FLIRTIN’ WITH DISASTER

A newborn Verizon iPhone threatens AT&T's future.

In the final days of the inevitable countdown to the end of AT&T’s monopolization of the iPhone, executives are surely biting their fingernails with eyes glued to a metaphoric doomsday clock brought to life in Verizon’s most recent advertising campaign. Like a modern Cinderella story, Verizon’s commercials depict a clock striking midnight, ending AT&T’s delusions of grandeur, thereby relieving loyal Verizon customers of their wait for Apple’s cellular Holy Grail.

In rewarding customer loyalty, and ultimately patience, Verizon has again outdone itself by purchasing the rights to bring the first Apple iPhone prototype to shelves Feb. 10. But this is old news. Surely someone who had longed for an iPhone, but was bound by their prior contract to Verizon and Apple’s restriction to AT&T, would’ve been anxiously awaiting such an announcement. The real news is what this marketplace eruption will mean for AT&T and its alleged majority among public opinion as America’s most trusted network. The truth is that AT&T’s concerns go far beyond simply having another competitor with the same phone. Its membership, market presence and reputation all anxiously await the release and eventual consumer response to Verizon’s first iPhone prototype.

Where AT&T stands to take the most immediate and devastating loss is in its membership numbers. A report by ChangeWave Research in Jan. revealed that 26% of current AT&T iPhone users would jump ship to Verizon following its release of the same device. Furthermore, a positive review on Verizon’s iPhone would likely cause a drastic increase to the already unprecedented figure. Consumer feedback regarding the competition between Verizon and AT&T is causing a technological buzz, calling to question AT&T’s service quality, pricing options, and even their customer service. With statistical data identifying one-fourth of current iPhone customers as dissatisfied, AT&T will be watching post-release consumer reports closely for the slightest indication of Verizon’s production of a superior iPhone service.

As for where AT&T will find itself in the market following a Verizon success, the concern is far less dramatic. After all, there is no doubt that the two service providers have elevated themselves to an oligarchical presence. However, with such power in business comes a capitalist responsibility to continue to challenge the primary competition. There will always be people buying AT&T and its array of products that Verizon still and may never offer, but there is a realistic possibility that a superior prototype from Verizon may lay the current debate about which provider is better to rest.

AT&T’s final and most unpredictable risk is the damage to its reputation along the spectrum of public opinion. The price of a happy customer and the word he spreads is invaluable among today’s instant communication generation. ChangeWave identifies a total of 15% of AT&T non-iPhone users as “willing or likely” to switch services regardless of Verizon’s iPhone genesis. Compounded by reports of dropped calls and unreliable service, AT&T’s consumer relations issues are slowly becoming a burden, causing obvious damage to the company’s place in customers’ minds.
Verizon’s iPhone is set to be a complete replica of the AT&T model and is rumored to be capable of overtaking the majority as the leading iPhone provider. But if there is one wave of hope that AT&T may cling to, it is the recent technological critique that has naturally accompanied the glorified reports about Verizon’s projected superior iPhone. A miniature radio mechanism called CDMA that comes standard with most Verizon smart phones, including the upcoming iPhone, is threatening to interfere with a feature that allows for internet browsing during phone calls. AT&T has manufactured its iPhone products without CDMA and consumers have enjoyed having the capability to surf the web during calls. Verizon has indicated that this problem will have to be a small sacrifice for their superior reception under their 4G network. However, the hype generated by eager and loyal Verizon consumers hasn’t seemed to diminish following the reports about the minor technical issue. Clinging to their reception claim, Verizon has made a proactive vow to continue to work towards fixing the CDMA interference.

For now, AT&T will enjoy what’s left of its iPhone monopoly. But all eyes will be on Verizon after February 10 to see who will sit alone upon the iPhone throne.

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