Davenport & Company analyst Drake Johnstone has made a bold prediction this week, saying that AT&T would lose up to 40 percent of its iPhone subscribers if the carrier was to lose its exclusivity pact on the iPhone and the smartphone moved to Verizon.
Says Johnstone in a client note: "Over the past several years, AT&T indicated that 40 percent of its new iPhone customers came from other carriers. We estimate that AT&T has 15 million iPhone customers (as of Q-1 10) and believe that AT&T could lose as many as 6 million, or 40 percent, of its iPhone customers when Verizon begins selling the iPhone in 2011."
Because of these expectations, the analyst says: "We are reducing AT&T’s 2011 wireless subscriber additions from 6 million to 2 million (most of these new additions may be lower value connected devices such as eReaders instead of higher value long-term wireless customers), since we believe that Verizon could obtain Apple’s approval to sell and provide wireless service for the iPhone as early as mid-2011."
While the numbers seem sensationalist, they could be a possibility. AT&T does have some measures in place to prevent such an "exodus," however. The company just raised its ETF (early termination fees) to $350 for smartphones, meaning leaving for another carrier could be a pricey transaction. Additionally, family-talk and business-discounted plans are hard to switch to new carriers with, and AT&T says about 80 percent of its customers have those types of plans.
Finally, there are still plenty of consumers out there that prefer the ease of a SIM card to CDMA activations.
Because of these expectations, the analyst says: "We are reducing AT&T’s 2011 wireless subscriber additions from 6 million to 2 million (most of these new additions may be lower value connected devices such as eReaders instead of higher value long-term wireless customers), since we believe that Verizon could obtain Apple’s approval to sell and provide wireless service for the iPhone as early as mid-2011."
While the numbers seem sensationalist, they could be a possibility. AT&T does have some measures in place to prevent such an "exodus," however. The company just raised its ETF (early termination fees) to $350 for smartphones, meaning leaving for another carrier could be a pricey transaction. Additionally, family-talk and business-discounted plans are hard to switch to new carriers with, and AT&T says about 80 percent of its customers have those types of plans.
Finally, there are still plenty of consumers out there that prefer the ease of a SIM card to CDMA activations.
