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USA Today reports that Apple (s AAPL) and Verizon Communications (s VZ) entered into high-level talks that would allow iPhone to come to Verizon’s network. USA Today speculates that this could means a CDMA-based iPhone. I don’t buy it. Around the world, the CDMA ecosystem is slowly but surely contracting. To spend development dollars on a protocol with the limited future wouldn’t make sense. Instead, I think if there is indeed an agreement with Verizon, it will be for devices for the Long Term Evolution (LTE) 4G Wireless networks.
Verizon has plans to launch its LTE network in a handful of cities by the end of 2009. By 2010, Verizon hopes to have 25-30 cities LTE-ready. Apple is smart enough to realize that, just like PCs needed processing power gains, data-centric wireless devices need wireless bandwidth gains to increase their utility. Trials show that LTE networks can run at speeds of between 50 Mbps to 60 Mbps. More importantly, LTE is a global standard, allowing Apple to sell the same 4G version of its device across the planet. LTE is expected to sweep the planet by 2012.
AT&T’s plans for a 4G rollout are currently behind Verizon’s plans. The company, which currently has an exclusive on the iPhone in the United States, plans to stick with HSPA up until 2011 then transition to LTE. But any chance of Apple giving up on the iPhone partnership — even a hint of a deal with Verizon — is going to spur AT&T into accelerating its LTE rollout plans. The company is increasingly reliant on Apple’s iPhone to show growth in sales and profits. The company is losing nearly 10 percent of its wireline customers a year and is increasingly looking at wireless as its future.