iPhone on Verizon - hope lives

[redman042]

You might well be right about that. Forgetting Verizon for a second, in the lack of any sort of good evidence to the contrary, I have a hard time believing the AT&T exclusive will go further than another year. Surely AT&T will have gotten the majority of their potential iPhone-switchers by then. At that point, it's easy to imagine that the benefits for both companies of an exclusive agree would be less clear.

Talk about low-hanging fruit - Tmobile would be an easy market to get into. At that point, I imagine Apple will be asking the following questions of their engineers and market analysts:

1. How much much would it cost us to produce a CDMA iPhone?
2. How many could we sell to Verizon customers and others?
3. Is the profit margin large enough that it's worth it?

These are the questions which nobody here can answer. I imagine that Apple's going to want to get the app store into as many hands as possible, just like with iTunes. That could factor into making CDMA networks more attractive to them. It's not just a phone sale anymore - it's a platform for app sales.

T-mobile uses unusual frequencies for their GSM, and I don't believe the new iPhone cell radio utilizes those frequencies.

I still think the cost of developing a CDMA iPhone is peanuts compared to the money they'd make, especially when you factor in incidental sales of Mac computers. If Apple doesn't have enough engineering resources to do the design work, that's one thing, but if it's purely a matter of cost-benefit, then I think the decision is clear.

 

[grndslm]

All cell phone carriers use voice codecs over digital communications, not VoIP. In fact, that's not even true; some cellular providers still use analog signals which are an inefficient use of frequency spectrum. Voice over internet protocol currently has little to do with cellular communications unless you're running Skype or another VoIP client over the data path using packet switching. Just because data is packetized during digital cellular communications does not mean it's VoIP. It's not.

Carriers are using VoIP but it's from tower to tower... Saying "they use voice codecs over digital communications" is Voice over Internet Protocol. Each carrier has a different method for dishing those digital packets out, tho. But this is why In-Network calling is free for all carriers. The big guys have been using VoIP for awhile, that's why they sue the little guys to stall the growth of anybody who could possibly compete with them.

Verizon has chosen LTE based on GSM as their 4G upgrade path over the expected UMB in the cdmaOne upgrade path. So technically, everyone is switching to the GSM upgrade path. Therefore, the GSM standard is better than the cdmaOne standard (often incorrectly shortened to simply CDMA), that's why Verizon is switching over to the GSM based LTE standard.

All I'm trying to say is that LTE & W-CDMA are closer to CDMA than GSM... it's in the name, for Pete's sake. I was trying to get at the old GSM dying before CDMA stops "evolving". Carriers will use VoIP end-to-end one day on whatever "digital" wireless standard they may choose, forgetting about the separation of voice & data packets.

 

[redman042]

Ok, new info for everyone to soak in. What do you think???

From Engadget Mobile:

iPhone launching on a CDMA carrier in Jamaica -- huh?

by Chris Ziegler, posted Jun 16th 2008 at 4:57PM
Last time we checked, the iPhone 3G was GSM through and through -- four bands of GSM / EDGE plus three bands of UMTS / HSDPA, to be exact. So how exactly is it that an exclusively CDMA carrier, Jamaica's MiPhone, could be carrying it? Even MiPhone's international roaming agreements are all with CDMA carriers (Alltel, MetroPCS, Sprint, and Verizon in the States, for example) so it's pretty freaking unclear how -- or what -- they plan to launch down there. We've cooked up a few possibilities for how this could play out:

* MiPhone has negotiated a roaming agreement with a GSM carrier in Jamaica. Doesn't seem like there would be any way to profit from this arrangement, though, since iPhone customers would be roaming 100 percent of the time.
* They didn't get the memo that "WCDMA" doesn't mean "CDMA". Just imagine the blushing execs!
* Unlocked iPhone 3Gs will simply be offered through MiPhone stores for use on other networks.
* There's a mysterious CDMA version of the iPhone waiting in the wings. Doubtful. Very, very doubtful.
* CDMA support secretly lurks inside each and every iPhone 3G. Again, doubtful.

We're working to figure out what the heck is going on here; we'll update you once we know.​

By the way, this carrier is listed on Apple's own site:

http://www.apple.com/lae/iphone/buy/

 

[kdarling]

I still think the cost of developing a CDMA iPhone is peanuts compared to the money they'd make, especially when you factor in incidental sales of Mac computers.

+1

If Apple doesn't have enough engineering resources to do the design work, that's one thing, but if it's purely a matter of cost-benefit, then I think the decision is clear.

It'd be surprising if they actually did the radio engineering... it's a lot easier and cheaper and safer to contract out to people/companies that are experienced in that sort of thing.

Apple already went from EDGE to 3G. And they have clearly not designed the phone OS to be dependent on GSM. (No info stored on SIM, etc.) Going to another radio costs almost nothing in the great scheme of things.

 

[skwoytek]

Ok, new info for everyone to soak in. What do you think???

From Engadget Mobile:

[Bob Loblaw]

We're working to figure out what the heck is going on here; we'll update you once we know.

By the way, this carrier is listed on Apple's own site:

http://www.apple.com/lae/iphone/buy/

I think Engadget needs to do more research.

MiPhone is owned by Oceanic Digital Jamaica Limited. The MiPhone website reads, "MiPhone, the MiPhone logo and all associated Symbols are Trademarks of Oceanic Digital Jamaica Limited."

Oceanic Digital Jamaica Limited has a GSM system planned for Jamaica according to the GSM Association's official website, GSMWorld.com. MiPhone's GSM network was planned for January 2008, so it's either complete or nearly complete.

And, Oceanic Digital Jamaica Limited is a wholly owned subsidiary of América Móvil, S.A.B. de C.V., the leading provider of wireless services in Latin America. www.americamovil.com América Móvil is a GSM service provider.

The GSM infrastructure will be in place, it's not CDMA.

 

[ravenvii]

I don't know about the short-term, maybe Apple will do a CDMA iPhone, maybe not.

But I heard that Verizon is planning to abandon CDMA and move on to 4G GSM in the next few years.

 

[redman042]

Looks like you're right . They are switching to GSM/3G. Found this thread of Jamaican techies talking about it... you will all get a kick out of reading their writing - exactly how it sounds

http://www.techjamaica.com/forums/showthread.php?t=61218&page=2

 

[grndslm]

Going to another radio costs almost nothing in the great scheme of things.

Why is it that you people cannot remember Apple & ATT have a FIVE YEAR CONTRACT?!?!?

 

[skwoytek]

I don't know about the short-term, maybe Apple will do a CDMA iPhone, maybe not.

But I heard that Verizon is planning to abandon CDMA and move on to 4G GSM in the next few years.

Most U.S. carriers are switching to the GSM standards 4G upgrade path (LTE) which itself is carried over a CDMA channel access method (LTE uses W-CDMA).

LTE = Long Term Evolution which is based on GSM standards.
W-CDMA = Wideband Code Division Multiple Access which is a method for sending multiple data streams across a common frequency channel.

 

[grndslm]

I don't know about the short-term, maybe Apple will do a CDMA iPhone, maybe not.

Not in America.

But I heard that Verizon is planning to abandon CDMA and move on to 4G GSM in the next few years.

And 4G GSM = LTE = Upgraded W-CDMA = evolution of CDMA.

The future is digital!!

 

[yadmonkey]

Why is it that you people cannot remember Apple & ATT have a FIVE YEAR CONTRACT?!?!?

Source?

 

[.michael]

I'm very sure that the whole 5 year contract thing was released. i asked a genius at the apple store. and its somewhere in one of the keynotes or speeches, i guess.

 

[yadmonkey]

I'm very sure that the whole 5 year contract thing was released. i asked a genius at the apple store. and its somewhere in one of the keynotes or speeches, i guess.

I'm pretty sure it is a mass assumption based on a single article which listed no source. It was definitely not part of a keynote and despite multiple requests, nobody has come forth with any sort of real evidence.

Here's some evidence that it wasn't a 5 year exclusive:

http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25791

Why would AT&T and Apple have a "new agreement" if there was already a 5 year agreement in place? Why would Apple take a lesser agreement (no more revenue sharing) if there was already a 5 year exclusive in place.

If you forget about the one article with no source, all you have is mass assumption. When you think about it, a 5 year exclusive doesn't seem like it would benefit either company.

 

[skwoytek]

I'm pretty sure it is a mass assumption based on a single article which listed no source. It was definitely not part of a keynote and despite multiple requests, nobody has come forth with any sort of real evidence.

Before I get started, I want to say that I'm not sure the exclusive agreement is 5-years.

I believe the origin of the claim was this USA Today article dated May 23, 2007. The third paragraph of that article reads,

AT&T has exclusive U.S. distribution rights for five years — an eternity in the go-go cellphone world. And Apple is barred for that time from developing a version of the iPhone for CDMA wireless networks.

Later in the article, they cite an outside source, Denny Strigl, Verizon's chief operating officer. According to the article, it was Strigl who decided to pass on the iPhone deal between Apple and Verizon. While he may not have direct knowledge of Apple and AT&T's terms, he does have knowledge of what Apple offered Verizon. Here the article reads,

Strigl doesn't think the iPhone will be that hard to compete against. Why? Because, he says, for five long years it will be tied to AT&T's wireless network. His point: A phone is only as good as the network it runs on, and he thinks Verizon's is better.

-=-=-=-

Why would AT&T and Apple have a "new agreement" if there was already a 5 year agreement in place? Why would Apple take a lesser agreement (no more revenue sharing) if there was already a 5 year exclusive in place.

Who's to say the new agreement is worse for Apple? Personally, I think they both made some up front sacrifices to get more iPhones out in the market. More iPhones means more App Store income for Apple, of which AT&T receives nothing. More consumer oriented smartphone means more of the public paying AT&T higher rates which they no longer share. And, AT&T knows once a consumer goes smartphone, they're likely to never go back to voice only.

I've read a few articles claiming that AT&T is getting the short end of this stick. And AT&T has noted to shareholders that they will lose money in the short term based on this deal - what a company tells shareholders these days is closely monitored. There may be no revenue sharing, but who knows how much AT&T is paying Apple up front for each iPhone 3G or new subscriber.

Again, I don't believe this is confirmation of the agreement length. But then again, I don't really care - my last few years with Verizon were hell. Every time I bought a phone the features listed on the manufacturer's site where disabled on Verizon's network, I was getting constant notices to try GetItNow applications and about a dozen other Verizon implemented frustrations that AT&T and iPhone have solved. Their coverage was marginally better, but the experience was substantially worse.

 

[redman042]

The 5 year agreement is simply not verified ANYWHERE. It is a commonly held belief that even the tech news sites propagate. But if you really dig into actual statements by Apple and/or AT&T, you will find they say precious little about both the old and the new agreement, and claim it to be confidential info for competitive reasons. In the recent AT&T conference call to shareholders, which took place a day after WWDC, the CEO said exactly that. He did say it was a multi year agreement, but it was very vague whether he was referring to the entire term from when the first iPhone hit the streets, or just the new agreement, and whether he meant 1.1 years or 2+ years. In any case, dismissing these discussions purely on the basis of the rumored length of the agreement is simply baseless. If we want to talk about this then we have to dig deeper than that. Those who believe the 5 year term verbatim have little to offer this thread, no offense.

Many will call this a stretch, but I tend to believe the "5 year" thing was purposely leaked by AT&T with Apple's blessing as a way to draw additional customers to AT&T, under the belief that if they wanted an iPhone any time this decade, they HAD to go to AT&T.

 

[skwoytek]

Many will call this a stretch, but I tend to believe the "5 year" thing was purposely leaked by AT&T with Apple's blessing as a way to draw additional customers to AT&T, under the belief that if they wanted an iPhone any time this decade, they HAD to go to AT&T.

I agree that we don't have solid proof on the exclusivity terms and until then it carries little weight towards this debate.

However, if you actually believe that claiming the terms are longer would get people to switch to AT&T, why would Denny Strigl, Verizon's chief operating officer be the one making the claim? Perhaps he thinks it will discourage people from being tied to AT&T for 5 years. Perhaps his comment is based on what Apple offered him.

Either way, I'm pretty sure Verizon was the origin of the 5-year agreement rumor, unless someone can find another earlier occurrence from an industry insider like Denny Strigl.

 

[yadmonkey]

skywotek, thanks for providing that link. Again, I think the new agreement is the only official evidence that the 5 year agreement was off-base. Whatever we extrapolate from there is just speculation.

It's really difficult to imagine why Strigl would make such a statement. It's also difficult to imagine that if there was a 5 year exclusive deal in place that AT&T wouldn't want you to know about it. You'd think it would be the opposite - Strigl would be trying to hide that fact and AT&T would be advertising it.

 

[question fear]

It is odd if AT&T and Apple signed a 5-yr exclusivity agreement. We probably won't know for sure until Apple releases a phone on another US carrier OR 5 years goes by.

Regarding AT&T's "new agreement" statements, I wouldn't read into those as having to do with exclusivity at all. Those are required releases to explain how accounting will be done for a revenue flow. It's required by law for companies to release material changes to things like that, so when the agreement changed from "revenue sharing" to "subsidizing" AT&T and Apple were required by accounting rules to issue statements clarifying that.

This is not to say that when they went back to the drawing board on the revenue agreement that other issues were not also renegotiated as well, just that from what I've read it looked more like an accounting change than a marketing one.

Actually, now that I typed that I had another thought: If a 5 year agreement existed and was broken, that would probably require a release under the same reporting laws. So either one doesn't exist or they haven't broken it (yet) and that's why nothing's been reported. Basically, if AT&T has a 5 year agreement, and Apple breaks that, then there's a significant potential change to the way AT&T does business, and they legally have to report it.

Basically, if it's important for investors to be aware of the change (as with the revenue to subsidy change) in this post-enron world they absolutely must release that information. My assumption is that a break in an exclusivity contract would fall under the same heading.

 

[redman042]

Basically, if AT&T has a 5 year agreement, and Apple breaks that, then there's a significant potential change to the way AT&T does business, and they legally have to report it.

But they never reported that they had a 5 year agreement in the first place.

 

[question fear]

But they never reported that they had a 5 year agreement in the first place.

Good point. I was a little sleepy when I wrote that post, so I left out bits I am sure.

Refresh my memory: Was AT&T presented as the "exclusive carrier" at all? If so, they may not have had to give a date on when that ended, just announce that it did end. As long as the expectation that AT&T remains exclusive doesn't change they don't need to report it. And again, this is my simplified explanation, and they do have to report material changes, but reporting that they are exclusive may be enough. Then they just need to explain they aren't exclusive anymore AS SOON AS that agreement ends. They can't wait until after Verizon releases an iPhone, for example, they'd have to do it as soon as the ink was dry on the new contract. I think.

Bear in mind my post above was just to clarify some of the press releases. It's easy to try to read statements like tea leaves, and I wanted to make sure before people took sides and assumed what a press release indicated that the law is pretty clear on material changes like that, and if the new agreement did alter the terms of exclusion there would legally have to be a notice in the release, at least as far as I understand the law. Whew, very run-on sentence. Anyhow, this is all based on what is admittedly a cursory knowledge of Sarbanes-Oxley, but there you go.

And I am not trying to argue for or against a Verizon iPhone, I am just trying to help everyone understand the information that's been given.

 

[kdarling]

However, if you actually believe that claiming the terms are longer would get people to switch to AT&T, why would Denny Strigl, Verizon's chief operating officer be the one making the claim? Perhaps he thinks it will discourage people from being tied to AT&T for 5 years. Perhaps his comment is based on what Apple offered him.

Verizon totally believes in the concept of "It's the network." And customer loyalty backs them up, for the most part. Strigl quite likely just picked a number out of his head that seemed harsh to him.

Yes, the USA Today article was the first appearance of the "five years". All that ATT or Apple have ever said, is "multi-year". But starting from when?

Remember that the Apple-ATT contract was created in Summer 2006. Without ATT even seeing the phone. (ATT finally saw it in December 2006.) So now it's been two years. That could be the multi-year.

Another odd thing is that people took a "five year" exclusivity contract to mean something good. As if ATT really wanted it badly. But they hadn't seen it when the contract was signed.

For all ATT knew, it was going to be another ROKR flop. And it might've been, since it used scroll bars at first (no fingertip flicking) and barely worked right up until first seen.

An exclusivity contract meant that Apple had to bend to ATT. If it was for five years, that's almost unheard of bending over. You'd have to believe that either Apple was desperate for a large US carrier after Verizon said no, or Apple's incredibly stupid to give up 2/3 of the US market.

So all these things count against the idea of a long exclusivity. But then again, maybe Apple really was that desperate / dumb.

One last thought about exclusivity contracts: they're almost always written so that if sales don't reach a certain amount, the exclusivity disappears.

 

[redman042]

And I am not trying to argue for or against a Verizon iPhone, I am just trying to help everyone understand the information that's been given.

Fair enough.

I'm not sure what the disclosure laws truly require. It makes sense to me that if they told their shareholders 5 years, then they'd have to tell their shareholders if that changed. But they didn't do either. They claimed the info was confidential for competitive reasons. I suppose Sarbanes-Oxley allows something for that, similar to how a company can ask the FCC to keep certain documents confidential. But there are probably strict guidelines for how the confidentiality argument is used. If anyone here is an expert on public company disclosure laws, it would bring interesting perspective to this whole discussion.

 

[redman042]

Verizon totally believes in the concept of "It's the network." And customer loyalty backs them up, for the most part. Strigl quite likely just picked a number out of his head that seemed harsh to him.

Seems to me that his goal was go get his customers into the mindset that "the iPhone is an AT&T phone for the foreseeable future, and Verizon is forging ahead with great alternatives". Remember that even a year or two exclusivity is an eternity in the cellphone business.

Remember that the Apple-ATT contract was created in Summer 2006. Without ATT even seeing the phone. (ATT finally saw it in December 2006.) So now it's been two years. That could be the multi-year.

Good point. I was having trouble believing that "multi-year" meant more than a year but less than two years (seemed a real stretch), but 2+ years starting in Summer 2006 makes more sense. The reason I say this is that, if Apple is going to ever do a CDMA phone, they need to do it real soon. With Blackberry developing great alternatives, Apple will miss the boat real soon if they don't jump in this year or early next.

One last thought about exclusivity contracts: they're almost always written so that if sales don't reach a certain amount, the exclusivity disappears.

Agreed... there has to be more to this contract with AT&T than just a simple exclusivity duration. I've never seen a contract that simple. There are always conditions, clauses, and outs.

What if the exit clause is the opposite of what you suggest? Instead of Apple saying they need an out if enough handsets are not sold by a certain date, they did it the opposite way. They said to AT&T: after you gain a certain number of new subscribers through iPhone sales, then we get to peddle to other carriers. After all, Apple is really the hype builder for this particular handset, which is totally opposite from normal handset deals. So if not enough were sold, it would be Apple's fault, not AT&Ts.

Apple needed into the market, and needed certain features like Visual Voicemail to sell the phone. AT&T wants to build subscriber base, and iPhone exclusivity would help them do that in a big way. But in the longer run, Apple needs to keep growing their sales year after year to please the stockholders. Eventually an exclusive deal with AT&T would cause them to hit a wall on growth, but maybe not for a year or two. So I think whatever deal was arrived at, it was structured to meet these goals for both parties.

 

[grndslm]

In any case, dismissing these discussions purely on the basis of the rumored length of the agreement is simply baseless. If we want to talk about this then we have to dig deeper than that. Those who believe the 5 year term verbatim have little to offer this thread, no offense.

In any case, continuing this discussion when evidence isn't good enough is purely retarded. Nobody knows the exact terms of the agreement, but we can all agree there is an agreement, right??

Let's look at the possibilities... As long as one of the companies are benefiting from the agreement, the agreement will continue. If both of the companies aren't benefiting, the agreement will be no more. If one isn't benefiting, and they think paying the "Early Termination Fee" *is* more beneficial, then the agreement will be broken.

No matter how much you believe the multi-year agreement is a conspiracy by ATT execs, it makes GREAT business sense. At some point, I think people switching to ATT just for the iPhone will start to decrease, and the agreement could end. But when ATT says that they're not going to see any money from the iPhone until 2010 or later... I wouldn't expect that agreement to end. Expecting it to end earlier would just make you more sad than you already are. And continuing this discussion will only lead to time slowly killing you. Sorry for the bad news, guys.

 

[redman042]

In any case, continuing this discussion when evidence isn't good enough is purely retarded.

Personally, I want to keep talking about it. Seems like others do too. If you don't, you know where the door is