts: 359member
    Dont care, either one....but they should lower the prices....I pay too much, just to have the iPhone.
  • Reply 19 of 140
    walshbjwalshbj Posts: 864member
    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...
  • Reply 20 of 140
    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
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