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AT&T's mixed iPhone message

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During AT&T's third-quarter earnings call yesterday, AT&T Mobility and Consumer Markets President and CEO Ralph de la Vega first trumpeted the company's third-quarter iPhone activations (3.2 million, the highest number ever) and then downplayed the company's reliance on the iPhone by saying that the iPhone was just one part of the firm's smartphone portfolio. This mixed message from de la Vega exemplifies AT&T's tenuous relationship with Apple--on one hand the carrier has benefited greatly from its exclusive Apple relationship, but on the other hand it has suffered tremendously from the network constraints that iPhone users' demand for data has generated.

But that love/hate relationship between AT&T and Apple may soon be over. De la Vega implied that the carrier's exclusive deal with Apple to carry the iPhone in the U.S. could end. When asked about the exclusive relationship, de la Vega didn't provide any specifics, but he did say that if AT&T loses that exclusivity it will still offer a better iPhone 3GS than potential competitors because the device runs on the company's HSPA 7.2 network. "The iPhone will work better on our network than on anyone else's network," he said.

AT&T is in the midst of upgrading its network to HSPA 7.2, and de la Vega said in yesterday's call that AT&T will only have six markets deployed in the fourth quarter of 2009 and only 25 markets deployed by the second quarter of next year. If the iPhone exclusivity deal is ending soon, I doubt that the company's HSPA network will be widely deployed enough to convince iPhone fans that AT&T offers a better option than other network operators, particularly Verizon Wireless. 

But it's not clear that Verizon will be launching the iPhone. Although it was rumored to be in discussions with Apple, there has been no confirmation of a deal. And with Verizon's recent ad campaign for the Droid device, which openly mocks the iPhone by telling consumers "iDon't have a real keyboard," and "iDon't run simultaneous apps," and adds that, "everything iDon't, DroidDoes," it seems unlikely that Verizon will be launching an iPhone any time soon.

Nevertheless, if AT&T doesn't already have a post-iPhone strategy, it better come up with one fast. Judging from de la Vega's comments, the company is putting a lot of faith in its new emerging devices division, which has secured several promising deals with ereaders such as the Barnes & Noble Nook and Amazon's international version of the Kindle. But it's going to take a lot of connected devices to make up for potential losses that the company may face if another U.S. operator launches an iPhone. -- Sue 

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I think the only other national operator in the US who will be able to sell the iPhone, besides AT&T, will be T-Mobile.

There's no point for Apple to develop a CDMA version (for Verizon or Sprint) of the iPhone. It is a dying network technology with a very small footprint.

Until 2011-13 when LTE devices will become more commonplace, HSPA/HSPA+ will remain dominant.

What did you expect AT&T to openly say to the public?

"Oh, my god! We can't lose the iphone! Our company will go down the drain! We'll lose millions of customers!"

That *HAD TO* say "no big deal if we lose the iPhone".

> There's no point for Apple to develop a CDMA
> version (for Verizon or Sprint) of the iPhone.
> It is a dying network technology with a very
> small footprint.

You better not tell that to the people that are installing Verizon cell towers.

Verizon coverage in the USA isn't just 1-2 times more than AT&T.

Verizon covers 5 *TIMES* more of the the US, than AT&T does.

A very small footprint???? Where?

"Small footprint...where?" Most of the industrialized world is where.

CDMA is going away, ask Verizon

Gonna have to sell a lot of e-readers at a $5/mo ARPU to make up for losing the iPhone exclusive.
If you listent to his comments, he is already resigned to the fact they'll lose the exclusive. He's already got his competitive strategy and sound bytes prepared for competing with T-Mob...

In the US, the only other mobile operator that would really make sense (and would hurt AT&T) would be Verizon. I know many people that if they had a choice today, would take their iPhone and move to Verizon. This is mostly because AT&T lacks the voice/data reliability and coverage of VZN. I'm hoping AT&T can resolve this soon...

Another reason it would not make sense for Apple to launch a phone with Verizon right now is the fact that CDMA technology which Verizon runs on can not do simultaneous voice and data. This would mean if you are on the phone your apps/email/etc could not access the internet.

I know I talk on the phone while using apps all the time.

I would be surprised if Apple doesnt wait to launch a phone with Verizon until they are running LTE on GSM technology. Only the future can tell.

Verizon will be lacking a lot more when they try to implement the GSM standard, which has much less saturation. This is a step Verizon will eventually have to do if they want to ever launch their LTE network, and then everyone will complain about coverage with VZ

"There's no point for Apple to develop a CDMA version (for Verizon or Sprint) of the iPhone. It is a dying network technology with a very small footprint."

My friend, you must be reading to many comment sections....If that's the case you're leaving out that G.S.M. is also "a dying network technology since it's being replaced also by L.T.E. & that's not just Verizon. You must work for At&t if you want to say C.D.M.A. is a small footprint. Also, your quote is the excepted timeline for in fact AT&T, not VZW.
L.T.E.'s launch starts first quarter 2010.
Don't cry here if you see a 4giphone on VZW next summer

I believe you should also check your facts. LTE is backwards compatible with GSM and this is because it is a progression of the GSM technology i.e for Verizon to use LTE they will need to have towers with GSM technology on them. And since we all know that CDMA signal propagates further than a GSM signal we know Verizon has less towers. This means that either Verizon will have to rent tower space from AT&T or spend the next couple of years catching up to AT&T. Either way the transition is not going to happen overnight. They will probably have 4g in limited areas in the next year. However unlike other 4g technologies like WiMax which can be propogated over larger distances LTE it is going to take time to have the coverage of Verizons current footprint. AT&T has the logical progression in its network to LTE and lets not forget the infrastructure to support it with the largest fiber network in the world and more towers across the country. In addition if Verizon wants to have a network to fall back on when its users leave 4G coverage areas they will have to have multiple antennas in their phones if they want to maintain coverage on their CDMA based network, and multiple antennas will do wonders for the battery life..... I should go on, but I hope I have made my point.

I believe you should also check your facts. LTE is backwards compatible with GSM and this is because it is a progression of the GSM technology i.e for Verizon to use LTE they will need to have towers with GSM technology on them. And since we all know that CDMA signal propagates further than a GSM signal we know Verizon has less towers. This means that either Verizon will have to rent tower space from AT&T or spend the next couple of years catching up to AT&T. Either way the transition is not going to happen overnight. They will probably have 4g in limited areas in the next year. However unlike other 4g technologies like WiMax which can be propogated over larger distances LTE it is going to take time to have the coverage of Verizons current footprint. AT&T has the logical progression in its network to LTE and lets not forget the infrastructure to support it with the largest fiber network in the world and more towers across the country. In addition if Verizon wants to have a network to fall back on when its users leave 4G coverage areas they will have to have multiple antennas in their phones if they want to maintain coverage on their CDMA based network, and multiple antennas will do wonders for the battery life..... I should go on, but I hope I have made my point.

Glad to see the radio wars are still being waged - even by anonymous warriors.

It looks as if Verizon is prepared, with droid, to break open the walled garden, which is as significant as AT&T losing exclusivity in a way and will further expand mobile use of internet apps.

i read a release that verizon will not shut down cdma. instead they will run cdma ant lte.we will see

Hey folks, just a heads-up: "GSM" isn't a technology. Its a standards-book that operators adhere to, like ISO certification or something, and GSM is a Frankenstein of technology parts patched together.

Take GSM 3G, its actually a W-CDMA access scheme, so it is "CDMA" technology by that measure. The reason you can have voice and data on AT&T is because the data gets over the W-CDMA channel while voice is coming down on one of the legacy TDMA channels (crack an iPhone open, note THREE wireless amplifiers).

GSM is like Windows XP, a zillion progressively less ancient standards stacked up in one big shit sandwich. Only reason its "everywhere" is because the European Union won't let any cellular WAN exist in Europe unless its GSM...i.e. GSM is a fixed racket in Europe.

@ Anonymous | October 24, 2009 - 7:44am

It would be suicide for VZW to shut down their CDMA network at any time in the near future. They have millions of users with CDMA devices that would need to be upgraded. They may launch another network, but they will continue to offer CDMA service for a very long time.

Look at how long it took TDMA and analog to finally croak.

GSM may be dominant worldwide but CDMA is the best coverage in the US. Japan even uses CDMA as the technology is superior. More calls can be crammed into a given spectrum with CDMA. It would be a wise investment to develop an iPhone for CDMA and WCDMA.

I can assure you Verizon is not shutting down their CDMA or EVDO networks when LTE launches. CDMA Voice and EVDO data won't be phased out for many years to come. Verizon is adding seperate LTE antennas and base stations to their existing sites. As for the guy that said they would need to add GSM equipment to their sites - he must be smoking crack. The only thing Verizon needs to add is LTE antennas and LTE base station equipment. Sorry boys - no GSM for Verizon. As anyone who ever opened a textbook knows, CDMA is by far the superior technology and the only reason GSM is worldwide is because the EU mandated everyone use it.

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