iPhone to Verizon? Really? Are We Sure This time?

A new report surfaced today that Apple is readying its iPhone for other service providers beyond just AT&T. Of course, this is not the first time we've heard such rumors. In fact, it seems like every few weeks another article pops up on some tech blog or Apple fan site about how the iPhone will finally be unlocked from AT&T. So what makes this one different? Maybe nothing, but it's reported by the Wall Street Journal, not some random blog. So let's see what it says.

Is It Real This Time?

The WSJ reports:

Apple Inc. plans to begin producing this year a new iPhone that could allow U.S. phone carriers other than AT&T Inc. to sell the iconic gadget, said people briefed by the company.

The new iPhone would work on a type of wireless network called CDMA, these people said. CDMA is used by Verizon Wireless, AT&T's main competitor, as well as Sprint Nextel Corp. and a handful of cellular operators in countries including South Korea and Japan. The vast majority of carriers world-wide, including AT&T, use another technology called GSM.

I know any Verizon-lovers who have iPhones probably all just fainted, but now that they've regained consciousness, note that the article also says this:

Verizon Wireless, owned by Verizon Communications Inc. and Vodafone Group PLC, declined to comment. An AT&T spokesman said: "There has been lots of incorrect speculation on CDMA iPhones for a long time. We haven't seen one yet and only Apple knows when that might occur." Apple declined to comment.

These responses are neither surprising nor revealing. If Verizon is in talks, it wouldn't comment, as doing so could anger Apple. If Verizon isn't in talks, it still wouldn't comment, as it has no incentive to preempt investors buying its stock and dumping AT&T's based on a rumor. Of course AT&T similarly has a strong incentive to continue denying it knows anything about such plans on the part of Apple.

Are We Sure It's Verizon?

What's a kind of worst-case scenario for iPhone lovers if Apple does decide to expand to other service providers? That it only branches off to T-Mobile. That would also be an odd choice since T-Mobile isn't as popular as other service providers like Verizon and Sprint. But T-Mobile is on GSM, though it operates at a different frequency band than AT&T. Still, that would probably be an easier fix than converting the device to CDMA -- Verizon and Sprint's network type.

Still the article specifically claims that the phone is being developed for CDMA. So what if Apple chose Sprint instead of Verizon? I think that would also be an odd choice. It may, however, satisfy some users who simply hate AT&T. Ranked third by size in the U.S., Sprint is pretty big. But unless Apple has some strong reason to shun Verizon further, I'd have to believe that if the iPhone is developed to run on CDMA, then Verizon would be a carrier.

If This Is True. . .

If these sources are accurate, then this is very bad news for AT&T. I would predict a mass exodus of iPhone users to Verizon as soon as their contracts expire. It's no secret that many iPhone users despise AT&T, and many believe Verizon has a superior network.

Of course, there's no proof that Verizon would be any better. Some claim that the iPhone's network problems with AT&T might not be the service providers' fault, but could be caused more by the iPhone's design and/or its users' data-hogging lifestyle. If that's the case, then it's unlikely switching to Verizon would help much. Those same users might just slow its network down instead.

If it is a data usage issue, there could be a sort of false perception for a year or two that Verizon's network is better just because, at first, the iPhone traffic will be split between the two networks, so each may notice improved service. Of course, Verizon will get all the credit, because its users will notice how much better their phones are operating on its network. Again, this is bad news for AT&T.

It's hard to see any scenario under which AT&T isn't harmed by Apple opening up the iPhone market to Verizon, unless the latter's network turns out to be utterly horrible. As an iPhone user myself, I would probably switch, as I always had better luck with Verizon before purchasing my iPhone almost two years ago. I suspect I would not be alone.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

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