A Verizon iPhone At Long Last?

January 10, 2011

Joshua Brockman

For four years, since Apple introduced the iPhone exclusively on AT&T, Verizon customers have wondered when they would get one to call their own.

The long wait may soon be over. Verizon Wireless is expected to announce Tuesday morning that it will start selling a version of the popular smart phone that will run on its network. And the device could be available in a few weeks, according to published reports.

If the speculation is correct, then there's the potential for millions of new iPhone sales. That's because one of the main consumer gripes about the existing iPhone has focused on the quality of calls using AT&T's network. Many analysts expect Verizon to sell a CDMA version of the iPhone 4 that will work on Verizon's existing 3G network.

Here, a look at a number of unanswered questions swirling about that could impact how fast consumers snap up a Verizon iPhone, including the potential structure of Verizon's data plans and whether Verizon iPhone users will be able to talk on the phone and go online simultaneously -- a feature that Verizon's network doesn't support for other smart phones.

How many customers are likely to buy an iPhone on Verizon Wireless' network?

Carl Howe, an analyst for the Yankee Group, expects Verizon to sell 16.5 million iPhones in 2011, with more than half -- 9 million iPhone purchases -- coming from Verizon's own subscriber base. He estimates Verizon will steal just under 2 million customers from AT&T's customer base (AT&T has more than 20 million iPhone subscribers).

Will the design be identical to the existing iPhone that runs on AT&T's network?

It's unclear what the Verizon iPhone will be called. Analysts say the design will remain the same. The only difference will be a key communications chip inside and the network software. That means if you have an AT&T iPhone and want to switch to Verizon, you'll have to do more than just pay an early termination fee: You'll also have to buy a new iPhone.

Will Verizon's iPhone Run On Its New 4G Network?

It's very unlikely. Most analysts expect Verizon to sell a CDMA iPhone because that's the technology used for the vast majority of phones on Verizon's network. That means the iPhone would run on Verizon's existing 3G network, rather than on the new faster 4G LTE network that Verizon launched in December. AT&T plans to launch its own LTE network later this year.

Charles Golvin, principal analyst for Forrester Research, says he would be surprised if Apple announced an LTE phone because Apple wants to "maintain control over their product line" and doesn't want customers feeling the difference between a Verizon and an AT&T iPhone.

What's more, Apple's timetable for releasing new iPhones is typically in June, when Steve Jobs takes center stage for the announcement. Verizon's president, Lowell McAdam, will preside over the announcement in New York on Tuesday.

"This is yet another distribution point, rather than a new product," Golvin says. "I think they want to downplay the underlying guts of the phone -- whether it's CDMA or something else."

How much will the phone cost?

It's unclear whether the price of a CDMA phone will be the same as an AT&T iPhone 4, which starts at $199. Analysts remain divided about the price, according to Computerworld.

What's likely to happen with the iPhone data plan?

Verizon presently offers unlimited data plans for its smart phones. Analysts say it would go against the grain to change this just for the iPhone. Golvin says that if Verizon is confident that it can support an unlimited data plan it will give the carrier a leg up on AT&T's capped data plans.

What are some of the advantages consumers might experience from using an iPhone on Verizon's network?

The quality of calls is likely to be a selling point.

"That's really the killer app here: You'll be able to make phone calls," says Howe of the Yankee Group.

What's more, Verizon has a lower percentage of smart phones on its network, compared to AT&T. Howe says this "lower load" should mean data will flow more freely until those numbers change.

What about some disadvantages?

"It's going to be an interesting challenge for Apple to position the phone and its capabilities given some of the limitations of the CDMA network," says Golvin of Forrester Research.

Apple previously ran TV commercials touting the simultaneous voice and data capabilities of the iPhone. But it's not possible to talk on a smart phone and surf the Web at the same time on Verizon's CDMA network.

Howe says it's also possible that the addition of 16 million or more new iPhones will "stress" Verizon's network because it only has about 30 million smart phones in use right now -- the lowest percentage of all national carriers.

"Unless Verizon has done a lot of network upgrades in advance, it may see many of the same capacity problems that have plagued AT&T," he says.

What impact might a Verizon iPhone have on sales of the popular Droid phones?

Golvin says with Apple out of the picture, companies like Motorola and HTC haven't had to compete for Verizon's smart phone customers. But if Verizon starts selling the iPhone, Golvin says it will "up the ante for those developers to prove that they are a viable alternative when exclusivity is out of the picture."

On Tuesday, we'll have to see what whether Verizon finally adds an "i" to its smart phone mix. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.