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AT&T SEC filing downplays risks from losing iPhone exclusive

updated 11:55 pm EDT, Fri August 6, 2010

ATT filing hints knowledge iPhone going away

AT&T in a newly published SEC filing discussing its latest results dropped strong hints that its iPhone exclusivity is nearing its end. The carrier devoted a significant section of its warnings to the risks that occur when "exclusivity arrangements end" and tried to minimize the potential effect. It didn't see the potential loss of Apple as a "material negative impact" and insisted that a non-exclusive wouldn't hurt customer turnover or the additions of regular subscribers.

Among the reasons for the public confidence were those given by wireless chief Ralph de la Vega when explaining why he didn't see massive defections from AT&T. With as much as 80 percent of customers locked into corporate or family plans, switching to another carrier would be difficult as it would involve moving the entire group, AT&T said.

While a GSM carrier that supports unlocked phones, the reality of American wireless networks would also make it impractical for some subscribers, AT&T added. Carriers such as Sprint and Verizon use CDMA and would force customers to buy new phones simply to use their networks; customers could switch to T-Mobile, but the switch from the 850MHz and 1,900MHz 3G bands to 1,700MHz and 2,100MHz would leave most phones without 3G. The increased diversity of smartphones should also soften the blow.

The SEC document is worded to avoid singling out the iPhone by name but is notable as previous quarters' filings made no mention of the effects of losing exclusivity, suggesting that AT&T is either about to lose or has already lost its sole rights to Apple's handset in the US. Apple had recently confirmed that its original deal with AT&T was to have ended in 2012, but multiple distinct rumors of a Verizon iPhone and now a T-Mobile equivalent have prompted beliefs that the deal has been shortened, either through the switch to subsidized pricing or in return for a temporary iPad exclusive.

Regardless of the term, analysts have so far disagreed with AT&T on the effect of losing the iPhone exclusive and have pointed to the steps it has taken to lock in subscribers. The company's decisions to roughly double early cancellation fees and extend iPhone 4 upgrade eligibility to all due in 2010 have been considered signs the provider is worried about losing customers. Many expect significant defections to any other US carrier if it offers the iPhone, with particularly strong shifts in the San Francisco Bay Area and other regions where AT&T 3G service is noticeably poorer than for its competitors.

The end of one-carrier sales in the US could damage Android's current supremacy, as it's unknown how many customers are choosing Android out of genuine desire for the products rather than the expense and possible quality problems associated with converting to AT&T for the iPhone.



By Electronista Staff
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Comments

  1. rtamesis

    Dedicated MacNNer

    Joined: Jan 2000

    +7

    Even playing field

    That'll depend on how good the networks of AT&T's competitors really are at handling all the data traffic once they get the iPhone. I know several people who wanted an iPhone but got an Android phone instead or just held off getting a smart phone simply because they didn't want to subscribe to AT&T.

  1. msuper69

    Professional Poster

    Joined: Jan 2000

    +4

    I will switch carriers ...

    Just as fast as I can. AT&T has had their chance.

  1. godrifle

    Fresh-Faced Recruit

    Joined: Jan 2006

    +1

    I'm not sure...

    ...what methodology AT&T is using to determine whether users will defect or not. I know I've never been survey about the likelihood, nor has any other AT&T subscriber that I know.

  1. mac

    Fresh-Faced Recruit

    Joined: Oct 1999

    +2

    This family plan will go

    most likely to T-Mobile when available. ATT's policy regarding not unlocking iPhones for customers who fulfill their contract is something I can't swallow. When I wanted to travel with my 2G iPhone in Europe, they would not unlock it to allow me to use European sim cards even though my contract was over. You may as well have a CDMA phone because they won't let you use your GSM phone the way it is meant to be used. Otherwise, I was happy with ATT service but I cannot support a company with this policy. I am putting off iPhone 4 purchase until it's available on T-Mobile. Congress needs to get involved because when a contract is over - people should be able to take their phone and use it with any provider. It's not ATT property after contract is over.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -1

    Re: I'm not sure...

    ...what methodology AT&T is using to determine whether users will defect or not. I know I've never been survey about the likelihood, nor has any other AT&T subscriber that I know.

    Well, if they haven't surveyed the 20 people you know, then their methods must be in question. I mean, it's not like they have 50 million subscribers or something...

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -6

    No concern

    Of course there's no concern. All they have to do is read the comments on MacNN. We all know that all the other carriers suck, and ATT happens to be the only good one. Why do you think Apple picked them?

  1. starwarrior

    Fresh-Faced Recruit

    Joined: Mar 2006

    0

    Two years to go

    However if WiFi buildout continues who will need them? Our family plan for iPhone and iPad work best when inter-netted. Usage patterns are changing from looking for a good AT&T tower spot to looking for a good WiFi spot. The home, dormitories, and even our cars now have them.
    Do you see it coming? Mr Apple is straddling the fence and seems to be ready to step off in the right WiFi direction. Time to start shorting AT&T and Verizon.

  1. aristotles

    Grizzled Veteran

    Joined: Jul 2004

    +4

    You people are hilarious.

    IF and that is a BIG IF, Verizon does implement LTE with voice that is compatible with LTE around the world, Apple will then release an LTE iPhone on both Verizon and AT&T in the US once the networks are ready.

    There will never, ever, ever be a CDMA iPhone.

  1. David Esrati

    Fresh-Faced Recruit

    Joined: Jun 1999

    +1

    What is AT&T smoking?

    I've heard people say they'd gladly pay the cancellation fee- and aren't worried, because they can sell their iPhone 4 to make up for it.
    I've not bought an iPhone 4 or a 3GS because I'm waiting for an iPhone from Verizon or Sprint.
    AT&T has been the worst carrier- and still hasn't provided tethering as promised.
    The company should be investigated for monopolistic policies that are anti-competitive.
    On the other hand- Apple better wake up. The droid army is increasing in size daily- thanks to the one carrier plan. January may be too late to stop the growth.
    If Apple was smart- they'd pay an early termination fee with AT&T and not miss the key Christmas buying season.
    It's time to realize that the days of being the only real smart phone on the market are gone. They need the platform to be as wide as possible to keep the apps store sales moving- because now that is where the real money is- not in the hardware.

  1. timlevin

    Fresh-Faced Recruit

    Joined: Aug 2010

    -2

    Clueless

    I see the whole company is clueless and not just customer service.

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