Apple, Verizon Negotiating over iPhone: Analyst

Apple and Verizon are negotiating over porting the iPhone onto the carrier, according to one analyst, but T-Mobile and Sprint are waiting in the wings should those negotiations falter.

Apple will launch the iPhone on another carrier in 2011, according to a new research note.

That note, from Shaw Wu at Kaufman Bros., suggests that the iPhone could arrive on both T-Mobile and Sprint, which in turn would possibly delay the device's long-expected arrival on Verizon until 2012. AT&T currently holds exclusive rights to the iPhone in the United States.

"It is notable that signing up both T-Mobile USA and Sprint would almost be the equivalent of Verizon (in terms of subscribers)," Wu wrote to investors, as reprinted on blogs such as Apple Insider. "For point of reference, AT&T has 90 million wireless subscribers compared to 93 million at Verizon, 48 million at Sprint, and 34 million at T-Mobile USA."

That being said, Wu added, Apple has an added incentive to push the iPhone onto Verizon in order to blunt Android's momentum on the carrier: "What better way to do that than where Android has seen the majority of its success?" The analyst hinted that negotiations between Apple and Verizon are currently underway; but should they falter, the one-two combination of T-Mobile and Sprint could substitute in Apple's quest to expand the iPhone's reach.

Wu's most recent research note somewhat echoes an earlier one published June 10, which suggested the idea of the iPhone on T-Mobile in either late 2010 or early 2011.

"From our understanding, this is becoming closer to reality than ever, with sourcing indicating that it could happen as early as this fall or by [the first half of 2011]," Wu wrote in that previous missive. "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."

At the time, he also wrote that, "We believe [Apple] needs to sign an additional U.S. carrier to sustain its high growth rates. ... Android's wins have been where iPhone isn't available and that could change dramatically if the iPhone were available on both carriers."

Wu's June note appeared at the same time as rumors that Apple and T-Mobile were in advanced talks over the iPhone, with the blog Cult of Mac claiming the device would arrive sometime in the third quarter of this year. An August study from market research firm Morpace estimated that 34 percent of current AT&T iPhone customers have declined upgrading to the iPhone 4, in favor of waiting for the smartphone's launch on a different carrier.

"It is clear that if the iPhone does become available on the Verizon network, it will impact the phone and carrier intentions of many consumers," read the Morpace report. "The study found that nearly a third of consumers are very likely or somewhat likely to purchase an iPhone if it is made available to Verizon."

Based on somewhat oblique comments in the carrier's latest 10-Q filing with the Securities and Exchange Commission, AT&T seems fully prepared to lose its exclusive rights to the iPhone in the United States.

"As these exclusivity arrangements end, we expect to continue to offer such handsets (based on historical industry practice), as we believe our service plan offerings will help to retain our customers by providing incentives not to move to a new carrier," reads the filing for the quarter ended June 30. "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."

But a break in the iPhone's exclusivity would almost certainly help other carriers' income.