AT&T: Loss of iPhone exclusivity won't have material effect

AT&T's latest filing with the U.S. Securities and Exchange Commission indicates the operator may be preparing to lose its exclusive hold on the iPhone.

While in past 10q filings AT&T has described the benefits of the iPhone, including higher average revenue per user and lower customer churn, this time it highlighted the wide variety of phones it offers and argued that the end of exclusive deals for phones shouldn't have a material effect on earnings.

"While the expiration of any of our current exclusivity arrangements could increase churn and reduce postpaid customer additions, we do not expect any such terminations to have a material negative impact on our Wireless segment income, consolidated operating margin or our cash from operations," AT&T's most recent 10q reads.

It also points out that AT&T offers a variety of handsets, including 18 smartphones from seven manufacturers, noting that the iPhone is its most popular.

"We believe offering a wide variety of handsets reduces dependence on any single handset as these products evolve. In addition, offering a number of attractive handsets on an exclusive basis distinguishes us from our competitors," AT&T wrote.

Without specifically naming the iPhone, the operator said it plans to continue to offer phones after exclusivity periods pass and it believes its service plan offerings will provide enough incentive for customers to stick with AT&T.

In its previous 10q, AT&T credited users of the iPhone, among other advanced devices, for a nearly 22% increase in average revenue per user for postpaid data services. It also listed the iPhone among reasons for an improvement in churn, which is the rate at which customers cancel their mobile service.

Speculation about the iPhone coming to another operator in the U.S. has been practically constant since the phone first launched in 2007. In most other countries, multiple operators offer the phone. While iPhone users in the U.S. are often fierce fans of the devices, many have been vocal about their dissatisfaction with the performance of AT&T's network.

Nancy Gohring covers mobile phones and cloud computing for The IDG News Service. Follow Nancy on Twitter at @idgnancy. Nancy's e-mail address is

Copyright © 2010 IDG Communications, Inc.

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