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Addition of iPhone could put strain on Verizon's network

The mobile carrier is expected to begin offering the popular smart phone. Its data-intensive features have been blamed for woes at AT&T.

January 11, 2011|By David Sarno, Los Angeles Times

With Verizon Wireless expected to start offering the iPhone, a key issue for consumers is: Will the popular device cause the network the same kind of problems it did at AT&T?

Although more than 73 million iPhones have been sold worldwide since Apple Inc. introduced the smart phone in mid-2007, in the U.S. its sole carrier — AT&T — has weathered complaints from users about slow performance and dropped calls.

The phone, expected to be added to the Verizon roster Tuesday, has data-intensive features such as the online game-playing and streaming that have been blamed for AT&T's woes. Analysts have warned that if Verizon's not careful, it could be in for the same drubbing. 

But when it comes to the iPhone, Verizon has a key advantage over AT&T: It didn't go first.

"AT&T had to go through quite a bit of pain in order to understand what the demand of those customers actually looked like," said Charles Golvin, a telecommunications analyst at Forrester Research Inc. "But Verizon has already gone through that learning curve — first from watching AT&T and second from watching people on their own network use these data-intensive devices."

Verizon's roster now includes an array of Google-powered Android smart phones built by manufacturers such as Motorola, HTC and Samsung. Over the last year Android phones have proved to be tough competition for AT&T's iPhone.

Still, the iPhone is expected to add considerable strain to Verizon's network. Analysts expect the carrier to sell as many as 12 million iPhones in 2011.

Spokesman Ken Muche would not confirm Monday that the iPhone was coming to Verizon. But he said the company would be ready for whatever products it added.

"We don't offer devices our network is not prepared to support," Muche said.

AT&T sold an estimated 15.6 million iPhones in 2010, according to Piper Jaffray analyst Gene Munster.

This year, Munster estimated, Verizon stands to "cannibalize" the sales of 6.5 million iPhones that might have been sold by AT&T.

In December, Consumer Reports rated Verizon the best mobile carrier — and AT&T the worst — in 16 of 23 of the cities it surveyed.

"When we compared the data on satisfaction for iPhone owners [on AT&T] and smart phone owners on Verizon, there was no comparison," said Paul Reynolds, the magazine's electronics editor.

"That said, we also know that iPhone owners are the heaviest data users," he added. "If and when Verizon gets an iPhone, they're going to get a lot of stress to their network."

Reynolds and other observers were not convinced that Verizon would be immune from the same issues that have dogged AT&T.

"There will be a flood of customers," said Richard Doherty, research director at the consulting firm Envisioneering Group. "But we're not sure the Verizon network is going to be the panacea that a lot of consumers are expecting."

Meanwhile, AT&T seems to mounting an effort to hold on to its iPhone users, who have complained widely online about the carrier's service. Some customers have said they plan to jump to Verizon, even through they'll have to pay several hundred dollars to get out of AT&T contracts.

AT&T has focused on what it said was the slower speed of Verizon's network. In November, the company released a study noting that its network was 60% faster than Verizon's. Verizon has not denied the claim.

On Sunday, AT&T spokesman Larry Solomon said, "I'm not sure iPhone users are ready for life in the slow lane."

Verizon's stock was largely unchanged in trading Monday, while shares of AT&T fell nearly 2% to $28.34.

Apple's shares, however, rose nearly 2% to $342.45 after the company hit an all-time high of $343.23 earlier in the day.

david.sarno@latimes.com

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