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AT&T CEO says end of partnership is inevitable

No one can deny the business sense that AT&T used when it locked up the iPhone from Apple as an exclusive back in 2007 when the phone first debuted. The iPhone has helped AT&T grow significantly since it debuted.

According to AT&T CEO Randall Stephenson, the partnership with Apple will inevitably end and ultimately the only differentiator between the wireless providers in America will be network quality. The exclusive agreement between Apple and AT&T is believed to end next year.

In Europe, O2 is facing the same problem as AT&T with its exclusive period ending. Apple is allowing O2 to keep the exclusive on the iPhone 3GS in the UK while opening the iPhone 3G up to other carriers. Reuters reports that AT&T added 1.4 million new subscribers in the second quarter and had more than 2.4 million iPhone activation during the quarter.

The prospect of losing the exclusive on the iPhone has to raise eyebrows at AT&T and with Wall Street. Research firm Pali Research issued a sell advisement on AT&T stock in June because it was believed to be losing its iPhone exclusive. At the same time, the research firm issued a buy order on Verizon, believed to be picking the iPhone up on its network.

Pali Research wrote in a report, "Our buy rating on Verizon is based on our view that its market share gains will lead to profit growth that tops other telecom companies and Wall Street consensus estimates. Our sell rating on AT&T is based primarily on our belief that its wireless business will enter a prolonged period of erosion after being propped up by the iPhone for the past two years."

AT&T has long been buoyed by the iPhone, but at the same time, many iPhone users are very critical of AT&T's 3G network. Stephenson admits that there are issues with AT&T's 3G network, but points out that most of the issues are centers on high call volumes and areas where the iPhone is most concentrated.

Apple continues to do fantastically well in the smartphone market with the iPhone and owns a full 91% of the over $1,000 PC market.

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AT&T better do something quick
By 3minence on 7/27/2009 4:19:02 PM , Rating: 2
If I'm reading the article right, a lot of AT&T's recent success is tied to the iPhone. I can believe it. It's service sure isn't make it any friends (at least not where I am). My phone routinely claims 2-3 bars until I hit the dial button, then the bars disappear and the call fails to go through. My coworkers with AT&T claim similar experiences. More bars in more places, until you hit the dial button.

I like Verizon's proposal of six months exclusivity, then let anyone offer it. Seems like a reasonable compromise. In this case I don't think the exclusive deal helped apple in the least. It still took 2 years before anyone came out with a real competitor to the iphone. Apple would have made a killing no matter which mobile provider sold it. In fact, I would argue it would have made more money selling both a gsm and a cdma version.

By Fallen Kell on 7/27/2009 6:43:45 PM , Rating: 2
I like Verizon's proposal of six months exclusivity, then let anyone offer it. Seems like a reasonable compromise.

Too bad you read and bought the Verizon PR line and didn't read the small print. The small print was that the "anyone" is defined to be "any wireless phone network with less than 500,000 total customers". So, too bad for T-Mobile, AT&T, or Sprint. Even small guys like Cellular South would not even be able to offer an iPhone if Verizon got it exclusively.

No, what Verizon is offering is still pretty much full exclusivity. The only people they wouldn't mind offering it to are companies they are not competing against in any sense of the word.

"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki

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