Analyst: AT&T likely to keep iPhone exclusive deal

Computerworld - Despite widespread speculation that Apple Inc. will open the iPhone exclusive arrangement with AT&T Inc. to include Verizon Wireless after 2010, one analyst firm is predicting AT&T's exclusive deal as the wireless carrier will be extended beyond then.

In a report, iSuppli Corp. said that its main reason for expecting an exclusive extension is based on its analysis of a growth in usage of a faster wireless standard at AT&T known as High Speed Packet Access (HSPA). The global growth in HSPA usage will far outstrip growth in usage of EVDO (Evolution Data Optimized), a different standard used by Verizon, iSuppli said.

"Speculation is rife that Apple will end its exclusive U.S. iPhone service deal with AT&T when the current contract expires in June 2010, and begin to offer phones that work with the Verizon network," said Francis Dieco, an iSupply analyst, in a statement. "However, iSuppli doesn't believe this will be the case. The main reason Apple is likely to stick with AT&T beyond 2010 is the relatively wide usage and growth expected for the HSPA air standard used by the carrier for 3G data."

It appears iSuppli reached it conclusions without any direct knowledge of what Apple will do regarding the exclusive deal. AT&T and Apple have been mum on the issue for months, and were again today.

Gartner Inc. analyst Ken Dulaney agreed that AT&T will "definitely extend their deal" for exclusive sales of the iPhone. "AT&T would be crazy not to sell iPhone," he said in an e-mail, but added that Apple will also support Verizon, possibly with a different type of unit.

"If you are beholden to stockholders to make money, there is no easier money than in your home turf through a carrier desperate for this type of device," Dulaney added.

Many analysts have speculated that Apple would want to work with more than a single carrier in the U.S. just to expand the opportunities to sell the iPhone.

Today, Jack Gold, an analyst at J. Gold Associates, said that Apple would more likely want to open the exclusive deal for both AT&T and Verizon, the two largest carriers in the U.S.

Gold said he didn't agree with iSuppli's conclusions, primarily because there isn't that much incentive for Apple to stay with AT&T "unless AT&T throws a lot of money at Apple."

Gold rejected the analysis of growth in HSPA as a sufficient rationale to stay with AT&T, partly because adherence to a wireless standard doesn't fully determine how data throughput occurs.

A major factor in what a user experiences is determined by the number of users on a single cell tower, and how many towers are located in dense areas, he noted. Many AT&T customers using the iPhone have been outraged about service interruptions and slow downloads, which may occur because a tower might not be nearby due to buildings or terrain, Gold and others have noted.