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6 million to flee AT&T for Verizon iPhone?

By
Philip Elmer-DeWitt
Philip Elmer-DeWitt
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By
Philip Elmer-DeWitt
Philip Elmer-DeWitt
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May 25, 2010, 11:38 AM ET
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That’s the estimate of one Wall Street analyst, but things might not be that bad



AT&T (T) could lose 40% — or 6 million of its estimated 15 million iPhone customers — when and if Apple (AAPL) makes a model of its smartphone that runs on Verizon’s (VZ) cellular network, according to a note to clients issued Tuesday by Davenport & Company’ Drake Johnstone.

But several factors mitigate against a wholesale migration:

  • Sticky plans. AT&T Mobility CEO Ralph de la Vega told an audience at a J.P. Morgan event last week that 80% of his customers are on family-talk or business-discount plans, which are notoriously hard to unravel.
  • Termination fees. Starting June 1, AT&T is raising its iPhone ETF (early termination fee) from $175 to $325 — a penalty that is reduced $10 every month of a two-year contract. That’s lower than Verizon’s $350 ETF, but it still means you pay $95 if you leave AT&T even just one month before the end of your contract.
  • Improved service. Those dropped calls and sluggish downloads aren’t quite as bad as they were 12 months ago since AT&T has scrambled to beef up its wireless network in major U.S. cities. But the carrier is running out of time. Johnstone — like many analysts — believes Verizon will get the iPhone in 2011. There are rumors that it could happen a lot sooner than that.

Via All Things Digital.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

About the Author
By Philip Elmer-DeWitt
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