ATandT Prepared to Lose Apple iPhone: SEC Filing

Aug 9th, 2010 | By technologynews | Category: Technology

AT&T could be preparing to lose its exclusive rights to
the iPhone in the U.S., according to the carriers latest 10-Q filing with the
Securities and Exchange Commission. If the oblique statements in that filing
prove accurate, it could validate analysts claims that the iPhone will appear
on other carriers starting in early 2011.

According to the Wall Street Journal, which
quoted from AT&Ts filing on Aug. 7
, speculation about AT&T losing
iPhone exclusivity has dampened the carriers stock price.

We believe offering a wide variety of handsets reduces
dependence on any single handset as these products evolve, reads
AT&Ts SEC filing for the quarter ended June 30
. In addition, offering
a number of attractive handsets on an exclusive basis distinguishes us from our
competitors.

That reference to a single handset has been widely
interpreted by media and analysts as iPhone, which has helped propel
AT&Ts smartphone-related revenues since its 2007 release. However, the
devices popularity has also exerted considerable pressure on AT&Ts
network, with resulting service issues and irate customers.

Despite those problems, the AT&T filing seems to suggest
that, if and when iPhone exclusivity ends, the carrier has a plan to retain its
customers: As these exclusivity arrangements end, we expect to continue to
offer such handsets (based on historical industry practice), and we believe our
service plan offerings will help to retain our customers by providing
incentives not to move to a new carrier.

The filing also posits that loss of handset exclusivity
would have little material effect on the carriers bottom line: While the
expiration of any of our current exclusivity arrangements could increase churn
and reduce postpaid customer additions, we do not expect any such terminations
to have a material negative impact on our Wireless segment income, consolidated
operating margin or our cash from operations.

Rumors have circulated for weeks that the
iPhone could arrive on T-Mobile as early as the third quarter
. From our
understanding, this is becoming closer to reality than ever, with sourcing
indicating it could happen as early as this fall or by [the first half of
2011], Kaufman Bros. analyst Shaw Wu wrote in a June 10 research note. While
the general consensus is around Verizon (which we believe will happen
eventually), we continue to believe that T-Mobile USA is the most likely
candidate given its use of similar cellular technology such as AT&T.

Other analysts have suggested that the iPhone will arrive on
Verizon beginning in 2011, as part of that carriers larger push for its 4G LTE
(long-term evolution) network. Barclays
Capital analyst James Ratcliffe suggested in a June 22 research note that
between 500,000 and 1 million AT&T customers
, dissatisfied with their
carrier service, could jump onto Verizons network should that occur. 

According to an Aug. 8 TechCrunch report, quoting sources
with knowledge of this entire situation, Apple has
already ordered Qualcomm CDMA chipsets for use in a Verizon iPhone
.

 

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