Verizon to announce iPhone offering today

According to multiple sources, including the Wall Street Journal, Verizon will formally announce later today the carrier will begin offering the Apple iPhone at the end of January. This will mark the end of AT&T’s exclusivity deal with Apple regarding the devices, but also represents a pivotal moment for both AT&T and Verizon in terms of Wall Street and network performance.

The impact to AT&T could be substantial given the network capacity and quality issues that subscribers have reported, leading to frustrations that could result in a switch of service providers. Quarterly churn numbers could jump significantly if there’s a mass exodus from AT&T, but that’s not likely. A vast majority of AT&T’s installed base of iPhone users are tied to family or corporate plans, making it more difficult to switch without prohibitive financial penalties.

The network capacity and quality issues caused by an overwhelming amount of data traffic on AT&T’s network could replicate themselves on Verizon’s network as well. While Verizon maintains their network is ready to handle the demand, there’s no guarantee and no way to predict what actual demand will be. For example, several studies have cited that Android users (the bulk of Verizon’s non-Blackberry smart phone portfolio) use more data than current iPhone users on AT&T’s network.

Perhaps the most significant difference (and differentiator) in the network offerings of AT&T and Verizon is the ability to talk and use data simultaneously – an advantage AT&T has leveraged in the marketplace since launching 3G services. This functionality is important to many subscribers, and may prove problematic for Verizon if the majority of potential new subscribers are not aware of the technology difference.

The most interesting metric to observe, if the announcement happens as planned, will not be the bleeding of customers from AT&T to Verizon – it will be the battle for market share between Android, Apple and RIM in the Verizon customer base.

Given the announcement is still pending, Telwares believes:

- Verizon will announce the iPhone with an unlimited data plan, attempting to lure dissatisfied AT&T users across carrier lines and attracting smart phone upgrades within their installed base of subscribers.

- Verizon will have 7 to 9 million iPhones in its subscriber base by the end of 2011.

- Verizon will not experience the network issues that AT&T has endured; all service providers are now beyond the shock factor of data usage from smart phones, and Verizon has the advantage of the lessons learned from AT&T’s deployment.

- AT&T’s quarterly churn numbers will be moderately impacted, but will not drastically impact stock price during 2011.

Telwares in the media: smartphones

Telwares was quoted today in InfoWorld on the topic of corporate ownership of smartphones. You can access the full article by visiting:

http://www.infoworld.com/d/mobilize/who-should-own-your-smartphones-173

Behind the curtain: Corporate versus individual liability in wireless

The topic of who owns and who pays for an employee’s wireless services is once again heating up, and has been for the past year. It’s no coincidence – from a financial perspective, times are tough and companies need cost out opportunities. On the technology side, smart devices  continue to penetrate the enterprise at ever-increasing rates…sometimes even alarming rates. This is a recipe for direct conflict and the issue is multifaceted.

Many organizations think moving to a stipend or pure T&E model will solve the cost issue in wireless. Some companies are questioning the concept of subsidizing wireless at all. The real truth is that no single model will solve the financial requirement for cost out, and certainly won’t solve the technical issues. It’s all about having a relevant mix of liability models (think bell curve that spans the wireless population) that drives the optimal impact. Basically, the “IL versus CL” debate is based in financial logic today, but will quickly evolve into the relevant discussion of risk tolerance, security, culture, and ultimately competitive advantage. Here’s why:

•It’s not about the simple MRC versus a stipend: the TCO and IT impacts shape the story and drastically impact end results (you still need to support connectivity, which then spins into security, compliance and support)

•A stabilized (or at least consistent) environment to launch back office enablement or enterprise tools becomes front and center in the argument to own the assets – not for finance, but for consistency and foundation and speed of deployment

•There is no such thing as a liability model without layers of exceptions including tiered stipends (what happens if I spike?), T&E (I exceeded my cap, now what?), or a pure consumer model (you don’t reimburse, I don’t answer the phone)

•The ultimate mix of liability models depends almost entirely on the subtleties of IT capabilities, business requirements, financial conditions and organizational culture

•Almost every organization embraces multiple liability models, whether they are formally acknowledged or not

As financial conditions tighten, cost out often leads to demand destruction – the outright removal of devices from the subsidized population of employees. Cost out can also mean the removal of certain services, the potential downgrade of support, or refinement of eligibility or entitlement policies. The math might work in the short term, but the business effects can last long after the short term savings gain. The point here is to vet out eligibility early, and be smart about what is fundamentally impacted by making changes. It can be financially and culturally painful if not executed carefully.

The bottom line, corporate liability is a consistent best practice for most organizations. What’s changing is the need to be specific and savvy about how to apply it, and how to bolster it with smart options.

Look for more thoughts from Telwares on this topic next week in a media feature, link to be posted here Monday.