10 Reasons Why ATandT Could Lose Ground Without iPhone Exclusivity

By Don Reisinger  |  Posted 2010-03-15

10 Reasons Why ATandT Could Lose Ground Without iPhone Exclusivity

Apple's iPhone is an unbridled success. The smartphone delivers an experience that has yet to be rivaled in the mobile market. It offers a design that satisfies consumer desire for a big, vibrant display that also fits easily into a pocket. Simply put, the iPhone is a revolutionary device that has earned its position as a leader in the marketplace. But there's one problem that it suffers from that Apple has yet to address: It's available exclusively on AT&T's network.

AT&T is, in many ways, the direct opposite of Apple. The communications company has been taken to task a number of times for its poor network. It has also been forced to weather attacks by competing companies regarding its 3G network's availability. AT&T has countered those complaints and done some things to improve its operation. But for all that it has done and all the improvements it has made, it can't quite keep from being defined by the iPhone.

As Verizon Wireless and T-Mobile continue to thrive without the iPhone, AT&T's operation relies upon Apple's smartphone. And if (or perhaps when) Apple makes the iPhone carrier-agnostic, AT&T could have trouble without it.

Here's why:

1. Network troubles

In recent years, problems with AT&T's network have been a constant issue. Users complained of slow 3G, poor availability and too many dropped calls. In recent months, AT&T has done a much better job of improving its network, and it has paid off. But a perception remains that AT&T's network pales in comparison with competing services. Without the iPhone, that issue will be magnified.

2. Competition

Without the iPhone, AT&T will be forced to compete without a single advantage. If we take the iPhone out of the equation, AT&T is the same as Verizon Wireless. The iPhone is the "killer phone" that has helped AT&T take a leading role in the mobile market. Without Apple's help, its main competitive advantage is gone. And companies like Verizon Wireless and T-Mobile will undoubtedly capitalize.

3. Phones

Take a look at the phones AT&T offers aside from the iPhone. Notice anything interesting? They are, for the most part, the same devices offered everywhere else. Plus, none of those phones can match the iPhone. That's a problem. If AT&T wants to maintain the kind of success it has enjoyed to this point, it needs to offer better phones than competing companies.

4. Where's the benefit?

What's the real benefit of becoming an AT&T subscriber? For some folks, it might mean saving money on plans, since family members are on the same network. It might also mean better coverage in a particular area. But any subscriber on any other network can make the same claims. Aside from AT&T, no single carrier currently provides customers with a benefit over the competition. If AT&T loses iPhone exclusivity, it will lose that single benefit of being an AT&T subscriber.

The iPhone Helps AT&T Retain Customer Loyalty

5. What about pricing?

For the most part, AT&T offers several plans and phones for about the same price as the competition. That's not good enough. Once again, if AT&T really wants to be something beyond the iPhone's network provider, it needs to have an advantage. Offering better deals on service and equipment is a good first step.

6. Popular opinion

AT&T, like its competition, is not very well liked by customers. The company has suffered from customer service woes, problems with its network and criticism over its involvement in Apple App Store policies. All that has combined to make AT&T somewhat disliked. If AT&T really wants to enjoy success beyond the iPhone, it needs to change popular perception of its brand.

7. Draconian policies

AT&T's contracts are tough to get out of. And, unfortunately, the fees associated with getting out of a contract with AT&T are quite high. The iPhone has helped to quell some of the reaction to those fees. But if the iPhone is made available through all carriers, will those policies cause AT&T to lose subscribers? It's tough to say, since other firms in the space have similar regulations. But it certainly won't help.

8. The future will be different

For years, the mobile phone market has operated the same way. In many cases, AT&T has simply followed the industry's core practices since its inception. Because of that, it's hard to find fault with everything it does, since it's just following the industry's lead. But that will need to change soon. Customer habits are changing. Google is offering a new phone retail idea that could revolutionize the market. And with the popularity of the iPhone and Android-based devices leading the charge, mobile carriers are losing some of the power they once had. AT&T sits at the middle of that power struggle. If it loses the iPhone, it might be difficult for the company to adapt to the changing times.

9. The uniqueness is gone

Without the iPhone, AT&T loses its uniqueness. For the past few years, the carrier has operated as a unique brand in the marketplace and it has enjoyed success because of it. Once AT&T loses that uniqueness, there's not much more it can do to coax subscribers to its network other than to target the competition in areas where it feels it has an advantage. Being unique means everything in the mobile business. AT&T can't forget that.

10. What else is there?

Let's be honest: AT&T is little more than the company that offers the iPhone. As mentioned above, it has no advantage over other carriers besides Apple's smartphone. It fails to distance itself from the practices that have made carriers so hated. And it continues to engage in poorly executed strategies to maintain its fragile hold over the market. The iPhone is the main reason for AT&T's success. Without it, the company's position in the market would be tenuous at best. AT&T knows that. And it understands that it needs to get to work on improving its operation now. After all, the iPhone won't be exclusive to its network forever.

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