Could Apple really dictate iPhone terms to Verizon Wireless?

Could Apple really dictate iPhone terms to Verizon Wireless?

Summary: The bricks just keep being thrown through AT&T's reputation window.This time, TechCrunch's MG Siegler has an entertaining rant on how Apple needs to dump AT&T and put the iPhone on Verizon Wireless.

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The bricks just keep being thrown through AT&T's reputation window.

This time, TechCrunch's MG Siegler has an entertaining rant on how Apple needs to dump AT&T and put the iPhone on Verizon Wireless. As noted before, the iPhone may be the worst thing that has ever happened to AT&T's reputation over the long run.

But Siegler reckons that Apple can dictate terms to Verizon Wireless and simply appear. Siegler writes:

Apple no longer needs AT&T. Thanks to its huge success, it can dictate its own terms to other carriers now, and ensure it controls the iPhone ecosystem — its top priority. Verizon, as the nation’s largest carrier, is likely to give it the most resistance. But that resistance is futile. The iPhone will eventually be on Verizon, on Apple’s terms. It’s just a question of when.

The first part of that riff is true. Apple doesn't need AT&T. The second part of that---Apple dictating terms to anyone---may not apply.

Why? Beyond AT&T Apple doesn't have that many options. What's Apple gonna do? Go to T-Mobile? Good luck with that one. Sprint? Possibly, but its network and customer service---both improving by the way---have been lambasted over the years. That leaves Verizon Wireless. Here's why Verizon Wireless may not be so enamored with Apple:

  • Verizon Wireless hasn't been crippled even though it would happily take the iPhone. The iPhone only has meant that AT&T can sorta, kinda almost tie Verizon. AT&T ended the first quarter with 78.2 million subscribers. Verizon Wireless had 86.6 million, inflated by 13.2 million from the Alltel purchase. AT&T's retail churn rate has improved to 1.2 percent, still behind Verizon's 1.14 percent. The mass exodus from Verizon to AT&T just isn't happening.
  • The Apple-AT&T partnership is great marketing---for Verizon. Verizon is smiling every time one of these AT&T sucks tales emerges. Verizon Wireless can mock AT&T as long as the iPhone fans jeer.
  • Verizon Wireless already has a bevy of devices that seem to be working. Granted, these devices aren't the iPhone, but a look at the financials and churn rate indicate that Verizon Wireless can do fine without Apple.
  • Perhaps the iPhone is just a network killer. RIM's co-CEO Jim Balsillie revealed the company's secret sauce a few quarters back: BlackBerries are easier on wireless networks. Is Verizon Wireless really in a rush to see if the iPhone will kill its network too? Probably not when you can just mock AT&T all day.

Does Verizon Wireless really need Apple? The case isn't that clear. If Apple really wants great carrier terms it may want to try Sprint.

Topics: iPhone, Apple, Hardware, Mobility, Smartphones, AT&T, Verizon

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162 comments
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  • american math

    "AT&T?s retail churn rate has improved to 1.2 percent, still behind
    Verizon?s 1.14 percent. "
    I don't know about american mathematics but in the rest of the world
    1.2% is usually bigger than 1.14% ...

    let me guess. you're a journalist? :P
    lordjeremias
    • 1.2% churn is much worse than 1.14

      the churn rate is the rate at which people leave the network. Improving to 1.2 means that you are much worse, a number bigger than that.

      Let me guess, you just don't understand, but you want to find fault so you say the 1st thing that comes to your mind ....
      ilinkcs@...
      • ur math sux

        AT&T - 78.2M subscribers w/ 1.2% churn = 938400 loss
        Veri - 86.6M subscribers w/ 1.14% churn = 987240 loss

        So, even though Veri has more subscribers, they're losing more of their customer base.
        Crakka
        • Know the business

          While you're point is well taken, you need to consider that in this industry, carrying capacity (number of subscribers who can be served with existing infrastructure) has a marginal cost increase or decrease that is way lower than the marginal revenue associated with gaining or losing a subscriber.

          That is what makes the churn rate worth management's attention. The churn rate is another way of isolating the customer base that sends in a payment each month. That base is your "hard revenue." The lower the churn rate, the higher the hard revenue. The higher the hard revenue, the more investment you can make in capacity or cost reductions, either of which may afford greater hard revenue.

          That is not to say a company should ignore the number of customers represented by the churn rate. This value is also meaningful, especially to those whose focus is improvement in customer service and overall satisfaction--which also affects hard revenue.
          TaxNerd
        • That is not the important metric

          but instead it is the amount that stays.

          Having a lower churn rate indicates that more customers are staying, you ROI for each customer is better as they are staying and spending money with you, not your competitor.
          GuidingLight
        • The percent loss is what counts ...

          ... not the number of warm bodies lost.

          Also, those raw numbers do not tell the whole story. How do those losses translate into dollars lost?

          For instance, if the average customer lost by AT&T spends more money per month than the average customer lost from Verizon. It could be MUCH WORSE for AT&T.

          The article suggests that it is the AT&T data network that is the weak link so it might be reasonable to assume that AT&T's losses actually do represent more money per head lost.
          M Wagner
        • Verizon Is Great

          I love Verizon. I've had AT&T (and SunCom), Sprint, Altel, and now Verizon. I had Verizon before they bought Altel.

          True, I have envied the iPhones for a while, but mostly for the apps...not necessarily for the phone service. I can go get an iPod touch and get apps if I wanted... but I never did... I am using a BlackBerry Tour with Verizon service. I've had Verizon for more than 5 years now... couldn't be happier.
          readydave
        • yep. But...

          ...if both continue at the same churn rate, Verizon would still have subscribers when AT&T ran out...
          fairportfan
    • Foreign Stupidity, lordjeremias = epic fail

      I guess you need a dictionary. But in America, "churn rate" is the rate at which people leave a carrier.

      This would make lower numbers better.

      lordjeremias = epic fail.
      trance2tec
    • Math Simplified

      1.2 percent of people leave you're country every year

      1.14 percent of people leave another country every year

      Who's country is losing a larger percentage of people every year?
      John Zern
      • IF country #1 . . .

        has 1000 people, they lose 12 citizens.

        If country #2 has 1500 people, they lose slightly over 17 (17.1) people.

        Percentages are meaningless in this debate, as it is actual numbers that will affect your bottom line, not percentages.

        'Course, the fact that Verizon has more overall customers, is AT&T's REAL problem . . .

        JLHenry
        • 100% wrong

          Sorry, but you are just completely off base. Percentage is all that
          matters, really.
          Total numbers lost is more than compensated for by total numbers
          that stay, if that number is greater than the other company.

          Case in point (purposely extreme to make the point):
          Company 1 has 1M subscribers and a 1% churn rate.
          Company 2 has 1K subscribers and a 10% churn rate.
          Each subscriber nets their respective company an average of $100 a
          year.

          After a year, Company 1 has 900K subscribers and an annual
          customer revenue of 90B, Company 2 has 900 (revenue=90K.) Which
          would you rather be?
          SpiritusInMachina
          • 90B?

            Ummm... does that stand for BILLION? You seem to make a valid point, eventhough you all are arguing. Still, when correcting other's mathematics, you check your own.

            900,000 x 100 = 90,000,000 aka 90 Million.

            Anyways, thanks for the illustration, it made me see things in that perspective. YOu have a good point, although I wouldn't want to keep a high churn rate even if I did have more customers. In real life, the numbers aren't that disparate. That's all.

            /end great post
            qcesarjr@...
          • Yes, where B=M, its new math!

            Yeah that was a typo. My math is OK, my typing not quite so much so.

            That said, yes, churn rate is something every company wants to
            minimize. The issue is that for churn, it is often less important relative
            to other companies that it is to oneself. Instead of looking at it as "I
            lost fewer than the next guy," or "I make more than the next guy," as a
            shareholder, the other important metric is, "We made 90M (!!) when, if
            we had better customer service and infrastructure and thus a lower
            churn rate, we would have made maybe 5M more."
            And since this is FTMP subscriber churn, customers lost are lost for
            approximately 2 whole years (the life of the typical contract.) This is
            not a good thing.
            SpiritusInMachina
        • would guess

          that you did not deal with much in the way of math, statistics or business while in school
          desamuelson
        • Verizon has more customers . . . .

          And always will. It's a conservative company, but focuses on the basics, network and customer service first, fancy phones second. When I press the call button I expect to make a call, with ATT, that outcome is increasingly unlikely.

          My Blackberry Curve is a frustratingly crude device in some ways, with a lousy browser, crappy menu systems, but it makes great phone calls, bluetooth works well, and I never miss an email. It keeps me connected, and Opera Mini compensates for the browser issue.

          I love my iPod touch, and would love an iPhone, as long as it was on Verizon. . . . .
          fireyouritguys
      • words

        "1.2 percent of people leave 'you are' country"?
        "'Who is' country is losing"?
        You not only need to pay attention to what soemone else is wrtiting, but your own words as well.
        In the first quote the proper word is 'your', the second it is 'whose'. Read the contractions as what they represent, and you will see as I posted it at the beginning of this comment.
        dhays
        • PuuuuLeazzzeee

          PuuuuLeazzzeee,
          I, like you, am annoyed with bad grammar, spelling & syntax; but in the age of texting and short attention spans - I don't see the relevance? I long ago "got over" allowing my blood pressure to rise over these postings and ORIGINAL articles as well!
          ncironman
    • There are 2 sides to statistics

      Yes a churn rate of 1.2 is worse than a churn rate of 1.14 by a mere 6
      100ths of 1 percent!

      BUT!!!

      A churn rate of 1.2% for AT&T's 78.2 million customers is 938,400
      customers and a churn rate of 1.14% for Verizon's 86.6 million
      customers is 987,240 customers. So Verizon actually lost 48,840 more
      customers than AT&T did.

      There are untruths, lies and statistics and all are the same thing!
      kirasaw
      • What's the line?

        "There are lies, DAMNED lies, and STATISTICS."

        -Benjamin Disraeli, popularized by Mark Twain.

        JLHenry