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You are here: Home / Mobile Tech / AT&T Deal May Block Verizon iPhone
AT&T Five-Year Deal May Keep iPhone from Verizon
AT&T Five-Year Deal May Keep iPhone from Verizon
By Jennifer LeClaire / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
MAY
11
2010
Does AT&T still have a stronghold on Apple's iPhone in the U.S. or not? Despite old newspaper reports and newly revealed court documents, analysts still aren't sure what the truth is.

As the story goes, on May 23, 2007, USA Today reported that AT&T had exclusive distribution rights on the iPhone for five years. The paper called that "an eternity in the go-go cell-phone world." According to the USA Today article, Apple is barred until 2012 from developing a version of the iPhone for CDMA wireless networks. That effectively locks out Verizon Wireless and Sprint Nextel.

The latest revelation comes from court documents in a class-action lawsuit that alleges Apple is running a monopoly. Apple's response seems to confirm its exclusive five-year iPhone deal with AT&T: "[T]here was widespread disclosure of [AT&T's] five-year exclusivity and no suggestion by Apple or anyone else that iPhones would become unlocked after two years."

A New iPhone Version?

According to Michael Gartenberg, a partner at Altimeter Group, the reason that confirmation of the five-year deal may be important is evident: An exclusive agreement would mean consumers looking for a Verizon iPhone this year or next shouldn't hold their breath. The rumors of a Verizon or Sprint iPhone seem to go up in smoke based on these court documents -- unless.

The unless is interesting. Gartenberg said the exclusive iPhone deal between AT&T and Apple was presumably put together about three years ago.

A lot can change in three years, especially given all the issues AT&T has had supporting iPhone customers on its network. A customer satisfaction survey from ChangeWave Research indicates AT&T has the lowest customer satisfaction rate and the most dropped calls among its carrier peers.

There's yet another unless. AT&T has an exclusive deal for the iPhone -- unless the terms of that deal changed since the 2008 class-action lawsuit.

"We don't know if the deal has been modified, amended, extended or shortened. We don't know what devices it applies to," Gartenberg said. "Was it the original iPhone that AT&T had the exclusive rights to sell for five years? Was it every iPhone that they have an exclusive for? No one knows specifically what the details are, or what devices it applies to or what changes, if any, have been made."

Competing on Operating Systems

As Apple sticks with its single-carrier approach, Google's Android is gaining ground in the marketplace because multiple carriers are adopting various smartphone models built on the operating system. With this open strategy, Android has surpassed Apple's operating system to take the number-two position, according to new research from the NPD Group.

NPD's wireless market research reveals RIM holds 36 percent of the market while Android has grabbed 28 percent and Apple holds its 21 percent. Phones like the Droid, Droid Eris and BlackBerry Curve have helped boost Android's status in the smartphone marketplace.

While Google competes on the merits of its operating system, AT&T's competitors are vying for market share with special offers that aim to squash the appeal of the iPhone. With its 30 percent of the smartphone market, Verizon is working to edge out AT&T (and its 32 percent market share) with two-for-one deals on all its smartphones. But without some version of the iPhone to sell on its network -- and with the newly inked iPad deal -- AT&T may continue to hold its slight lead in the carrier market.

Read more on: AT&T, Apple, iPhone, Verizon, Sprint
Tell Us What You Think
Comment:

Name:

Nathan:
Posted: 2010-05-12 @ 3:49am PT
With all of the amazing Android phones hitting the market it won't be long before consumers understand that "Yes the iPhone was wonderful, however, that time has passed. There are better devices on the market, that can do more and are on a better market." Consumer education is the key.

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