ATandT Prepared to Lose Apple iPhone: SEC Filing

 
 
By Nicholas Kolakowski  |  Posted 2010-08-09 Email Print this article Print
 
 
 
 
 
 
 

Apple's iPhone could appear on carriers besides AT&T by early 2011, an eventuality for which AT&T seems prepared in a recent SEC filing. Rumors also suggest that Apple is preparing an iPhone for use on Verizon's network.

AT&T could be preparing to lose its exclusive rights to the iPhone in the United States, according to the carrier's latest 10-Q filing with the Securities and Exchange Commission. If the oblique statements in that filing prove accurate, it could validate analysts' claims that the iPhone will appear on other carriers starting in early 2011.

According to the Wall Street Journal, which quoted from AT&T's filing on Aug. 7, speculation about AT&T losing iPhone exclusivity has dampened the carrier's stock price.

"We believe offering a wide variety of handsets reduces dependence on any single handset as these products evolve," reads AT&T's SEC filing for the quarter ended June 30. "In addition, offering a number of attractive handsets on an exclusive basis distinguishes us from our competitors."

That reference to a "single handset" has been widely interpreted by media and analysts as "iPhone," which has helped propel AT&T's smartphone-related revenues since its 2007 release. However, the device's popularity has also exerted considerable pressure on AT&T's network, with resulting service issues and irate customers.

Despite those problems, the AT&T filing seems to suggest that, if and when iPhone exclusivity ends, the carrier has a plan to retain its customers: "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."

The filing also posits that loss of handset exclusivity would have little material effect on the carrier's bottom line: "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."

Rumors have circulated for weeks that the iPhone could arrive on T-Mobile as early as the third quarter. "From our understanding, this is becoming closer to reality than ever, with sourcing indicating it could happen as early as this fall or by [the first half of 2011]," Kaufman Bros. analyst Shaw Wu wrote in a June 10 research note. "While the general consensus is around Verizon (which we believe will happen eventually), we continue to believe that T-Mobile USA is the most likely candidate given its use of similar cellular technology such as AT&T."

Other analysts have suggested that the iPhone will arrive on Verizon beginning in 2011, as part of that carrier's larger push for its 4G LTE (long-term evolution) network. Barclays Capital analyst James Ratcliffe suggested in a June 22 research note that between 500,000 and 1 million AT&T customers, dissatisfied with their carrier service, could jump onto Verizon's network should that occur. 

According to an Aug. 8 TechCrunch report, quoting "sources with knowledge of this entire situation," Apple has already ordered Qualcomm CDMA chip sets for use in a Verizon iPhone.


 
 
 
 
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
 
 
 
 
 
 
 

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