Verizon IPhone Should Scare AT&T
What' s more, few rumors in the industry have been as evergreen as Verizon Wireless getting the iPhone within the next year, whatever the year, since the expiration of AT&T's exclusive agreement with Apple is still a matter of conjecture. The Verizon iPhone rumors have kicked up again lately, with speculation the fabled pairing will finally appear this fall.
But at a JP Morgan technology conference today, Ralph de la Vega, president and CEO of AT&T's Mobility and Consumer Markets division, expressed confidence that the iPhone becoming available from other carriers wouldn't lead to an exodus of iPhone customers to rival operators.
That's because 80% of AT&T customers are either on family-calling plans or business-discount plans that people are reluctant to pull away from, he said. So the loss of exclusivity wouldn't necessarily be the severe blow to AT&T that some have predicted. AT&T also reported its lowest overall churn rate ever of 1.3% in the first quarter, not much higher than Verizon's 1.07%.
But de la Vega may be underestimating the frustration of iPhone users with the carrier's much-publicized problems providing reliable service to the devices. My perspective may be skewed by being in New York -- where AT&T has faced particular service hurdles because of the high concentration of iPhone users -- but the chance to switch to Verizon seems like an opportunity many iPhone owners would jump at regardless of their current plan.
A study released earlier this month by market research firm ChangeWave found only 23% of AT&T users described themselves as "very satisfied" compared to 49% for Verizon, based on a survey of 4,040 consumers. Among the four major U.S. carriers, AT&T also had the highest dropped-call rate over the prior 90 days, at 4.5%.
While the survey didn't indicate what proportion of AT&T customers would switch to a Verizon iPhone, it found more than half of existing Verizon subscribers would likely move to an Apple handset. The report concluded that a Verizon iPhone would have a "profound and likely transformational impact on the industry" because of pent-up demand from non-AT&T customers.
Upgrading its network quickly is the best defense AT&T has against losing customers to a potential Verizon iPhone. To that end, de la Vega said Wednesday that service is improving in New York since the carrier undertook steps to bolster operations there late last year, but he said he was still "disappointed" at the lack of progress in San Francisco -- the other iPhone-centric city that's been the source of frequent complaints about spotty service.
Of course, the best solution of all for AT&T would be to extend its exclusive arrangement for the iPhone well into the future. But if Apple decides not to renew the current deal, would you dump AT&T for Verizon or another carrier to power your iPhone?