With Verizon on the Horizon, iPhone Users Weigh Leaving AT&T—but There's a Catch
but There's a Catch — Network quality won't be the only issue for iPhone buyers trying to decide between AT&T Inc. and Verizon Wireless when the smartphone becomes available to a second U.S. carrier. The technology behind their high-speed networks matters, too.
Context & Ripple Effects
Verizon had been preparing for an iPhone launch since 2009, and a May 2010 survey found 17% of Verizon customers would upgrade to an iPhone. That makes a second U.S. carrier more than a handset-distribution change: it gives buyers a carrier choice around the same flagship device.
The decision is complicated by the carriers’ differing high-speed network technologies. Verizon had also signaled tiered data pricing within four to six months, so service terms as well as network performance may shape the appeal of an iPhone offering.
First-order effects
- AT&T faces the prospect that iPhone buyers can evaluate its network alongside Verizon’s rather than accepting AT&T as the device’s only U.S. carrier option.
- Verizon can use iPhone availability to target both its existing subscribers and buyers whose purchase decision turns on network technology.
Second-order effects
- Carrier competition for iPhone customers shifts toward communicating network performance and data-plan terms, not simply securing access to the handset.
- Apple gains greater leverage over U.S. carrier distribution when the iPhone is no longer tied to a single carrier, while each carrier must differentiate the service wrapped around it.
Third-order effects
- If flagship smartphones spread across carriers, carrier exclusivity becomes a weaker customer-acquisition tool and network quality, pricing, and service features become more central competitive variables.
- The iPhone’s U.S. market moves toward handset competition mediated by carrier networks, rather than a single-carrier device relationship.
The trend: Premium smartphones are becoming a contest over the carrier experience—network technology and data pricing—rather than access to the device alone.