Apple iPhone Will Remain Exclusive to ATandT, Says Report

AT&T has been the exclusive U.S. carrier of the iPhone since it first debuted in June 2007.
 
When AT&T’s contract expires in 2010, many have speculated that Verizon will raise its hand for a CDMA version of the device. A new report from iSuppli, however, suggests that Apple may actually renew its contract and remain exclusively with AT&T—though Apple may pursue other opportunities with Verizon.
 
“Speculation is rife that Apple will end its exclusive U.S. iPhone service deal with AT&T when the current contract expires in June 2010 and begin to offer phones that work with the Verizon network,” said iSuppli analyst Francis Sideco in a statement.
 
“However, iSuppli doesn’t believe this will be the case,” Sideco added. “The main reason Apple is likely to stick with AT&T beyond 2010 is the relatively wide usage and growth expected for the HSPA air standard used by the carrier for 3G data.”
 
iSuppli expects HSPA wireless services, which include high-speed downlink packet access, or HSDPA, and high-speed uplink packet access, HSUPA, to rise from 269.1 million in 2009 to 1.4 billion in 2012. The EVDO standard used by Verizon, by comparison, is expected to grow from 2009’s 145.2 million subscribers to 304.6 million in 2013.
 
“The FCC investigation not withstanding,” said Sideco, referring to alleged pressure from AT&T for Apple to reject the Google Voice app from its App Store, “Apple has no reason to move away from its highly successful deal with AT&T, which has already generated strong growth in iPhone sales and is expected to fuel a continued expansion in the coming years.”
 
While Apple may have every reason to be thrilled with AT&T, the feeling may be less than mutual these days. An Aug. 17 study by Copenhagen-based Strand Consult found that carriers that offer the enormously popular iPhone not only have not increased their revenue, earnings or market share, but in some instances are worse off for offering it. “Some carriers have sent out profit warnings because of the iPhone,” reported Strand Consult.
 
AT&T, likewise, has spent billions of dollars updating its network and nonetheless faced criticism for its overly taxed network, as iPhone users delight in the device’s data-gobbling features. This situation will be exacerbated further when, on Sept. 25, AT&T finally makes MMS messaging capabilities available on the iPhone.
 
iSuppli analyst Jagdish Rebello agrees that iPhone users are bogging down AT&T’s network with data traffic created by the use and download of apps, but ultimately he puts the blame on AT&T.
 
“The real problem is that A&T has not found a way to monetize data traffic generated by the iPhone. With its voice service revenue on the wane, and the company unable to cash in on the increase in data traffic outside of the base data access fee, AT&T is finding it difficult to make the required investments in upgrading its network to support greater bandwidth.”
 
Rebello points that the customer ownership line between AT&T and Apple is blurring, which is a growing phenomenon in the global cellular industry.
 
“To sustain growth momentum in data revenues while working with [players such as Apple, Google, Yahoo, Nokia, RIM and Microsoft], wireless carriers will have to develop and implement carefully thought-out business models that also allow them to own the customer experience,” said Rebello. “Such moves are critical to ensuring the success of the operators and the sustained health of the mobile value chain.”
 
While iSuppli expects Apple to stick with AT&T for iPhone sales, the firm says Apple may still seek out a deal with Verizon to provide services for other platforms, such as the tablet device Apple is rumored to have in development.