Verizon IPhone Should Scare AT&T

With the iPhone playing such a crucial role in the growth of AT&T wireless business in recent years, the question of what will happen when, and if, the company loses its exclusive deal for the signature Apple device has always loomed ominously in the background.

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.

Ralph de la Vega

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?

3 comments about "Verizon IPhone Should Scare AT&T ".
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  1. Heidi Claunch from SheKnows, May 19, 2010 at 7:40 p.m.

    "But if Apple decides not to renew the current deal, would you dump AT&T for Verizon or another carrier to power your iPhone? "

    - Yup. I LOVE the phone. Although AT&T has great customer service (as far as I have had to deal with them anyway), their network leaves a lot to be desired.

  2. David Diekmann from Bloomstruck, May 20, 2010 at 7:07 p.m.

    The ONLY reason why I'm still with AT&T is because of the iPhone my wife got as a Christmas gift~she was so excited, I couldn't break her heart (and risk more than the usual marital strife!) with a churn to Verizon. I've spent tens upon tens of hours on the line with AT&T trying to resolve connectivity issues with my first, second, and third BBerry Bolds (their CSReps always blamed the device), finally downgrading to a 2G Curve....which is now dropping calls as bad as the Bold! So what is it: handheld or network?

    Bring on a new vendor and let the free market sort it out!

  3. Jonathan Mirow from BroadbandVideo, Inc., May 21, 2010 at 5:54 p.m.

    Droid on Verizon is the way to go. Great network, great CSRs - I fought with BlackBerry for months (and three phones), it simply wouldn't function as advertised. With millions of apps, a killer network and now Google stepping up to the pump with Google TV, I smell a winner.

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