Lessons from AT&T might help Verizon survive iPhone

11.01.2011

"Verizon benefits from the experience that AT&T's had ... but we can't assume they are in a significantly different position relative to AT&T," Marshall said. "Traffic is going to be a big issue for everyone."

The danger for a mobile operator introducing any blockbuster device is that it will sell faster and inspire more network use than was expected. AT&T has acknowledged it was caught off guard by the popularity of the iPhone, which was the first of a new generation of smartphones and triggered the mass-market embrace of mobile data in the U.S. In some areas, including places with many early adopters of the iPhone, AT&T gained a reputation for dropped calls and sometimes sluggish data speeds. Marshall believes AT&T is still suffering in public opinion for those early experiences even though its network has improved.

A key advantage Verizon would have with an iPhone introduction now is the benefit of time, Marshall and others said.

When the first iPhone was released, it wasn't even equipped for 3G, partly because that network wasn't available in enough areas. If Verizon introduces its first iPhone on Tuesday, it will do so with a 3G network already deployed across the country. The carrier's current expansion effort is focused on LTE (Long-Term Evolution), which the first Verizon iPhone is not expected to use.

"Verizon has much more coverage with 3G than anybody else," said ABI Research analyst Philip Solis. Geographic coverage helps with vertical applications such as telematics and boosts users' perceptions of network quality, he said.