Verizon iPhone: Better for AT&T than Android


It's official. Today, the iPhone finally became available from a second mobile operator in the United States. You no longer need to sign on the bottom line with AT&T to use the most successful gadget ever released. With Verizon Wireless fully aboard the iPhone bandwagon, people in this country can finally choose between two carriers (America's largest pair) to provide service for their Apple smartphone.

Verizon started taking preorders for the device that transformed and modernized the wireless industry last week. It quickly stopped doing so, though, when a record number of people placed their iPhone orders.  Earlier this week, Verizon started delivering some of those iPhones to customers, ahead of today's nationwide roll out.

Today's Verizon launch--at its and Apple's retail locations, online and through Best Buy and a few Wal-Marts--means a number of current AT&T customers may look to abandon that carrier and its troubled wireless GSM network for the (supposedly) more reliable waters of Verizon's CDMA network. According to a survey by uSamp, a market research company, 26 percent of current iPhone users would leave AT&T for Verizon if they could. The leading reasons for wanting to switch carriers: dropped calls and wireless coverage.

However, whether AT&T customers looking to move to Verizon are already iPhone owners, users of some other cell phone or smartphone model, or are new to the whole smartphone experience, it may mean paying a hefty fee to break their current contracts. This very same dilemma applies equally to those wireless subscribers thinking of leaving Sprint and T-Mobile for a bit of Verizon's iPhone goodness.

AT&T, which held an exclusive on the iPhone for three-and-half years, is--for its part--doing its best to minimize the damage. For instance, a recent report suggests the carrier, which nixed all-you-can-eat data plans last year, is reinstating them for some eligible iPhone customers, with the hope of encouraging them not to jump ship to Verizon, who is--at least temporarily--offering an unlimited-data option for the iPhone at $30 per month.  It still plans to follow AT&T's lead and delete these types of plans across the board for all its smartphones sometime later this year. Meanwhile, AT&T, unlike Verizon, offers iPhone subscribers the choice of an entry-level $15 per month data plan.

Is AT&T or Android the loser now?

Verizon's millions of new Phone customers won't come from AT&T, at least initially. And, while it will certainly affect AT&T, with some customers certain to jump ship, Current Analysis Analyst Avi Greengart writes in a new report that "most Verizon Wireless iPhone buyers will come from Verizon Wireless itself." In fact, he predicts those who build mobile devices on Google's Android platform (i.e. Motorola, Samsung, HTC, etc.) are the company's with the most to lose. After all, Verizon has 93 million subscribers, many of which have waited a long time for a chance at the iPhone.

"The heaviest users and most disgruntled iPhone users at AT&T will switch, which may not be a bad thing for AT&T, but most AT&T iPhone users will stick with the carrier because they are on family or business plans," Greengart says. "The biggest impact will be felt by Android licensees selling phones at Verizon Wireless over the coming year or so as feature phone subscribers choose iOS over Android and some current Android customers switch when their contracts expire."

People generally assume poor planning and investing on the part of AT&T in its wireless infrastructure is to blame for the iPhones connectivity problems. While this may be true, there's a real possibility Verizon may run into similar issues once it picks up the millions of notoriously data-heavy iPhone users.

"What if it is simply a matter of too many iPhones overwhelming each cell tower?" notes Greengart. "Once a significant percentage of Verizon Wireless' customer base has iPhones of their own, the Verizon Wireless network could end up clogged, too."

Verizon is selling the iPhone for $199.99 for the 16-gigabyte edition and $299.99 for the 32GB model with a two-year service contract. This is the same as AT&T's pricing for the iPhone.  Without an agreement, the cost balloons to $649.99 and $749.99 respectively.  For $39.99 per month, you get 450 minutes of talk time, with an additional $20 adding unlimited texting. 

One nice feature Verizon offers that AT&T doesn't for the iPhone is the ability to use it as a MiFi-like mobile hotspot. For an extra $20 per month, users get a pool of 2GB of data to share with up to five devices via the iPhone's 3G data connection.  True, AT&T offers iPhone tethering for the same amount. But that is for one device at a time, and it is not separate pile of bandwidth--meaning whenever you tether a laptop to your iPhone, the data used is subtracted from your standard monthly data allotment.

Entry-level iPhone: Advantage AT&T

An important advantage AT&T has over Verizon, according to Greengart, is its ability to offer an entry-level iPhone. As Greengart points out, "AT&T is now selling the iPhone 3G S for just $49," an attractive price to draw feature phone owners up to the higher average revenue per user (ARPU) ratios of smartphones.

Since Apple first launched the iPhone in 2007--with then exclusive worldwide partner AT&T--it's moved an astoundingly 80 million units. And, with 16.2 million iPhones sold last quarter alone, there's no sign of things slowing down anytime soon.

Of course, Apple isn't alone in benefiting from the smartphone boom it jumpstarted with the first iPhone and (nearly as importantly) the App Store the following year. (Few note this today, but Apple implemented the latter after mistakenly committing to only supporting web apps with the iPhone.) Steve Jobs and company face stiff competition from RIM's BlackBerry mainstay and Google's Android juggernaut; today the global mobile platform leader, having recently overtaken also-ran Symbian.

Tomorrow, we may find out if struggling Nokia, still the leading mobile phone provider in the world, will dump Symbian and its long-in-development MeeGo operating system for Android and/or Microsoft's upstart Windows Phone 7 platforms. The customer-win would be a boon to Microsoft, which is struggling to regain its footing after the debacle of letting Windows Mobile rot for years and yet another feather in Google's already impressively coiffed cap.

iPhone 4 still has some minor drawbacks

Not that the latest edition of Apple's smartphone, the iPhone 4, is perfect. Like every earlier edition of the iPhone, you can't remove the battery from either the CDMA (Verizon) or GSM (AT&T and pretty much every other carrier in the world) version of the iPhone 4. And the iOS, used to run the iPhone, the iPad and the iPod still does not support Flash video and animations. There's also evidence Apple didn’t alter the antenna (remember antennagate?)in the iPhone 4 for Verizon.

Also, keep in mind, if you plan on using a Verizon iPhone outside the U.S., don't bother trying in most locations--save for places such as such as Mexico, South Korea and Israel where Verizon's inked roaming agreements. Like other CDMA-only phones, Verizon's iPhone 4 won't work in Europe and most parts of Asia where GSM--by far the most widely-deployed cellular standard worldwide--is leveraged by the majority, if not all, mobile operators. 

So, even if Verizon delivers clearer and more consistent voice service in this country (and that seems to be the consensus), it won't do you any good if you travel aboard. "International travelers, particularly those who travel to Europe frequently, should stick with AT&T," says Greengart.

The international-roaming situation for the iPhone may, according to reports, even out between AT&T and Verizon with the coming iPhone 5. That's because rumor has it the next-generation iPhone will sport a dual GSM/CDMA radio.

One big happy smartphone family?

If you go by Apple's usual timeframe, Apple's next-generation iPhone could become available early this summer. Rumor has it Apple will completely redesign the hardware of the iPhone 5 and it may add support for 4G LTE cellular-wireless data networking.  Reports also suggest the upcoming model  could run on Apple's new and powerful ARM Cortex A9-based A5  processor, feature Near-Field Communication (NFC) capabilities for mobile payments, video-calling over 3G, media streaming, a new-and-improved antenna (of course), etc.

In the end, Greengart thinks the iPhone landing on Verizon could turn out for the best for all involved, even AT&T. "Apple will sell millions of them, and Verizon Wireless subscribers will be extremely happy," he says. "While AT&T will undoubtedly take a hit as its most disgruntled customers switch to its bitter rival, the arrival of the iPhone at Verizon Wireless is hardly as dire for the carrier."

AT&T will lose some of its most disgruntled customers, keep most others, and-- perhaps --gives its network some breathing room as it continues to implement improvements.




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