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A Verizon iPhone? It could be dual mode for CDMA and LTE

But much remains to be resolved in the bargaining over AT&T's exclusive carrier rights

April 27, 2009 12:00 PM ET

Computerworld - If Verizon Wireless sells the iPhone, possibly as early as 2010, it would likely offer the device with a dual-mode radio that works with both Verizon's CDMA network and its upcoming, faster LTE network.

Today's report in USA Today that Verizon is in talks with Apple Inc. to possibly develop a CDMA-capable iPhone misses the point that Verizon is expecting to have more than 25 cities ready for LTE (Long Term Evolution) in 2010, analysts said today.

Given how long it will take for a full nationwide rollout of LTE, which will go into 2015 or later, a dual-mode iPhone makes sense, perhaps with the WCDMA variation of CDMA along with LTE, they said.

The Verizon iPhone "would be LTE, although what they need is a dual-mode iPhone until the LTE network is built out," said Phillip Redman, an analyst at Gartner Inc. "An LTE-only phone wouldn't be of much use until 2015, though a dual-mode WCDMA/LTE phone would be."

Craig Mathias, an analyst at Farpoint Group, said that since LTE might be five years or more from a full rollout, Verizon could easily benefit from having a first-generation iPhone that is just over CDMA and then, eventually, dual mode.

"An iPhone that is CDMA/EV-DO capable would really open up opportunities for Apple," Mathias said. "It makes sense for Apple to get the iPhone to 80 million subscribers at Verizon."

AT&T has exclusive distribution rights for the iPhone, which operates over its GSM network. AT&T is said to be seeking a one-year extension beyond 2010 of that exclusive agreement.

Mathias said Apple may realize that AT&T is reaching the point where it can't continue to attract iPhone customers at a fast rate. "How many more iPhone customers is AT&T going to get? But there are 80 million Verizon customers, and my guess is that there are at least 20% who will want an iPhone," he said.

LTE radio chips would have to come down in price before they could be affordably included in the iPhone, Mathias said, but he expects the prices to eventually drop low enough to make an LTE iPhone cost-effective for Verizon to sell.

The news about talks between Apple and Verizon could also be an attempt by Apple to enhance its bargaining position with AT&T over the exclusive contract, Redman said. But the ultimate value of having the iPhone in the inventory is to attract subscribers to lucrative data plans, the he said.

Some customers will pay $100 or more per month to have an iPhone voice and data plan just to enjoy iPhone's superior browsing and other functionalities, analysts noted.

"If you talk to iPhone users, they will tell you there is no substitute for an iPhone, and without one, you are operating at somewhat of a disadvantage," Mathias said. "That's a reason Verizon would want to sell it."

And some good news for customers is that if both Verizon and AT&T sold the iPhone, data plan prices would probably come down, "at least some," he added.

Read more about Mobile/Wireless in Computerworld's Mobile/Wireless Topic Center.

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