Exclusivity Doesn’t Last Forever: Beware the Impending Arrival of the Verizon iPhone!

by Matt Klassen on June 18, 2010

While speculation that the iPhone may be coming to America’s leading wireless network is nothing new, the fact that this rumour has had unparalleled and persistent longevity is, for me at least, evidence that there might be some truth to it. I have never doubted the fact that the iPhone will eventually land in Verizon’s lap, as such a move seems to be inevitable, but the question of when such a move would be made has always been the mysterious X factor.

So while a report released this week indicating that Apple may in fact be contracting certain Chinese manufacturing firms to produce an iPhone compatible with Verizon’s CDMA network may be nothing new, the fact that this report now coincides with several other minor moves on AT&T’s part means to me that the era of exclusivity is coming to an end; and if that’s not enough to give rabid techies looking to get their hands on the iPhone 4 a reason for pause, I don’t know what is.

Rumours have long swirled around the contentious exclusivity agreement that Apple signed with AT&T, giving the wireless network giant uncontested control of Apple’s two marquee devices, the iPhone and the iPad. However, since the release of the iPhone 3G, AT&T’s network has struggled mightily to provide consistent and reliable network service, a point that has led to near riotous discontent among American iPhone owners.

Coupled with the longstanding and well-documented issues with AT&T’s network comes the interesting observation that Apple has seemed to have softened its rigorous support of wireless giant, as this month’s WWDC saw little of the AT&T fanfare that has accompanied other phone releases. But with that said, Apple is still planning on releasing the iPhone 4 exclusively on AT&T this summer, which detracts from the speculation of any immenent dissolution of the exclusivity agreement.

But take into consideration another relatively minor story that we’ve covered here at TheTelecomblog, the fact that AT&T has significantly increased its iPhone cancellation fee from $175 to a whopping $325. The reasoning behind this innocuous story may have seemed confusing at the time, until one considers it within this current timeline of events.

With the overwhelming volume of pre-orders for the iPhone 4, again exclusively on AT&T’s network, the wireless giant has again effectively chained thousands of customers to a multi-year data and talk plan, one that will cost customers dearly if they were to renege on the contract. But why would AT&T be so concerned about loyal iPhone customers jumping ship unless there was a place for them to jump too?

Now consider the renewed speculation that Apple has entered into an agreement to begin to manufacture CDMA compatible iPhones, one’s made for Verizon’s network, and the truth behind this rumour really begins to take shape.

I firmly expect that Apple will unveil a CDMA iPhone at the end of this year or possibly early 2011, long after AT&T has got a chance to rope as many iPhone 4 customers as possible into long term contracts. Sure these AT&T customers will be mad at the timing of the event, but the possibility to jump ship to Verizon will still be available to them, at a cost of $325 of course.

While an underhanded move like this will clearly kill AT&T’s long term sales and customer loyalty, a cost-benefit analysis of this devious plot may actually work out in AT&T’s favour. AT&T has always known its exclusivity won’t last forever, so why not cash in on it on the heels of the iPhone 4? It seems now that only question left unanswered is whether or not you’ll be swayed by my arguments?

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Written by: Matt Klassen. www.digitcom.ca >. Follow TheTelecomBlog.com > by: RSS >, Twitter >, Identi.ca >, or Friendfeed >

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Verizon Preparing for the iPhone? Cancels Unlimited Data Plans — TheTelecomBlog.com
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