For the last few years, cell service provider AT&T has dominated the headlines within the industry due to its exclusive agreement with tech giant Apple and its popular iPhone in the United States. The agreement extended into the iPhone’s second generation, which offered the new 3G network and DSL speeds for internet applications on the cell phone. For the last few months, rumors have circulated that AT&T is desperately trying to renegotiate the exclusivity deal to last for another two years beyond 2011 as reported by the Wall Street Journal and other tech-specific media outlets. It hasn’t gone unnoticed by AT&T’s biggest rival, Verizon, that the deal is about to be up.
Talking with the Wall Street Journal, Verizon CEO Ivan Seidenberg stated that Apple never wished to manufacture an iPhone for Verizon’s CDMA network since it wouldn’t work as well as the GSM-based models that it currently produced. He directly discussed the notion of Apple and the iPhone joining the Verizon Wireless in the future, saying that the partnership makes a lot more sense under the upcoming 4G network.
If you are unfamiliar with what 4G is, AT&T announced back in February that a Long-Term Evolution process was in place for wireless broadband technology. Come 2011, the 4G network would replace 3G, offering better service throughout the country. The new technology will be blazing fast to the tune of handling downloads of 100 Mbps and uploads of 50 Mbps. This means that it would be faster than what most DSL and some cable providers offer to their home internet consumers via direct connect. However, other cell phone technology partners have gone on the record as saying that more “real world” results would only offer 20 Mbps downloads and 5 Mbps uploads on the 4G network, which is still ridiculously fast for a cell phone or for a tethered laptop.
David Pfannenstiel, a former employee of cellular chip manufacturer Qualcomm and current tech manager at a Fortune 500 company weighs in: “I think that offering more bandwidth is a step in the right direction for cellular networks. One of the problems with the current network structure is not maximum speed, but available bandwidth. If you have 5 Mbps and 20 users, you chop up the maximum speed to a point that feels like dialup. By increasing the bandwidth, you increase the number of users per tower. For the traveling business customer, this will allow faster access and more reliable connections in high traffic areas such as airports and hotels, where you have many users trying to access the same network.”
While the 4G is in the plans for AT&T and Verizon, third wheel Sprint is working on using a version of the WiMax technology for its next generation of broadband architecture. While Sprint may not be on the 4G bandwagon and potentially positioning itself as an Apple partner, Verizon has changed its mood towards the California tech giant. Seidenberg went on the record back in the summer of 2008 saying that Steve Jobs was getting old, implying that Apple’s 15 minutes of fame had about two minutes left on the clock. However, with rumors of an upgraded third generation iPhone on its way, Verizon can’t ignore what customers want to buy.
Not so fast, says AT&T boss Randall Stephenson. He has stated on more than one occasion that the exclusivity deal with Apple through 2011 is a priority for AT&T, but it takes two to tango. Apple has sold 4.3 million iPhones in the second half of 2008 alone and benefited from a full court press marketing attack deployed by AT&T. It seems that the exclusivity deal makes a ton of sense for AT&T, but not nearly as much for Apple. The deal for exclusivity past 2011 better be a sweet one, otherwise we’ll be hearing “Can you hear me now?” with the Verizon nerd holding an iPhone. Could he also be playing on PokerStars or Full Tilt Poker on it? Assuming the legal hurdles in the United States are removed, absolutely.