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Verizon iPhone A Possible Boon for AT&T Customers…

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I’m basically locked into my AT&T iPhone contract, for a few reasons (not the least of which being I am the beneficiary of a hefty employee discount – Thanks mom!). So today’s announcement that Verizon will be carrying the iPhone 4 starting on February 10th doesn’t really affect me, nor does it affect those who are going to be tragically left behind — At least, not in the negative.

While AT&T may suffer among its investor base for losing its exclusivity, and an estimated 6 million customers over the next year, its customers might be able to see an increase in service and offers from a desperate AT&T who wants to maintain its lead in iPhone sales.

What has iPhone exclusivity to AT&T gotten consumers over the past 4 years? The worst cellular service in the nation (according to Consumer Reports), a strangled data plan which charges users for going over a certain amount of data per month, and a $20/month tethering plan tied to that data plan. For users looking at the Verizon offering, the ability to move into an unlimited data plan where the iPhone can be used as a local wifi hotspot is going to be rather enticing.

But many analysts have pointed out that Verizon’s offering might not be the panacea people think it is. While AT&T’s data plans may be limited (unless you’re grandfathered in – another reason I don’t want to leave AT&T just yet), they are also much, much faster. While this doesn’t result in “faster emails” as their commercials imply, it will result in faster podcast and app downloads and more reliable streaming of media content over the wireless network through services like Hulu Plus, Netflix or Pandora. And while Verizon might boast a strong signal now, many people are thinking that once the data-hungry iPhone arrives on its networks, it will create a similar strain there as well.

With approximately 15.6 million iPhone 4s sold over the last year, removing 6 million of these customers should create a tremendous ease in the network for AT&T users. That will translate to less dropped calls, faster data rates and greater overall satisfaction. Verizon’s #1 rating and AT&T’s dead last rating will more likely balance out, making an overall less-crappy service experience for iPhone users.

The immediate shock of the Verizon exodus might also have better benefits to AT&T customers, in the form of incentives offered to keep users around. Less strain on the data networks might result in lowered per-month rates, if AT&T needs to remain competitive with Verizon’s offering.

AT&T users who stay will probably benefit most if they are currently power users of their iPhone. Due to the architecture of Verizon’s network, the iPhone 4 will be incapable of simultaneously transmitting data and making calls. While this will not affect many people, for anyone who has ever used Google to answer a question while on a call, bank software to check their balance while on hold or Maps to help someone with directions or find a place to eat with someone you’re talking to, losing the functionality may make it feel like you’re using a second tier phone.

Finally, users rushing over to Verizon in February are going for an iPhone that is nearly 8 months old, and is on cycle to be replaced later this year. Their contracts will keep them locked into the current iPhone for 2 years, putting them very much behind the development cycle (by contrast, they would have the equivalent of an iPhone 3G today when their contracts expire in 2 years). While jumping ship to Verizon might make sense if AT&T doesn’t get a signal in crucial areas, it might be smarter to just wait a few months more to get in on the newest technology.

In any case, it’s hard to imagine a scenario where the Verizon iPhone doesn’t make AT&T better for its current and existing customers. The stockholders may suffer, but the increased competition will force AT&T to finally compete on an even playing field.

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  1. January 12th, 2011 at 20:06 | #1

    Good observations! I think you hit the nail on the head… almost. Too early to know. I share your AT&T circumstances with my current contract. Good job!

  1. January 12th, 2011 at 01:12 | #1