After long wait, iPhone arrives on Verizon

Verizon on Tuesday said it will start selling the iPhone early next month

iPhone fans rejoice, the rumors have finally come true: Verizon on Tuesday announced that it would offer Apple's iconic iPhone 4 on its network, becoming the second carrier in the U.S. to offer the smartphone after AT&T.

The smartphone will run on Verizon's 3G EV-DO network, and will become available on Feb. 10, said Tim Cook, Apple's chief operating officer, at a Verizon launch event in New York.

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"All of Apple is very very happy to bring the iPhone to Verizon's 93 million customers," he said.

While the launch comes at a time when Verizon is ramping up the rollout of its LTE network, the new phone does not run on the faster network. That fact will surely disappoint hopeful customers. The phone is compatible with Verizon's 3G EV-DO network, which promises download speeds of 600 Kbps to 1.4 Mbps.

"The first generation LTE chipset forces some design compromises, some of which we would not make,” Cook said. Executives from both companies declined to say when an LTE iPhone might become available.

That makes the iPhone 4 on AT&T capable of faster download speeds. Many reviewers report typical throughput of around 3 Mbps on the iPhone 4. However, even though that's faster than Verizon's EV-DO network, current iPhone users tend to complain about network coverage and availability. It doesn't matter how fast a network is if the user can't connect to it.

Verizon has been building out its 3G capacity over time and feels confident it won’t have bandwidth issues that could result from an influx of new users, said Dan Mead, CEO of Verizon Wireless.

"Even as we roll out 4G ... we are committed for many many years in building out the 3G network," he said.

AT&T has been the only carrier offering the iPhone in the U.S. since its launch in June 2007. Users have complained about the performance on AT&T's network and believe they'd have better luck on Verizon's network. Rumors of a Verizon iPhone have been persistent nearly since the initial launch of the phone over three years ago.

"The big question is, is Verizon Wireless ready for the mad Apple rush that is coming? They say yes, but then again that is what AT&T always said too. We'll just have to wait and see," said analyst Jeff Kagan.

With the iPhone on two U.S. networks, the experience could improve for all end users, he said. "It could take the pressure off AT&T and if Verizon is ready then suddenly we could see an immediate improvement in service," he said.

Verizon began talking to Apple in 2008 about bringing to phone to its network, said Lowell McAdam, president and chief operating officer of Verizon. They started testing it in 2009.

The specifications of the phone appear to be similar to the original iPhone 4 that starting shipping in June last year. It comes with a 3.5-inch “Retina” screen that displays images at a 960 by 640 resolution.

It will include dual cameras so that users can video conference with others using Apple’s FaceTime application. It will also include a Personal Hotspot that will let users share connections with five other devices via Wi-Fi. The phone will run on an Apple-developed A4 chip.

The 16GB model will cost $199.99 and the 32GB model $299.99 for customers who sign up for a new two-year agreement.

The executives did not disclose subscription pricing details. They said that tethering would become available in the future.

It remains to be seen how the availability of the iPhone from Verizon may impact AT&T. ComScore recently said that as of November, Apple had 25 percent of the U.S. smartphone market. That amounts to a significant number of phones on AT&T's network. In the third quarter of last year alone, AT&T reported it activated 5.2 million iPhones.

However, just last week, a Consumer Reports customer satisfaction survey ranked AT&T last among mobile operators. Over half of the 58,000 respondents who were AT&T customers used iPhones. Still, in order to switch to Verizon, an existing iPhone user will have to buy a new phone and potentially either wait out or pay to break their contract with AT&T.

The new iPhone is likely to boost sales of phones for Verizon, but not exclusively from the new iPhone, said Dan Hays, director of the telecommunications practice at PRTM. He's skeptical of other analyst estimates that predict sales of 9 million to 13 million iPhones for Verizon in 2011. "While the launch of the Apple iPhone on Verizon's CDMA network marks a turning point for the U.S. wireless market and shifts the competitive landscape for high-end wireless subscribers, we believe that current estimates of its potential sales are overblown and fail to contemplate the likely benefits to Verizon's other smartphone devices," he said.

The Verizon iPhone may entice some high-end subscribers from other operators to switch to Verizon, convert a small number of existing Verizon customers and indirectly spur sales of other devices on Verizon's LTE network, he said. But that will likely amount to 5 million to 7 million Verizon iPhones this year, he said, slowed by the high cost that customers will be required to pay to break an existing contract to switch to the Verizon iPhone.

(Grant Gross contributed to this report.)

Copyright © 2011 IDG Communications, Inc.

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