Verizon iPhone Coming in January: Report

Verizon Wireless will begin selling an Apple iPhone in January, “Taking Stock” host Pimm Fox announced on Bloomberg Television June 29.
Fox hosted analysts Brian Marshall, with Gleacher & Co. (formerly Broadpoint AmTech), and Chandan Sarkar, with Auriga Securities, who each addressed the information as a given. While Marshall and others suggested months ago that January 2011 was the likely date that AT&T would lose its exclusivity contract with the iPhone, Verizon and Apple have yet to officially confirm the date-or such a deal.
What would a Verizon iPhone mean for AT&T?
“It’s going to be problematic,” Marshall told Fox. “I think it’s good that AT&T’s actually securing all the upgrades for the iPhone 4 and locking in those customers for the next couple years. But clearly when the iPhone comes to Verizon early next year, I think that’s going to be problematic for post-paid net ad growth at AT&T.”
Marshall added that Apple has had a “sweetheart deal” with AT&T, which he estimates pays Apple $450 for the activation of each iPhone. Verizon, like Apple’s current international carrier partners, is more likely to pay Apple $300 per iPhone.
(iSuppli recently estimated that each iPhone 4, in hardware materials, costs Apple $187.51.)
In addition to the discounted deal, scoring an iPhone contract should initially be a positive for Verizon, said Sarkar.
“I think that when they launch next year, they’re probably going to end up using this iPhone as the spearhead to their new fourth-generation network, what they call long-term evolution, or LTE,” Sarkar said, “and I think that combination is going to be quite potent in the marketplace.”
He added, however, that “LTE is going to be a brand-new technology, and as much as we’d like to think that just by moving away from AT&T everything’s going to be perfect, it’s probably going to have some issues early on, I suspect.”
Marshall similarly noted that the challenges AT&T has faced in supporting its tremendous iPhone user base likely won’t be unique to AT&T. While calling Verizon the currently superior wireless network, Marshall described AT&T as being “brought to its knees” by the demands iPhone users placed on its network. To point, on June 28, AT&T announced the completion of additional improvements to its service in areas of New York City; like San Francisco, its dense user base has made it particularly difficult for AT&T support at a high level.
Marshall added, “I worry about the same thing for Verizon.”
However, unlike the all-you-can-eat data deals AT&T shouldered through the iPhone’s early years, Verizon executives have said they’ll offer tiered pricing plans on their 4G network.
Verizon plans to begin rolling out its 4G LTE network later this year, and to cover 25 to 30 markets-or approximately 100 million people-by December.