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Rumor Has It: AT&T Losing iPhone Exclusivity this Wednesday

According to a report over the weekend on, Apple (s aapl) may have more to announce at its special event this Wednesday than its mythical tablet.

We have been led to believe by an inside source that AT&T will lose their iPhone exclusivity on the same day, though it’s not yet clear what other carrier (or carriers) will be stepping in to also carry the phone.

It doesn’t come as any great surprise to hear about the end of AT&T’s (s att) exclusive partnership with Apple, but I will be surprised if El Jobso deliberately announces it during his keynote. After all, if he did announce it, at what may become the most-watched-and-reported-on  keynote in Apple’s history, the predictable whoops of delight from the attendees will be hugely embarrassing for AT&T. Will Jobs be so insensitive?

AppleInsider says AT&T’s contract with Apple expires in June this year. Certainly, AT&T has recently been shoring-up its offering of smartphones to include Android-based handsets, but that’s hardly unusual for a mobile operator striving to remain relevant in a crowded and hugely competitive market.

While Apple may be looking forward to ending the exclusivity deal, I don’t think the same is true of AT&T. They have attracted and retained millions of new subscribers with the iPhone since its launch in 2007. The press hasn’t been kind to it, and even its own CEO has criticized its bandwidth-chomping customers, but I’m sure AT&T doesn’t regret one single lucrative day of that almost-three-year partnership.

Brand Loyalty

Incidentally, this is pretty much win-win for Apple, who — I am sure — will see tremendous sales on other networks despite the relative age of the iPhone. For instance, here in the UK, O2 enjoyed high iPhone sales throughout its exclusive partnership period.

But as soon as O2’s exclusive partnership with Apple ended, Orange reported record-breaking opening day iPhone sales. And more recently, a third major carrier, Vodafone, also started selling the iPhone and reported even higher opening day sales.

If this demonstrates anything, it is that significant numbers of customers remain loyal to their cellular networks, choosing to “make do” with whatever handsets are available to them, all the while quietly coveting the wares of competing operators. Personally, I have no such loyalty. Most of the operators here in the UK offer pretty much the same awful services at pretty much the same inflated prices, with only minor differences in tariffs. The biggest differences lie, as always, in the range of handsets they have to offer.

When I bought my iPhone back in 2007 I just happened to already be an O2 customer, but I readily admit, had I been with another carrier, I would have made the move without hesitation. I’m surprised, then, to learn that an awful lot of people are not so ready to switch. Apparently brand loyalty extends to products and services beyond Apple. Who’d have thunk it?

A Harsh Light

AppleInsider suggests this brand loyalty probably had something to do with the relative sales success of iPhone alternatives such as Motorola’s Droid, which served as a “second best” choice for carrier-loyal customers who wanted an iPhone but weren’t prepared to leave their existing network operator.

…an announcement this week might effectively preclude a large group of consumers from upgrading to phones they might otherwise be interested in because they know the iPhone will be hitting the relatively stable Verizon network in just a few months.

Verizon’s (s vz) network may be “relatively stable” right now, but wasn’t AT&T’s considered stable before the arrival of the iPhone in 2007? I don’t know, of course, but — wasn’t AT&T always a bit rubbish? Didn’t it take the arrival of the iPhone to shine a harsh light on its patchy service?

Or was it the arrival of the iPhone that caused the degradation in service? HotHardware’s Shawn Oliver thinks it was the latter.

The iPhone itself doesn’t really handle the switch from 3G to EDGE very well, so calls that are in-progress tend to fail… It seems that AT&T is tired of taking the heat for this, and at this point, they may be smart to just let another carrier take some of those customers who are most inclined to complain.

Did he just imply iPhone customers are a bunch of moaning minnies?

So who’s right? Will the inevitable opening-up of the iPhone to other carriers in the U.S. destroy Android sales? Will Americans enjoy the iPhone price wars that (sadly) never happened over here? Or will everyone be too busy cooing over the Tablet to even care?

Or — worse — what’s the chance that Apple will have an AT&T-related announcement this Wednesday, but rather than confirming the end of the exclusivity deal, could Jobs announce a new, extended exclusivity partnership that includes the iPhone and the Tablet? What fresh horrors could such a partnership bring?

Related GigaOM Pro Research: Why Apple Should Choose Sprint Before Verizon Wireless

14 Responses to “Rumor Has It: AT&T Losing iPhone Exclusivity this Wednesday”

  1. KiterDog

    I am one of the “loyal” T-Mobile customers. My friends and family are on T-mo, so if I moved, calls to them would cost me dearly. Also, I am on a family plan, where each member of the family has a 2 yr contract with subsidized phone. The contracts end about 6 months apart. Cancellation fee/contract is about $200. So yes, after 6 years I am still with T-mo, but not exactly vuluntarily. I now bought the Nexus One from Google and I am getting everybody off contract, mainly so I could get the iPhone, if I still want it. There is a new one every year, so I don’t worry about it getting outdated too much. But after getting Nexus One, I don’t really want the iPhone anymore. It now looks old and clunky…

  2. While there is an incentive to open the iphone up to more carriers in the US (to sell more and make it, theoretically 3x more popular) consider this- AT&T is PAYING apple $432 per iphone subscriber because of their exclusivity.

    If Apple opens it up to other carriers they’d be losing this income.

  3. Apple would be smart to just re-hash the iPhone to make it compatible with any network and release it as a contract-free standalone phone. No more of this i”iPhone plan”, just get your phone and take it where you want.

    I’d gladly pay $500 for a non-subsidized iPhone that I could take anywhere.

  4. If you want simultaneous voice and data on any phone, there’s this neat networking technology called WiFi.

    How would anybody sell another iPhone 3GS if a substantial change to the product was announced five months in advance of the actual release? If Apple wants to start selling unlocked phones, Nexus One style, that’s great — except that you’re stuck with mutually incompatible 3G services from every US wireless carrier.

  5. I’m totally the opposite. My experience with Verizon’s network and customer service has been the worst. Even worse than Sprint who has no coverage in my area at all.

    I’ve had to deal with Verizon a few times, on behalf of my girlfriend having constant billing problems and every time, the Verizon rep was rude and surly. And that was BEFORE he realized I was calling from an iPhone, at which point, they become offensive.

    And when she finally got tired of dealing with Verizon and switched to AT&T, the reps in the Verizon store were beyond unacceptably rude. I’ve never filed a complaint before (because I understand employees can have a bad day), but every call to a Verizon rep has warranted one.

    As for my AT&T loyalty, I’ve been a customer since the CellularOne days and frankly, my service has been great. I’ve always been in heavily covered areas (minus a subway here or there), have never experienced a drop call (even when pulling up data during my call), and have always favored AT&T’s selection of phones over others (except my brief engagement with Helio – I dug the Ocean) and my calls always sound super crisp and clear. I never have to ask the other person to repeat themselves.

    My theory is that Verizon isn’t particularly better, but a majority of their customers are using basic SMS and voice and they haven’t really experienced a massive jump in data use. Even with the top Android phone in their stable, they still aren’t seeing a fraction of what AT&T sees in data usage.

    My prediction is that Verizon gets the iPhone and gets their network pounded, too.

    I’m hoping AT&T has spent this head start well and is ready to rollout new technology to solve the problems they’ve had.

  6. Erkenntnis

    If the cell networks in the US were more or less at parity with one another, I would feel much as Mr. Cassidy does about switching. But I do not believe that is the case. I believe that AT&T is, in the aggregate, a worse wireless carrier than Verizon. This is not to say that I believe they offer no good services (like rollover minutes, simultaneous voice and data, and worldwide cellular compatibility), nor is this to say that I disbelieve any of the people who say they have good service with AT&T. But surveys upon surveys from reputable sources consistently say that AT&T has problems with dead zones, dropped calls, lower-quality customer service, and a smaller 3G footprint – all of these are worse problems for AT&T than for Verizon. I do not wish to run this risk of being on an unreliable carrier; ergo, I do not switch, even if AT&T has the phone I really want. It really has little to do with brand loyalty, in my view.

    • Erkenntnis

      Follow-up: I guess it would be more accurate to say that I am loyal to a brand (i.e., Verizon), but this loyalty is not an emotional one. It is based on what I value and my perception of who can cater to this value better than anyone else. Let us say that that there is a hierarchy of needs in buying phone service, and that I believe that a carrier needs to satisfy the basic needs before progressing to the higher levels of the hierarchy. In my view, AT&T caters better to the high-level needs, but Verizon caters better to the all-important foundational needs. If AT&T did a better job of catering to those low-level needs, then there’s no question that I would switch.

  7. John Hart

    Not sure why so many people bitch about the coverage that they get from AT&T. If your “carrier loyalty” statement is accurate, it would serve to reason that the majority of iPhone users were already AT&T customers. I myself am a member of that group and since being exposed to Apple products by way of the iPhone, I have purchased and iMac and my next notebook will be a MacBook. AT&T has always been a great carrier which is why I have been a customer since the Cingular days. Let’s not forget just how new much of the technology is from which we have come to expect flawless functionality. Just two and a half years ago, if you had told most people that there would be a device like the iPhone, they would have thought you were crazy. The best way to have shattered expectations is to have expectations at all. Just enjoy the iPhone and appreciate it even when AT&T isn’t at it’s best.

    • You are a Douche Bag.
      AT&T is crap and there service is over priced…I am an RF Engineer…in terms you can understand I make cell service work and was an AT&T contractor for way too long.

    • I think your just a f*ckin retard mr “tmoney” your obviously are in some place in the ghetto where you don’t get good cellphone coverage. I’m in the army and travel all over the us, comparing service with some of my friends I almost always have the best/most reliable. So continue using your ghetropcs because your credit scores so terrible that AT&T won’t let you in without a $750 deposit, which you’d probably have to rob a bank to consider getting. Johns got some good points.