Where does AT&T go when the iPhone exclusivity ends?

AT&T has a couple tricks ready to try to recover from its reputation for poor quality and the imminent availability of the iPhone on Verizon

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AT&T is also investing in its network, bolstering backbone capacity and adding faster radio technologies such as HSPA+ and LTE to its cell towers. Of course, so is everyone else; AT&T gets no relative advantage here. But the 4G race is on, and AT&T seems committed to keeping up with the rest of the pack. Its network may not be the best, but it appears it will not get worse relative to the competition. As always in cellular technology, the actual performance varies from location to location and minute to minute, so it's impossible to know who's really better -- other than to see what customers say in aggregate.

Finally, I think AT&T is being smarter about its data pricing than the competition is, which affects both the pocketbook and the network quality. It charges $15 for 250MB and $25 for 2GB of data access -- and lets users switch between the two plans monthly without penalty. For most people, 250MB of data usage on a smartphone is enough (assuming they use Wi-Fi where available, such as at home and at the office). By contrast, to date Verizon has charged $15 for 150MB of data and $30 for unlimited data; that essentially forces people to spend $30 per month even though most will never exceed 1GB of data usage. The $15 difference is meaningful for a lot of people.

This unlimited usage policy also encourages the wasteful users to keep on wasting, which will tend to attract the data hogs to Verizon's network. So far, it seems as this has not been a problem for Verizon's many Android users -- but I'm betting it will be as Android adoption continues to soar and a few million iPhone users and later iPad users join the Verizon network this year. For the short term, though, the siren song of unlimited data usage (which of course is never really unlimited) is a smart marketing move for Verizon.

AT&T also has inertia working in its favor. Verizon uses a different network technology (CDMA) than AT&T's GSM-based network, so AT&T iPhone users can't just switch to Verizon when their contracts expire -- they'll need to buy a new iPhone as well.

Then there's the issue of Apple's typical iPhone schedule, in which it announces a new model each June or July. Verizon will offer 16GB and 32GB versions of the iPhone 4 that are the same as AT&T's except for the cellular network they use. So many users will wait until later this year to see what the next iPhone is, in the hopes that Verizon will get that new model at the same time as AT&T.

This is not certain: The United States is the only market that has two cellular technologies in equal footing, so there is no history of Apple dealing with competing radio technologies that gives us a clue of how it will handle that market reality. Given Apple's focus on having simple product lines, I'm betting on parity.

Don't get me wrong: I'm not suggesting AT&T won't feel the hit from the end of the iPhone exclusivity, nor do I believe that Verizon is cellular nirvana. Its network has issues in some parts of the country, and Verizon's reputation for contract gotchas and fees is not a good one if you're a customer. But AT&T will continue to have the goods that attract technophiles and businesses alike. It's still a two-company market.

This article, "Where does AT&T go when the iPhone exclusivity ends?," was originally published at InfoWorld.com. Read more of Galen Gruman's Mobile Edge blog and follow the latest developments in mobile technology at InfoWorld.com. Follow Galen's mobile musings on Twitter at MobileGalen.

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