Verizon-iPhone deal less likely after Google move, IDC says

Computerworld - SAN DIEGO -- This week's announcement by Verizon Wireless and Google that they plan to bring more Android smartphones to market means Verizon is less likely to sell the Apple iPhone any time soon, IDC analysts said today.

But the companies' plans offer other possibilities, such as a move by Verizon to raise data rates for users next year, said IDC's Scott Ellison in a breakfast meeting timed in concert with the International CTIA wireless conference here. Verizon could do so, he said, in an attempt to distinguish its network as offering superior performance and reliability than other networks, including AT&T's.

AT&T, Ellison noted, has been vilified by iPhone users who think the carrier has done poorly in supporting network throughput for a range of iPhone applications that now include MMS. But there's no sign Apple is ready to jump to another carrier in the U.S.

"AT&T has immolated itself with network capacity issues," Ellison said, with the iPhone network support issues being the third in a cycle of network problems going back to 2002. "They have been completely unprepared with the iPhone."

Ellison predicted Verizon will raise data rates next year partly to draw attention to AT&T's difficulties, and also to boast about its own network superiority, which he said is "clearly above" other operators. By raising rates, Verizon would basically be saying, "Go ahead to someone else, if you want cheaper pricing," he added.

Separately at a CTIA keynote address today, AT&T's Chief Technology Officer John Donovan defended his company's efforts to add network capacity, pointing to plans for an HSPA 7.2 network in 25 cities by the end of 2010 to support data-hungry devices like the iPhone.

"I'm well aware of the press coverage..., but I don't plan a network based on blogs," Donovan said, referring to concerns from iPhone users and others. "But no one knows more about the wireless data experience than AT&T, and we're working hard to make that experience a great one."

Whatever Verizon does decide to do with data rates, three IDC analysts said the provider probably won't get an iPhone in its product mix before it converts to an LTE network in two years; it probably wouldn't make sense to convert a GSM-oriented iPhone to Verizon's current CDMA network.

Instead, the analysts said Verizon's partnership with Google shows it is willing to rely on Android phones on its superior network, at least until it can support the iPhone with a faster network. "Because Verizon is with Google, its near-term direction is with Android," Ellison said.

On another pricing topic, Ellison predicted a backlash by the carriers on netbooks that several are subsidizing, and predicted that carriers might find a way to raise the data rates charged to netbook customers in an attempt to throttle back data consumption on already-crowded networks.

"I'm sure carriers are wondering who in hell thought netbooks were a good idea," Ellison said. "The last [thing] they wanted was something using more data."

Ellison said he is not sure carriers are even making any money with netbooks, which are sometimes on sale for as little as $300.