AT&T Loses Exclusivity On Apple's iPhone; Gets Caught Goosing Network Figures

AT&T got hit with a double dose of bad news this week. First was the revelation that the telecommunications company went ahead and claimed that it had the nation's largest 4G network, but did so merely by renaming its existing 3G network. It didn't actually bring any facts to back up the change.

Marketing has won. Truth in advertising has lost.

4G speeds, real 4G, are specified as 100Mbit/sec for a mobile device moving at a fairly high rate of speed relative to the base station and 1Gbit/sec if stationary relative to the base station.

Current "4G" speeds by the carriers though is nowhere near this. It is, however, higher than what we are used to as 3G speeds for the last few years. I guess saying you had 3.1G would do no good because your competitor would just claim 3.2G and eventually everyone would be up around 3.9999G and, well, you might as well round to 4G, which they did.

AT&T is the latest to join the farce with its HSPA+ technology. Last year T-Mobile called their HSPA+ network 4G and AT&T gave T-Moble grief over it. Less than a year later, AT&T is on the HSPA+ 4G bandwagon.

What happens when LTE comes out on these networks? There is nothing to stop these guys from claiming it is 5G, even though it technically isn't even 4G.

The numbers become meaningless.

Then, there's the issue of those areas that supposedly have 4G service that are still inaccessible to many users because the networks themselves are not robust enough to manage the demand.

The networks are all playing games, but AT&T is just the latest to be called out for goosing its network figures in an attempt to increase market share and sales.

So why am I picking on AT&T? What makes AT&T's situation particularly galling, is that AT&T had just called out T-Mobile for doing the exact same thing just a few months ago. Verizon is also in the game, renaming its LTE architecture as 4G, but the ITU has let all these shenanigans continue because they've relaxed the definitions for 4G to the point that they're meaningless as a standard.

Now comes the long rumored possible word that Apple has finally inked a deal to sell and distribute the iPhone on Verizon Wireless, which has the largest and most accessible 3G network in the nation. Apple will have had to rework the iPhone to meet the different network architecture for Verizon (CMDA versus GSM as used on AT&T).

The companies are holding pressers on January 11, and it is widely expected that the companies will announce the iPhone coming to Verizon.

Adding Verizon would end Dallas-based AT&T Inc.’s four-year run as the exclusive U.S. carrier of Apple Inc.’s iPhone, a period in which the device has both been a top seller and faced complaints about reception. The move brings millions of potential customers to Apple and may crimp the growth of devices that run on Google Inc.’s Android operating system, Reiner said.

“By getting on to Verizon, Apple has the opportunity to sell more iPhones and could potentially slow Android’s momentum at the carrier that has been that platform’s most important patron,” Reiner said.

This past week, ComScore Inc. said Android topped the iPhone in U.S. smartphone subscribers for the first time, accounting for 26 percent of the market, compared with 25 percent for Apple. BlackBerry maker Research In Motion Ltd. had the top spot with 33.5 percent.

Apple and Verizon are waiting for the technology industry’s focus to move away from the Consumer Electronics Show being held now in Las Vegas, said Rajesh Ghai, an analyst at ThinkEquity LLC in San Francisco.

Verizon's network is simply more robust and accessible than AT&T - and you don't have to take Verizon's (or my) word on that - Consumer Reports found that AT&T had the worst coverage, particularly in urban areas like New York and other major metropolitan areas. It simply couldn't keep up with the data usage of its customers and Verizon has built out a greater capacity.

Since Verizon will now be carrying the iPhone, expect a significant shift in users to Verizon since the one major factor in AT&T's growth over the past few years has been due to iPhone exclusivity.

I'd also expect to see many Verizon users who have been locked into Android (Google) or Blackberry operating system architectures to flock to Apple's iOS system and expect to see Droids lose market share to Apple. That would also likely result in additional price pressure to bring prices down on the smartphones.