The iPhone is Going to Another Carrier this Year, and Here’s Why:

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It’s been rumored for a long time now, but now I feel that I can say fairly confidently that Apple is going to either add or move to another carrier later this year. Here’s why.

In the past week, two things have come out of the AT&T camp that made this issue clear. First was a statement from AT&T Wireless CEO Ralph de la Vega in Wired’s Gadget Lab:

70 percent of AT&T’s subscribers are on family plans, and it would be difficult to transition multiple devices, he explained. Additionally, 40 percent of subscribers are part of corporate plans, and employers are unlikely to switch company-owned devices for a new carrier. (There is some overlap between the two types of plans.) The CEO added that “churn” rates (i.e., a measure of customers leaving) for AT&T are staying at record-low rates, so he expects that iPhone customers will remain loyal.

By itself, that seems like a fairly innocuous statement, and one that’s fairly accurate. I myself am on a family plan, and I know that it can be a bit tricky to move numbers in that situation.If the 70% number is true, then that’s a good chunk of people who won’t go.

Then it got more interesting. Last Friday, AT&T put out an open letter where they discussed some changes to their early termination fee, or ETF. You know, that thing you’ll get hit with if you have a current contact with AT&T and decide to jump ship to Verizon.

Beginning June 1, 2010, we will reduce the ETF in new and upgrade two-year service agreements for all customers who are buying basic and quick messaging phones. Whether you are new to us or upgrading handsets, the ETF will decrease to $150 from $175, and be reduced by $4 for each month that you remain with us as a customer during the balance of your two-year service agreement. After the term commitment is completed, the ETF will no longer apply.

Not bad news for those people with regular and cheap phones. Then it comes to the rest:

For customers who enter into new two-year service agreements in connection with the purchase of our more advanced, higher end devices, including netbooks and smartphones, the ETF will increase to $325, and be reduced by $10 for each month that you remain with us as a customer during the balance of your two-year service agreement. After that, the ETF will no longer apply.

Should you re-up your contract with AT&T when the next iPhone comes out this summer, then you’d better like AT&T. Because if – as rumored – Apple drops the Verizon bomb in September, then you’re screwed. Get ready to drop a grand on that new iPhone, because between new contract fees, the phone itself and the ETF, you’re gonna get boned.

Rumors of a Verizon iPhone have been around since the device first came up for sale under AT&T’s control in 2007, but this changes things. Before last week, AT&T was just the exclusive carrier for the iPhone, rumors be damned. Now they’ve steeled themselves for the loss of income associated with an iPhone under another carrier. They know they’re going to lose a substantial amount of income when the iPhone goes elsewhere. To offset that long-term loss, they’re going to take a short-term gain with ETF fees. They’ll make twice as much as they would have last year in the same situation, and that makes the accountants happy.

This tells me one other thing, too. Whatever contract that AT&T had or has with Apple is up this summer. Yes, recent information shows that it was a 5-year contract signed in 2007,

This situation though assumes that Apple is going to play a hard card. It assumes that Apple announces the new iPhone in June, releases it in July under AT&T, then announces a Verizon/T-Mobile/Sprint/Nextel phone in September. This would have people locked into their AT&T contracts from their July purchase, and forced to pay the higher ETF should they want the better service or coverage that another provider has.

I don’t see that happening.I just don’t think that Apple is willing to alienate a huge portion of their fanbase just to make AT&T richer. It’s not like AT&T has any favors owed by Apple.

Instead, I see Apple announcing the AT&T iPhone in June, as expected. Then I think their “One more thing” will be the announcement of another iPhone sku, this one with another carrier.

Notice that I’m not saying it’s going to be Verizon.

Sprint has been sucking up to Apple recently, with ads depicting the iPhone connected to a 4G hotspot and the release of a iPad case with hotspot pouch included. Should Verizon play hardball, I think that Sprint has a good chance. Remember, AT&T was a huge company in 2007, but they’re mammoth with the iPhone. The same thing could happen with Sprint.

Then there’s T-Mobile. The current iPhone will work with their service as any jailbreaker will tell you, so the only issues is a software limitation that can be easily remedied. Putting the iPhone on T-Mobile is therefore stupid easy. The issue instead is service. My cell service with T-Mobile rocked, but I never tried to do much on the web with my BlackBerry curve. I have no idea where they’re at today, and I don’t know if they even have 3G coverage.

Finally, we’ve got Verizon. First they hated Apple, and lately they’ve been softening up to the idea. I think they’re who everyone wants to get the iPhone, but I’m not sure that Apple is going to work with them. In 2007, Verizon thought Apple couldn’t do it. Now the iPhone is so successful that everyone wants a piece. Apple will of course use their leverage to make the Verizon iPhone a good thing for consumers and for them, but will Verizon bow to their demands? Does Apple want their phone lumped in with every other crappy netbook and lame phone that Verizon carries?

You’ll notice I didn’t mention Nextel. I don’t think they have a dog in this race, so  I don’t think they’re going to get it. Yeah, I’m an idiot. Disregard that last part.

I don’t often make predictions, and when I do, I’m often wrong. But to me, all these recent developments say that Apple is either leaving AT&T or adding another carrier. AT&T is girding up for the loss. I may eat my words later, but right now, this is as clear as day to me.

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Kokou Adzo

Kokou Adzo is a stalwart in the tech journalism community, has been chronicling the ever-evolving world of Apple products and innovations for over a decade. As a Senior Author at Apple Gazette, Kokou combines a deep passion for technology with an innate ability to translate complex tech jargon into relatable insights for everyday users.

5 thoughts on “The iPhone is Going to Another Carrier this Year, and Here’s Why:

  1. “I have no idea where they’re at today, and I don’t know if they even have 3G coverage.”

    Dude. Really? *sigh*

    T-Mobile has a nice 3G network. But they are using a different downstream frequency than AT&T, so an unlocked iPhone will only do EDGE on T-Mobile.
    If Apple adds another carrier, it’s more likely that it would be T-Mobile. Verizon is moving away from their existing CDMA network anyway. Why would Apple make a phone for a network that is going away? There’s a big CDMA provider in China, though….
    The recently stolen iPhone prototype that was taken apart yielded no hint of CDMA hardware.

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