It is only three words, but it was enough to get speculation revved-up: Is AT&T admitting it’s iPhone deal is coming to a close? In a late-Friday filing with the Security and Exchange Commission, Apple’s U.S. partner told regulators exclusivity contracts on ‘a number of attractive handsets’ are about to end.
Although Apple’s iPhone was not mentioned by name, the oblique reference had analysts scurrying to connect the dots. For some time, rumors have floated that Apple is preparing to introduce a CDMA version of the iPhone, potentially for AT&T rival Verizon. While neither firm has spoken directly on the issue, AT&T’s statement is just the latest piece in the puzzle.
“Offering a number of attractive handsets on an exclusive basis distinguishes us from our competitors,” according to the AT&T filing. “As these exclusivity arrangements end, we expect to continue to offer such handsets (based on historical industry practice) and we believe our service plan offerings will help retain our customers by providing incentives not to move to another carrier,” the company noted in an effort to assure investors all would be well without the iconic iPhone.
In May, AT&T CEO Ralph de la Vega told analyst at the JP Morgan Tech Conference, spoke more openly about what those “incentives not to move to another carrier.” AT&T said 70 percent of iPhone customers are on family plans with others on corporate discounts – two plans with very few exits.
The company went on to say the exclusive arrangements with Apple and others “may not provide a competitive advantage over time, as the industry continues to introduce new devices and services.” Is this a possible reference to the growing number of Android-based handsets? Although ending exclusive arrangements could increase loss of customers – including the valuable postpaid subscribers – “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,” the carrier concluded.
Although AT&T exclusive contract with Apple is thought to last until 2012, many analysts expect to see Verizon added to the iPhone ranks in 2011.
