AT&T warns exclusivity for 'a number of attractive handsets' will end

in iPhone edited January 2014
In its latest filing with the U.S. Securities and Exchange Commission, AT&T has made mention of its exclusivity agreements for smartphones, and attempted to argue that the company would remain strong after those expire, though Apple's iPhone was not specifically named.

Filed late last Friday, the 10Q from AT&T was interpreted by Steven Fox, analyst with CLSA, to mean that the wireless carrier is attempting to prepare investors for the end of exclusivity of the iPhone. He noted the addition of "significant new language about exclusivity," which he said suggests Apple could add Verizon as a carrier in the U.S. by early 2011.

"Offering a number of attractive handsets on an exclusive basis distinguishes us from our competitors," AT&T's filing reads. "As these exclusivity arrangements end, we expect to continue to offer such handsets (based on historical industry practice), and we believe our service plan offerings will help to retain our customers by providing incentives not to move to a new carrier."

AT&T's statements are an effort to ensure investors that the expiration of exclusivity agreements will not spell doom for the company. Of course, the biggest exclusive of all for AT&T is the iPhone, which has only been available on one carrier in the U.S. since the device first launched in 2007.

"Although exclusivity arrangements are important to us, such arrangements may not provide a competitive advantage over time, as the industry continues to introduce new devices and services," the filing reads. "Also, while the expiration of any of our current exclusivity arrangements could increase churn and reduce postpaid customer additions, we do not expect any such terminations to have a material negative impact on our Wireless segment income, consolidated operating margin or our cash from operations."

While the new statements are intriguing, Fox's conclusion is speculation at most, as neither Apple nor AT&T have revealed the terms of their current agreement publicly.

But it wouldn't be the first time AT&T has spoken of a post-exclusivity world, as earlier this year, one of the company's executives said he wasn't concerned about the iPhone becoming available on other carriers. Ralph de la Vega, president and CEO of AT&T's Mobility and Consumer Markets division, downplayed the effect the loss of exclusivity would have on business.

De la Vega said that his company's family talk and business discount plans are "sticky" and keep customers with the carrier, regardless of options from other providers. He believes AT&T will retain iPhone users even if Apple's immensely popular handset becomes available elsewhere.

Rumors of a CDMA iPhone compatible with the Verizon network in the U.S. have persisted for years, but the latest reports have suggested such a device could debut in January 2011. Those reports indicated that manufacturing of the hardware is set to begin late this year.

Apple and AT&T originally agreed to a 5 year deal through 2012 for exclusive access to the iPhone. However, contracts can be amended, canceled or breached due to a variety of factors.

The relationship between Apple and AT&T has been a controversial one, as some customers have been vocal in their displeasure with AT&T's service. One recent behind-the-scenes report suggested that Apple nearly ended its partnership with AT&T multiple times over a myriad of issues, as Apple was unwilling to restrict the Internet capabilities of its phone, and AT&T struggled to meet the overwhelming pressure the smartphone placed on his network.


  • Reply 1 of 75
    damn_its_hotdamn_its_hot Posts: 1,198member
    Now we can believe the Verizon rumors.
  • Reply 2 of 75
    Just pull it out of the hat already
  • Reply 3 of 75
    daharderdaharder Posts: 1,580member
    The most 'attractive handset' being (of course)... wait for it... Apple's iPhone.
  • Reply 4 of 75
    I know what that means...


    I will believe it when an Apple exec is holding a press conference with a new carrier exec.
  • Reply 5 of 75
    eyepadeyepad Posts: 39member
    A few months ago, I would have said Vzw will NOT get an iphone until LTE is going strong and there would never be a CDMA version.

    However, with the higher ETF and new data packages on AT&T, makes me think maybe Apple is going to go ahead with the CDMA iphone.

    What I would love to see: iphone, droid X, motorola droid II, incredible, evo release on ALL 4 US networks.

    I for one, Love AT&T. I worked at Vzw and you couldn't pay me to use them again. 3G so slow it makes boost mobile look good and their extra 3 bucks for visual voicemail. No thanks.

    I don't care if vzw gets the iPhone or not. I honestly hope sprint and t-mobile get it before vzw, just because. I will stay with my Really Fast 3.5G connection and my WONDERFUL roll-over, AT&T's awesome customer support and my grandfathered unlimited data.
  • Reply 6 of 75
    maccherrymaccherry Posts: 924member
    if Verizon does get the iphone will it really be any better contract wise? Will Verizon try limiting the itunes ecosystem in favor of that nasty a** Vcast crap?

    It remains to be seen huh.
  • Reply 7 of 75
    Originally Posted by Damn_Its_Hot View Post

    Now we can believe the Verizon rumors.

    From yesterday:

  • Reply 8 of 75
    damn_its_hotdamn_its_hot Posts: 1,198member
    Originally Posted by Damn_Its_Hot View Post

    Now we can believe the Verizon rumors.

    I should have noted that it makes me no difference - since I will stick with AT&T. I have had a good experience with them. Good reception, no dropped calls, no complaints in general. It will be interesting to see how people react to Verizon once there is a choice - it is the savior now - I bet it'll be something totally different when people start using it and they are overloaded.
  • Reply 9 of 75
    lkrupplkrupp Posts: 10,557member
    Originally Posted by maccherry View Post

    if Verizon does get the iphone will it really be any better contract wise? Will Verizon try limiting the itunes ecosystem in favor of that nasty a** Vcast crap?

    It remains to be seen huh.

    I'm a firm believer in the "grass is greener" philosophy. At&t and Verizon are the two biggest cellular carriers in the U.S. They didn't get there by screwing their customers and having crappy networks. For all the caterwauling about at&t's network it's not any better or worse than Verizon's, no matter what the at&t haters/Verizon fanboys pontificate. We just hear their loud screams the most, just like very other issue of the day that is blown way out of proportion by the anonymity of the internet. Antennagate comes to mind.

    If and when the iPhone comes to Verizon, or any other carrier, there will be fans and haters. The iPhone will be blamed by some, Verizon by others. There will be no mass exodus from at&t as the whiners and screamers predict for all the reasons discussed by at&t executives.

    What will be interesting to see is what effect the iPhone will have on Android sales. At&t already has a number of Android phones available. To my knowledge we have no hard information of how Android is doing within the at&t network vs the iPhone. Surveys seem to indicate that a good number of Android users would switch to the iPhone if it were available on their carrier. We already know that Android is not going all that gangbusters in other parts of the world where the iPhone is available on multiple carriers.
  • Reply 10 of 75
    mstonemstone Posts: 11,510member
    They will play it like this to the last possible moment to fulfill contract agreements. When iPhone is available on other networks, it will be officially announced the day before it goes into effect and not sooner.
  • Reply 11 of 75
    postulantpostulant Posts: 1,272member
    Palm took a dirt nap. Who's next? Any takers?
  • Reply 12 of 75
    A coworker of mine recently got the latest and greatest HTC Android phone from Verizon. She was so proud of it too when she got it. Then Verizon advised her last week to upgrade to Android 2.2. Big mistake. In the process, the update wiped out all her apps and contact information, and she now claims that her phone runs slower. She is so P.O.'d now. I wonder if she will be one of those folks who decide to switch to an iPhone if it becomes available on Verizon.
  • Reply 13 of 75
    john.bjohn.b Posts: 2,740member
    OK, ***now*** I officially believe that Verizon is getting the iPhone.
  • Reply 14 of 75
    esummersesummers Posts: 953member
    I wouldn't worry either. They got quite a head start. That pretty much means they got everyone in the middle (that didn't have loyalty to a certain carrier) and probably converted a few customers to their side from other carriers. The customers that they might lose are the ones that probably didn't have very good service in their area anyway. They probably will not need to pay Apple as much without exclusivity so it might be a slight positive to their profits initially.
  • Reply 15 of 75
    bushman4bushman4 Posts: 848member
    Lets see how service is on Verizon when they get the Iphone. Of couse they'll gain hundreds of thousands of customers.....will it slow down their system????
  • Reply 16 of 75
    Originally Posted by Damn_Its_Hot View Post

    I should have noted that it makes me no difference - since I will stick with AT&T

    For those who own shares, the stock price impact could be huge.
  • Reply 17 of 75
    esummersesummers Posts: 953member
    Originally Posted by DaHarder View Post

    The most 'attractive handset' being (of course)... wait for it... Apple's iPhone.

    They said "a number of attractive handsets"... so must be: iPhone, iPhone 3G, iPhone 3GS, and iPhone 4.
  • Reply 18 of 75
    esummersesummers Posts: 953member
    Originally Posted by anantksundaram View Post

    For those who own shares, the stock price impact could be huge.

    Not really. AT&Ts dropped call problem is as overhyped as antennagate. There are a few areas that do have legitimate problems, but overall they aren't too bad. Besides... if the rumors are true, it is just a CDMA phone (inferior to AT&Ts much faster 3G network). Things will get more interesting when AT&T and Verizon battle over 4G.
  • Reply 19 of 75
    elliots11elliots11 Posts: 285member
    I put off getting an iPhone 4 just to avoid renewing with AT&T since I'm month to month. I put off the 3GS too, which I'm about to get used to hold me over since my 3G is super slow now.

    AT&T's service in my area is not awful, it's also not good. Voicemails arrive when the phone hasn't rung, dropped calls, the usual. But really, it's screwing me over on roaming when I was with them the last time that did it. Wouldn't have ever been with them again if it weren't for the iPhone, and that was a hard thing to make myself do. (At the time Android wasn't mature enough and I couldn't wait any more). As soon as iPhone is on Verizon or Sprint, I'm gone. Yes it's called holding a grudge, but companies should always treat their subscribers right if they want to expect loyalty.

    As for the whole CDMA is an old technology argument, yes, maybe, but it's also used by the most reliable networks. T-Mobile was GSM and highly unreliable when I was on it (maybe better now), and AT&T is only moderately better. I would also bet that the CDMA iPhone has a 4G antennae. I'm sure the major carriers have some idea of what they're going to use and will tell Apple to build it in. The 3GS came with upgraded HSDPA or whatever before it was even widely available. So I don't expect that to be too big of an issue. I'll probably buy it either way. Good news day.
  • Reply 20 of 75
    Hope the iPhone goes to other carriers soon. This should ease the network "congestion" that AT&T has been experiencing since 2007.
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