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Analyst sees dimming future for AT&T wireless if Verizon gets iPhone

Tower
A bottom up view of a cell tower. Credit: Locomotive8/ Flickr.


If Pali Research were to pick its favorite wireless carrier, it wouldn't be AT&T.

The market research firm believes that despite the huge success of Apple Inc's iPhone, for which AT&T is still the exclusive carrier, its monopoly on the iPhone won't last forever, and as soon as it expires, the beleaguered telco should prepare for slowed growth and even defections.

Customers will head to faster, more reliable networks, said Pali head researcher Walter Piecyk in a blog post, and that means Verizon. 

"A basic premise of our recently initiated buy rating on Verizon and sell rating on AT&T is our belief that as the iPhone exclusivity period rolls off between AT&T Wireless and Apple, a material number of AT&T customers will flock to Verizon’s superior network."

"We expect AT&T Wireless net subscriber additions to fall to less than 1 million in 2010 from more than 4 million in 2008," he noted.

Piecyk cited a recent reader survey by Wired, in which the magazine asked users to register their locations along with the speed of their 3G service.  Though unscientific, the survey did generate 12,000 responses from customers across the spectrum of major wireless providers.  Verizon won handily with an average download speed of 1,940 kilobits per second, while AT&T took fourth behind T-Mobile and Sprint, with an average speed of only 900 kbps.

A recent story in The Times raised the possibility that AT&T's 3G networking infrastructure may be lacking, and that a sparse 3G network could be contributing to substantial battery drain among many iPhone 3G and 3GS users. When towers are farther away, the phone requires more power to communicate with them.

AT&T acknowledged that the density of the network was a factor in the power drain on 3G phones, and is in the process of building thousands of new cell sites around the country to buttress its network. 

Updated, 12:01 p.m.: The expiration date of the exclusive iPhone deal between Apple and AT&T has not been officially released, but in April the Wall Street Journal cited anonymous sources saying AT&T is hoping to extend the deal into 2011.

-- David Sarno

 
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