AT&T CEO isn’t worried about losing iPhone customers once contract with Apple expires

Wed, May 19, 2010


The iPhone has been an unmitigated success not only for Apple, but for AT&T as well. In the nearly 3 years since its release, the iPhone has persuaded millions of users to switch over from their existing carriers to AT&T, and with iPhone users, on average, having higher monthly bills than other smartphone owners, AT&T would like to keep the iPhone all to itself for as long as possible.

Thankfully, though, that’s not something we have to worry about. Depending on who you believe, AT&T’s exclusive right to sell the iPhone either expires in 2012, or hopefully, sometime this summer. Regardless, AT&T will soon have to get used to a world where users can purchase iPhones from rival carriers.

And while you may think that AT&T is dreading the day, AT&T Mobility CEO Ralph De La Vega doesn’t seem worried at all.

At today’s J.P. Morgan technology, media and telecom conference in Boston, De La Vega fielded a number of questions from conference-goers and addressed all things iPhone and AT&T.

When asked about “the elephant in the room”, namely the date when AT&T and Apple’s iPhone contract expires, De La Vega just laughed. De La Vega did, however, mention that whenever that date comes, AT&T isn’t worried about current subscribers flocking for the greener pastures of Verizon and other carriers. De La Vega explained that about 80% of current iPhone subscribers are on a family or business-discount plan, which are very “sticky.” That said, AT&T is confident that it can maintain its current pool of iPhone subscribers even when Verizon inevitably begins offering the iPhone.

Regarding AT&T’s well documented troubles with network quality in big cities like New York and San Francisco, De La Vega conceded that there have been problems. He noted that while issues such as call quality have improved in New York, he remained “disappointed” in the progress they’ve made in San Francisco. He attributed some of these problems to equipment shortages.

Taking a step back, it’d be foolish to take De La Vega’s statements at face value. You can bet your bottom dollar that AT&T is none too pleased that their exclusive iPhone contract will eventually come to an end. While De La Vega makes a good point about keeping current iPhone subscribers, the name of the game in wireless is in attracting new subscribers, and in that regard, the power of the iPhone is unparalleled.

In the last quarter alone, for example, the iPhone was responsible for bringing in approximately 1.28 million new subscribers to AT&T. Still, what’s unfortunate for AT&T is a win for consumers. Once the iPhone hits Verizon and the race to steal subscribers from competing carriers intensifies, we’ll hopefully start to see a noticeable reduction in those expensive monthly data plans.

via WSJ



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