It’s widely expected that Verizon Wireless, the biggest U.S. wireless carrier, will eventually sell Apple’s iPhone — perhaps as soon as this year.
So how will AT&T, the iPhone’s exclusive carrier for the last three years, deal with that when it happens?
Will customers flee in droves?
Probably not, AT&T wireless CEO Ralph de la Vega said this morning at the JPMorgan tech conference (without formally confirming that iPhone exclusivity is ending). Why not? Because switching carriers is still pretty tricky to do.
- 70% of AT&T’s customers are on family plans, which is a pain in the butt to move everyone over to a new carrier, de la Vega said.
- 40% of customers are on corporate discount plans, which are also a pain to let go of.
So just as AT&T has never been able to get more than roughly 40% of each quarter’s U.S. iPhone buyers to switch over from other carriers, it’s unlikely that huge numbers AT&T’s iPhone customers will rush out the door if a Verizon iPhone hits the market.
To that point, just as the iPhone has been a big helper in lowering AT&T’s churn rate — the per cent of customers who leave the service each month — NON-iPhone customers have seen the same reductions in churn rate as iPhone customers, de la Vega said. So AT&T’s entire device/service portfolio is working to keep customers loyal to AT&T just as well as the iPhone has.
Sure, there will be customers who switch, but Apple’s incentive to sell a Verizon iPhone is much more to get existing Verizon subscribers to buy one than to pull its existing customers over from AT&T.
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