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How Will The Verizon iPhone Matter To You?

2011 January 5
by Henry Casey

Update: The prediction that Verizon would use the stage at CES to announce their own model of the iPhone was only off by less than a week, as the tech punditry found out on Friday when this invitation was sent out. In addition, if the Wall Street Journal’s reporting is true, then Verizon will in fact have an unlimited plan to offer prospective iPhone buyers. Read on for more analysis that still rings true.

This being said, the article as it was originally posted:
It appears that Verizon is on the verge of ending the tech sector’s longest running Will They Or Won’t They by welcoming the iPhone to its roster. As to when this will happen, everything is currently pointing to this Thursday evening, when Verizon’s CEO is scheduled for a keynote speech at the annual tech expo, CES, which takes place in Las Vegas, NV. These speeches are typically the kind of marquee moments that companies reserve their biggest announcements for.

This is the biggest story about the iPhone since 1) a prototype fell into Gizmodo’s hands after it was purchased using funds from the Gawker Bank Account, and then 2) most left-handed iPhone 4 owners found the way they hold their phones to be detrimental to their call-making (and holding) needs. At the same time, though, for those whose interest may be piqued by this story, I’d like to give typology for why and how this announcement will matter to you
People under contract with Verizon

Many smart phone holdouts under contract with Verizon have been convinced by their family, friends, and especially the media, that the iPhone is the expensive phone to have. They’ve gone into their local Verizon store and asked if they sell the iPhone, or have any idea when they will. When the store clerk starts to go into the “We have Android phones, they’re like iPhones, and even better in some ways,” sales pitch, these people think twice about it and tell themselves they can wait. They can wait because they do not need a smart phone at all, and so they can wait for the phone they want. They will get the iPhone and they will be buying them in large numbers.

Those Verizon customers who own smart phones are likely to own Android phones, and they will be split in reaction to the news of a Verizon iPhone. The many Android phone owners who love their phones will ignore the news, but they should know that they now have something to lose. If too many people jump on board for the Verizon iPhone, there’s a chance that Verizon’s servers are going to start creaking and groaning, doing their best AT&T 3G impression. Other Verizon/Android owners, mostly Mac users, have used their current phones (Android or otherwise) as a stopgap measure and are likely to drop their current phones into a gutter as they run to the Verizon store once they hear the words “the Verizon iPhone is on sale now,” ignoring any contract cancellation fees or logic.

iPhone owners (AT&T customers)

If you love your iPhone but hate seeing it capped at the knees by AT&T’s now notoriously poor service, you should still think twice before jumping over to Verizon. iPhone owners have two options and their decisions will likely be based on how much they have to spend. Ditching AT&T for Verizon is not as easy as bringing your iPhone to a Verizon store and sending a Go To Hell letter to AT&T.

Based around current contractual obligations, customers will be paying through the teeth to leave their current contract, because the price for triggering the escape of contract clause is $350, which is more expensive than either the 16 or the 32 GB iPhone models currently available.If you’ve been living through the problems of AT&T, but don’t really find that their problems merit running away as fast as you can, then you have something to gain by sticking around. That is, only if many, many, people leave their contracts behind. If you look to the right, imagine that AT&T’s iPhone users are the little plastic toys (diseases in Simpsons nuclear energy baron Mr. Burns’ body), and AT&T’s satellites are the doorway (his immune system), you understand the overcrowding problem that AT&T’s servers are suffering through. If enough iPhone users switch their carriers away from AT&T, then it’s only logical that AT&T’s networks in high traffic areas (the entire southern half of Manhattan, from my experience, and most of San Francisco, according to tech journalists) will be sped up, and an odd & unjustified brand loyalty will be rewarded. One note should be made about switching: if you are grandfathered into an Unlimited Data plan on AT&T, you’ll be kissing that pay structure goodbye, as Verizon does not offer such plans anymore.

Sprint, T-Mobile, and possibly Metro-PCS phone owners If you do not pay a monthly tithe to AT&T or Verizon, but are still interested in the iPhone, these are not the non-AT&T iPhones you have been looking for. Thanks to Verizon bargaining for some of the exclusivity that AT&T held for so long, it looks as though no more carriers will be able to sell you the iPhone in the U.S. for at least a year or two. Sorry!

AT&T Executives

A Shot From Verizon's Latest Ad

These probably-mega-rich folks are probably in the middle of a months-long chain-smoking marathon, the likes of which has never been seen before. They’re not only losing their golden goose, but they don’t have anything new to advertise. Verizon’s incoming 4G LTE network is now running slick commercials that subtly compare their new network arriving in customers’ hands to Superman landing in Kansas. This is Verizon implicitly guaranteeing that their network servers will be ready for the iPhone, that they’re about have an even faster network than that which already shames AT&T on a regular basis. Sure, AT&T will have an influx of cash from people abandoning their iPhones and triggering the aforementioned escape clause, but a lot of that will go to pay off the subsidized price of said phones. The iPhone, like most smart phones sold primarily with a two-year contract, costs much more than the current retail of $99-$299. This is why the monthly contract costs so much: you’re basically paying off the cost of the phone over month after month. The old saying goes that competition makes everybody stronger, but for that to happen with AT&T, they’re going to need something new with which to compete.

2 Responses
  1. Miles permalink
    January 5, 2011

    Having owned an iPhone in New York City for ~2 years and that same iPhone in SW Ohio for ~6 months, I can say unequivocally that NYC-based iPhone owners should be paying reduced monthly usage charges. The device simply doesn’t work a lot of the time in Manhattan and North Brooklyn, as you know–dropped calls, failure to locate via GPS, and data connection timeouts are so common in the more heavily-trafficked parts of the city that most of the time it feels like you’re carting around an incredibly expensive iPod Touch. While living in the city, I often gave AT&T the benefit of the doubt, since it seemed that every third person on the street was tapping away at the same device, sucking down bandwidth from the same network. But after several months in the Cincinnati area, where my phone works perfectly, with maybe ~3 dropped calls a month and no data problems, I returned to Manhattan for the holidays. Pulling my phone out of my pocket became again the crapshoot I’d remembered, only worse–perhaps because I’d gotten a taste of the way the network *should* work, perhaps because there were even more AT&T customers. Regardless of the reason, I was struck by the fact that, were I to move back to the city, I’d be paying the same monthly rate for a service that didn’t work but 75% as well. How is that fair, or even legal? People put up with a lot of bullshit to live in NYC, and maybe this is just one of those unpleasant realities. But if I should find myself, several years hence, back in New York, it certainly won’t be as an AT&T customer. It’s just not worth it.

    • January 5, 2011

      What I left out of the story was my own personal experience, and it is such: bad, bad, bad, bad.
      If by the time my AT&T contract expires, the Verizon iPhone service reports are stellar, then I’ll switch. Sure, I have to wait another year and change for a contract started in April of ’10 to expire, but often times it does feel in fact like I have to spin a wheel of misfortune to get things to work right.

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