AT&T CEO: Exclusive iPhone deal won't last forever

Exclusive handset deals are helping ATT sign-up more new customers than Verizon, but exclusive probably isn't forever, admits AT&T's CEO

Exclusive handset deals are helping AT&T sign-up more new customers than Verizon, but exclusive probably isn't forever, admits AT&T's CEO. Post-exclusivity, AT&T's future doesn't look nearly as bright as its past. Verizon's lead looks solid.

Verizon said Friday it added 1.1 million customers in the second quarter. That's less than the 1.4 million AT&T reported a day earlier. However, Verizon remains the #1 provider of cellphone service in the U.S., with 87.7 million customers compared to #2 AT&T 79.6 million.

Much of AT&T's growth has come from exclusive deals with handset manufacturers, notably Apple for the iPhone and RIM for the BlackBerry Bold. But, those deals won't last forever, and then what?

AT&T CEO Randall Stephenson yesterday told attendees at a Fortune-sponsored conference that iPhone exclusivity probably won't last forever, but refused to elaborate.

What happens when Verizon gets iPhone--as is widely expected in 2010? I'd expect Apple's new customer sign-ups to fall like a rock and for its churn rate--reflecting the number of customers that leave--to skyrocket.

Like many iPhone users, I am an AT&T customer by coercion rather than choice. If you live in the U.S. and want an iPhone, that's the deal you have to make. AT&T customers seem to have far more carrier complaints and, given a chance, would have gladly chosen Verizon.

Some iPhone users will jump from AT&T to Verizon, given the chance, while knowledgeable new customers would have to be given a strong incentive to select AT&T over its more-respected rival.

Apple seems to have its AT&T issues, too, appearing to snub the carrier for its weak support of new iPhone 3GS features.

Or perhaps an exclusive AT&T deal will someday become an exclusive Verizon deal. Such a cold turkey separation is likely to significantly damage AT&T, especially as current iPhones are replaced by newer models.

Stephenson's admission makes me expect another U.S. carrier, probably Verizon, to have iPhones sooner than later. And AT&T may have given up on stopping that.

When exclusivity ends, AT&T may watch most of its iPhone-related gains slip away over a two or three-year period, as new models come out and customer contracts end.

David Coursey tweets as @techinciter and can be contacted via his Web site.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

David Coursey

PC World (US online)
Topics: Apple, at&t, smartphones, iPhone, iPhone 3GS
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