AT&T could lose 40% of its iPhone customers to Verizon

It's been long rumored that Verizon will, in fact, be getting the iPhone. However, the question of when, still remains. According to most analysts, its safe to say that AT&T's exclusivity deal is bound to expire sometime soon--if it hasn't already. As it currently stands, Apple is expected to partner with Verizon for its next generation smartphone either late this year, or in early 2011. Assuming this to be true, AT&T could be in for a roller coaster ride.

PocketNow has pointed to an interesting post over at All Things Digital. According to them, analyst at Davenport & Company, Drake Johnstone, believes that if Verizon begins carrying the Apple's iPhone, AT&T will see a mass exodus from its subscriber base. In his estimations, roughly 40% of AT&T's iPhone users (about 6 million people) could leave for the more reliable service of Verizon wireless. 

"Over the past several years, AT&T indicated that 40 percent of its new iPhone customers came from other carriers,” Johnstone theorized in a note to clients this week. “We estimate that AT&T has 15 million iPhone customers (as of Q-1 10) and believe that AT&T could lose as many as 6 million, or 40 percent, of its iPhone customers when Verizon begins selling the iPhone in 2011."

The analyst does note reasons as to why customers may be hesitant to drop AT&T (early termination fee increase, and family-talk, or business-discount plans). However, if people aren't happy with their service, it's unlikely that they've renewed their contract since the ETF was increased. In addition, family-talk and business-discount plans can be had on Verizon as well, in some form or another. While valid, these things don't seem like clear cut lock-ins for AT&T.

The reasons for such a mass exodus are clear. AT&T has failed in bringing its wireless network up to acceptable standards. It has consistently failed to handle the increased traffic caused by the iPhone and has been known for dropping calls in heavily saturated markets. Were it not for their exclusivity deal, its safe to assume that Apple would already have pushed the phone onto other carriers at some point during the past few years. Although nothing has been confirmed, we may hear news of a Verizon iPhone at Apple's WWDC event on June 7th.

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My first business failed because verizon couldn't provide stable isdn service to me. There's no freaking way I'll ever use verizon again!!

crazyfish said,
My first business failed because verizon couldn't provide stable isdn service to me. There's no freaking way I'll ever use verizon again!!
You had a business fail because of bad ISDN service? Sounds like a whole lot of blame for a crappy technology. What exactly was this business that depends on some slow crappy ISDN line? Why couldn't you use something more reliable like T1's or fractional T's? If my business depended on a service for life or death then I'd choose something more reliable or if I was having problems to the point it was costing me my business then I'd surely try a different carrier before closing the doors.

Wouldn't bother me to see them jump ship, at least it would take care of the bandwith hogs using the iPhone, and, when they start swamping Verizon's network, people can start picking on Verizon.

naap51stang said,
Wouldn't bother me to see them jump ship, at least it would take care of the bandwith hogs using the iPhone, and, when they start swamping Verizon's network, people can start picking on Verizon.

Won't happen, ATT was and is still ill prepared for the realities of Smartphone uses, and refuse to upgrade their network to "fix" the problem. Blaming iPhone users as "bandwidth hogs" is just bad FUD at it's best

The iPhone is a very popular phone, and if so many uses go over to Verizon, whats to say they won't have problems on their network as well?

SfIsHeR1701 said,
The iPhone is a very popular phone, and if so many uses go over to Verizon, whats to say they won't have problems on their network as well?

Because hopefully Verizon has spent the past few years watching AT&T trip over themselves and hopefully have been working internally to handle the increased load. AT&T couldn't of predicted the insane popularity of the iPhone. Verizon got the chance to watch how not to handle it and hopefully have made the correct infrastructure updates to handle the almost overnight influx of iPhone users.

Edited by Supra Boy, May 27 2010, 3:32pm : spelling

Supra Boy said,

Because hopefully Verizon has spent the past few years watching AT&T trip over themselves and hopefully have been working internally to handle the increased load. AT&T couldn't of predidcted the insane popularity of the iPhone. Verizon got the chance to watch how not to handle it and hopefully have made the correct infrastructure updates to handle the almost overnight influx of iPhone users.

A company can prepare all they want but the same thing will happen with Verizon. I guarantee it. In two years people will be hoping for the iPhone to come on Sprint or T-Mobile next.

SfIsHeR1701 said,
The iPhone is a very popular phone, and if so many uses go over to Verizon, whats to say they won't have problems on their network as well?

Considering the problems I have with my Verizon BlackBerry, I hope for their sake they plan on doing a hell of a lot more. AT&T has been a dream in comparison, at least in this area.

Edited by mantis-, May 27 2010, 3:34pm :

SfIsHeR1701 said,
The iPhone is a very popular phone, and if so many uses go over to Verizon, whats to say they won't have problems on their network as well?
If Verizon had the iPhone deal everyone would be complaining about their service and people would be begging to move to another carrier. AT&T is screwed here because once Verizon gets an iPhone, they will only have a small portion of the iPhone user base and be declared a winner.

I've been a very long-time AT&T customer since it was AT&T Wireless before Cingular and I've had virtually zero issues with AT&T's voice and 3G data, especially since I've had my first iPhone almost one year ago. Before I had an iPhone, I had numerous smartphones and each one had excellent voice and data service.

For the record, I live in Metro Detroit about 20 miles north of Downtown and I commute to Detroit almost daily and no issues there. I've also used my service in Phoenix, Tucson, Washington D.C., and rural Ohio (some no service there, but no one else had service from any carrier) many times without issue.

I think in reality the issue isn't really with AT&T but people's sensitivity to this issue and they expect too much. If Verizon receives the iPhone as a smartphone on their network, the same "issues" would occur, people would see small problems, blow them up, and put the blame on Verizon. It's a lose-lose situation for all carriers...why would Verizon even want the iPhone anyway? They should concentrate on making good competitive smartphones that will entice people away from their iPhones.

angmi90 said,
I've been a very long-time AT&T customer since it was AT&T Wireless before Cingular and I've had virtually zero issues with AT&T's voice and 3G data, especially since I've had my first iPhone almost one year ago. Before I had an iPhone, I had numerous smartphones and each one had excellent voice and data service.

For the record, I live in Metro Detroit about 20 miles north of Downtown and I commute to Detroit almost daily and no issues there. I've also used my service in Phoenix, Tucson, Washington D.C., and rural Ohio (some no service there, but no one else had service from any carrier) many times without issue.

I think in reality the issue isn't really with AT&T but people's sensitivity to this issue and they expect too much. If Verizon receives the iPhone as a smartphone on their network, the same "issues" would occur, people would see small problems, blow them up, and put the blame on Verizon. It's a lose-lose situation for all carriers...why would Verizon even want the iPhone anyway? They should concentrate on making good competitive smartphones that will entice people away from their iPhones.

The issue isn't entirely with the saturation of the usage areas. For me and many others the issue os with the penetrating effectiveness of the signal in relation to buildings. I have to keep my phone sitting on a window ledge to maintain a strong enough signal to stop from getting a dropped call while at home. Verizon's upcoming LTE network has stronger penetrating power than AT&T's network and would therefore be (theoretically) more reliable. With the LTE network Verizon will be the only other provider that will allow data usage along with phone usage at the same time. So far tht is the advantage that AT&T has over the other networks and a main reason why Apple chose AT&T as the carrier.

Ironman273 said,
I'm in the exact same situation as you, albeit in South Florida.

No issues with ATT since i joined like 10 years ago....absolutely love the service and would never switch. Everyone i know with verizon, sprint, tmobile...all have major issues. ATT just works for me. <---satisfied customer.

you people expect 100 Mbps internet on your wireless provider need to grow up.

I don't think these issues are perceived. I have a client with 30 sales people who had Sprint Blackberry's who were regularly on the road. They had no complaints. The company decided to switch them to iPhones through AT&T and they suddenly started reporting all kinds of issues with dropped calls, echoing, no signal, etc. These are 30 people who had no idea there were issues with AT&T and the iPhone. They're not technical people who keep up with this market. They were all excited to get the iPhone but after a month of usage they were nearly all complaining and asking to go back to Sprint. This is just one of many first hand experiences I've had with people who made the switch and later regretted it. BTW, these people are spread all over the country.

I live in Maryland and travel regularly from the PA line to Baltimore and have zero issues with AT&T in fact PC world recognized AT&T as the best 3G network. I have been to NY two or three times a year and have never had any issues in any part of the city either. Maybe I am lucky but my friends and family on ATT dont report issues either. Haven't been on the west coast with ATT so maybe that is where the ATT doom and gloom come from.

shakey said,
t's been long rumored that Verizon will, in fact, be getting the iPhone. Is it a rumor or fact?

Its a fact that its been long rumored.

shakey said,
t's been long rumored that Verizon will, in fact, be getting the iPhone. Is it a rumor or fact?

The exclusivity agreement still has a year or two left. So, most likely, it'll be either 2011 or 2012 that we'll see one on Verizon.

Bengal34 said,

The exclusivity agreement still has a year or two left. So, most likely, it'll be either 2011 or 2012 that we'll see one on Verizon.

Doubt it. There have been many reputable sources reporting the agreement would end early 2011 if it went to full term however there are always loop holes and escape clauses that Apple to enforce allowing them to get out early and take their newest toy to a more reliable carrier especially considering how AT&T has totally and completely failed with their iPhone endeavors. They've had 4 years to fix it and still they can't figure it out yet they have time and money for commercials that state they have all this coverage. I don't have an iPhone because I refuse to go to AT&T thanks to the many close friends that have AT&T with the iPhone and complain endlessly. No thanks. My BB Storm on Verizon is rock solid and reliable. I'm definitely switching to the iPhone if it comes to Verizon.