AT&T Gets a Fuzzy Signal on Apple's iPhone
Did AT&T get a sour apple when it snagged the iPhone? — Maybe. AT&T's exclusive right to offer Apple's smart phone over the past two years has attracted new customers, and at least initially enhanced the phone company's image.
Context & Ripple Effects
The deal that once looked like a slam dunk is being reappraised. When the iPhone launched in 2007, the question was whether AT&T's exclusivity was a magic bullet for customer growth — and early friction with Apple surfaced by late 2007 raised the first doubts about how smooth the partnership would be.
By April 2009, AT&T's chief executive was publicly lobbying to preserve the arrangement (pushing to keep the iPhone exclusive), which makes this week's framing notable: the Journal reports that while exclusivity drew new subscribers and initially burnished AT&T's image, the benefit now looks uncertain — against a rumored shift of the iPhone to other U.S. carriers within a year and ahead of Apple's confirmed September 9th iPod event.
First-order effects
- If the rumored end of exclusivity materializes, AT&T loses its single biggest differentiator for winning new postpaid subscribers — the two-year hook it has used since 2007 to grow its base.
- Apple gains immediate negotiating leverage: multiple interested carriers mean AT&T's renewal terms get costlier, reversing the bargaining position that produced the original deal.
Second-order effects
- Rival carriers gain access to the device that has been draining their subscriber bases, forcing them to compete on network quality, pricing, and subsidies rather than accept a permanent handicap.
- AT&T would have to defend its iPhone-era subscriber gains on service merits — precisely where public criticism of its network performance has already been building since 2007 (early friction between AT&T and Apple).
Third-order effects
- The pattern points toward handset makers, not carriers, controlling smartphone distribution: exclusivity windows become temporary marketing instruments rather than structural moats, eroding the carrier-lock-in model that defined US mobile for a decade.
- Carriers' economics shift from owning scarce devices to competing on network capacity and service — an uncomfortable position for any operator whose flagship phone also stresses its infrastructure hardest.
The trend: US smartphone distribution is moving from carrier-exclusive deals toward multi-carrier availability, transferring bargaining power from operators to device makers.