The Verizon iPhone

Unless you just woke up, have been at work all day (and not reading the news online), or simply never cared before, you ought to be well aware due to this morning’s media surge that the Apple iPhone has finally come to Verizon. While the overall reaction seems to be hugely positive, there are certainly some concerns that must be taken into consideration. Some of them have already been brought to our attention, though I’ll do my best to provide my own creative insights.

One of the primary reasons for AT&T’s network being less-than-ideal in terms of performance over the last few years was because they were not prepared in the slightest for the huge boost in data usage that came about with the introduction of the original iPhone. This is a pretty well documented fact. It was also a repeated problem virtually every time a new carrier somewhere in the world brought the iPhone into its selection.

It is probable that Verizon has had plenty of time to bolster its network in preparation of the launch of such a high-data-usage handset. We haven’t heard any complaints of Verizon’s Android phones bringing the network to a crawl. Not only have they been able to support the existing data demands of their Android users, but also Android users tend to use at least as much data as iPhone users. While it still remains possible that a monstrous hoard of new Verizon iPhone users could give the network troubles similar to those seen on AT&T, there isn’t much reason for Verizon to be in fear of being swamped with customer complaints. Clearly they aren’t afraid at all, at least in outward appearance, as Verizon CEO Ivan Seidenberg has remained confident in the strength of their network. Their bigger concern should be the suspected $5 billion they’ll have to pay in subsidies over the first year, as reported by Bloomberg.

iPhone vs Android Data Usage

For the most part, Android and iPhone users use about the same amount of data features on their handsets. Other reports also suggest that actual data usage in terms of megabytes is higher for Android users.

Again, as long as there isn’t a major rush of new iPhone users, and so long as their data usage trends keep up relative to existing Android users, Verizon ought to be able to handle the increased usage and scale accordingly when needed.

Of course, it might also be worth considering that AT&T’s iPhone users have consumed less data because–according to many of their customers–the network doesn’t work a significant amount of the time. If the user isn’t able to access data services when they try to, no data usage will be recorded.

PCWorld posted an article shortly after the announcement titled Five Questions About the Verizon iPhone. While the questions it raises may seem at first to be mightily relevant, I couldn’t help but wonder if the article had been dumbed down for people that wouldn’t be taking everything into consideration. The first question especially bothered me: Will the rumored iPhone 5 arrive on Verizon and AT&T at the same time?

My thoughts: the article states that Verizon would risk losing their customers who might switch to AT&T to grab the next iPhone at its expected early summer release. I’m not sure why this would be the case, as their new iPhone users (old customers upgrading to the iPhone as well as recent converts from AT&T whose contracts had recently ended) would be under service agreements. They’d only be able to get out of their contracts by paying a hefty early termination fee, which tend to be in the hundreds of dollars. Anyone that always needs the latest and greatest in tech tends to follow trends enough to realize that there’s an extraordinarily high probability of Apple releasing the iPhone 5 for AT&T around June. If someone wants the iPhone 5 as soon as it comes out, the won’t be starting a new Verizon contract anytime soon. Therefore, it seems that the suspected AT&T Summer 2011 iPhone 5 poses a threat to Verizon not in terms of people switching over to AT&T but rather customers not signing on with Verizon in the first place. However, the situation could be entirely different if Apple ends up doing a yearly update for AT&T/other GSM carriers over the summer and a Verizon/CDMA annual upgrade every January or mid-winter. Another possibility, though one that I don’t find to be very likely, is that Apple’s usual summer announcement could just be a hardware fix for the AT&T iPhone 4 antenna problem, with iPhone 5 for both GSM and CDMA coming in January 2012 or sometime in late 2011.

PCWorld’s second question addresses the Verizon iPhone’s hotspot feature. This has a much simpler answer: anyone on AT&T who wants a hotspot can already jailbreak and install MyWi for a one-time cost of $20. Verizon gave no indication that tethering would be free, so we can expect that it will have an additional cost similar to AT&T’s $20/month. (That is, on AT&T you can pay $20/month to tether without jailbreaking or $20 one time to tether with jailbreaking.)

One of the biggest impacts that I haven’t yet seen discussed anywhere is the implications this will have for other CDMA carriers like Sprint, MetroPCS, and US Cellular. Just as U.S. T-mobile users have been able to use AT&T iPhones for several years now with unlocking, it can be expected that similar capabilities will emerge with this new hardware.

Hopefully this provided a take at least slightly different from what’s all over the web right now. I’m currently an AT&T iPhone user and I have no plans on switching, as 1) I haven’t had any of the troubles with the network that so many other users have complained about and 2) I’m on an AT&T family plan, so going solo to Verizon would come with quite an increase in personal mobile entertainment expenditures.

Send a message to the author of this post at andy@aneconomictheory.com.

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