iPhone 4 launch should be good news for AT&T Mobility

To the surprise of few, Apple Inc. unveiled its latest iPhone iteration yesterday and like every previous version of the device, domestic availability will continue through AT&T Mobility.
While there were – and have been for years – rumors that Apple would expand access to the device beyond the nation’s No. 2 operator, that time has not yet come. Apple’s CEO Steve Jobs hinted at a recent technology conference that expanding the availability of the device could happen in the future, while many industry observers have claimed that AT&T Mobility has an exclusivity agreement in place that lasts through the middle of next year.
There were also screams from the peanut gallery during the iPhone 4 unveiling of “Verizon” when one of Jobs’ demos of a streaming service ran into network difficulties. Jobs quickly corrected the person that the device was actually running data traffic through the facility’s Wi-Fi network.
While AT&T Mobility might remain a sore point for some consumers, and to a lesser extent to Apple for the drag on its reputation, the fact remains that it makes the most financial sense for Apple to continue its domestic relationship with AT&T Mobility. The carrier’s use of GSM-based technology allows Apple to rely on just a single device with quad-band GSM/GPRS/EDGE and tri-band HSPA support to serve virtually every country on the planet. A move to a CDMA-based carrier in the U.S. would require a second model that would also splinter the usability of some features due to differing network capabilities.
For its part, AT&T Mobility said it will indeed begin offering the iPhone 4 beginning June 24 with preorders beginning on June 15. Pricing for the device will follow Apple’s already announced $199 for the 16 GB model and $299 for the 32 GB model. Following the iPhone 4 unveiling, AT&T Mobility cut the price of its current 3GS models from $199 to $149 for the 16 GB model and from $299 to $199 for the 32 GB model. A new 8 GB model of the 3GS will also be made available beginning June 24 that will sell for $99 replacing the current 3G model that sells for that price.
The pricing for the new devices factors in a $400 subsidy provided by AT&T Mobility, according to pricing provided by the carrier for both subsidized and unsubsidized iPhone’s. The carrier recently increased the early termination fee it charges for customers purchasing a smartphone that then decide to break their contract before the agreement expires. The new ETF fees begin at $325 before a prorating chops $10 per month off the total fee. The previous ETF for all of the carrier’s devices was $175.
AT&T Mobility also followed previous precedent by amending its upgrade policy for current iPhone users that allows them to take advantage of upgrade pricing up to six months early, if they agree to sign a new two-year contract.
Perhaps in anticipation of the new device, AT&T Mobility last week altered its smartphone data plans, capping the previous unlimited offering to 2 gigabytes of data transmission – and cutting the price from $30 to $25 per month – and slotting in an entry-level 200 megabyte plan for $15 per month. Current unlimited customers can stick with their plans, though AT&T Mobility said they can select a new plan if desired.
“While some will moan about the loss of unlimited plans, most users will pay less, grandfather clauses should keep existing users happy (and churn-free), and the new plans have reasonable overage charges,” noted Current Analysis in a recent report.
AT&T Mobility, which has been beset with acknowledged network capacity issues in some markets, might have also had a hand in denying Jobs’ “one more thing …” video-calling FaceTime feature from expanding beyond availability Wi-Fi networks. Analysts have noted that such video-calling services are bandwidth hogs and until AT&T Mobility is able to further enhance its network with both radio and backhaul upgrades, or roll out its planned LTE network, it’s unlikely they will see traditional cellular support.
As part of its data plan changes, AT&T Mobility also said users can add tethering capabilities to their device for an extra $20 per month of top of the 2 GB plan, though Apple did not make mention of the capability during the presentation.
AT&T Mobility also remains very committed to Apple’s products as it continues to host both the iPhone and iPad, while at the same time currently limiting its Google Inc. Android-powered smartphones to a single model from Motorola Inc. However, the carrier is one of the few to offer access to at least one device running virtually every known operating system.
While AT&T Mobility is only expected to see about a week’s worth of sales for the new iPhone during its fiscal second quarter, the new device should help the carrier continue its current domination in postpaid customer growth. The carrier’s first quarter results showed that the carrier added 512,000 direct contract customers during the quarter, which was nearly double the results posted by larger rival Verizon Wireless. AT&T Mobility noted that it added 2.7 million gross iPhone activations during the first three months of the year and that one-third of iPhone activations were from customers new to the carrier.