GO
Loading...

AT&T and Verizon Trade Taunts Over iPhone

In the Verizon-AT&T fight, the gloves are officially off.

AT&T , which has been the exclusive carrier of the iPhone in the United States, took a public swipe at the competition on Monday, a day before Verizon was expected to announce plans to offer the iPhone as well.

Apple's iPhone
Getty Images
Apple's iPhone

“I’m not sure iPhone users are ready for life in the slow lane,” Mark Siegel, an AT&T spokesman, said in a company statement. He suggested that Verizon’s version of the iPhone would not be as fast because of the network technology the company uses.

Verizon offered its own jabs in response, pointing out the stress and strain placed on AT&T’s network since 2007, the year the first iPhone was introduced.

“AT&T is known for a lot of things, but network quality is not one of them,” said Jeffrey Nelson, a spokesman for Verizon Wireless. “Typically companies try to call attention to their strongest suit.”

Mr. Nelson added something that had the ring of a playground taunt: “It must be backwards day at AT&T.”

Verizon’s impending announcement is cranking up the tension between AT&T and Verizon, which has watched from the sidelines as AT&T reaped the benefits of its partnership with Apple.

The fight now heating up underscores the growing importance of the gravitational pull of popular devices like the iPhone, which for wireless companies can mean millions of dollars in revenue in sales of the devices and data plans.

"Historically, these companies have not been direct competitors...But it speaks to the fact that the wireless business is now the majority of their growth." -Analyst, Sanford C. Bernstein, Craig Moffett,

“Historically, these companies have not been direct competitors. They share the same gene pool, going back to Ma Bell,” said Craig Moffett, an analyst at the research firm Sanford C. Bernstein. “But it speaks to the fact that the wireless business is now the majority of their growth, and it’s not far from the majority of their business.”

The competition between AT&T and Verizon, he said, recalls some of the great brand battles of the past, in which rivals duked it out in advertising campaigns on television and billboards.

“It’s reminiscent of the days when you couldn’t say the word ‘Pepsi’ in Atlanta,” Mr. Moffett said.

The stakes for AT&T are high. The company has suffered from the strain placed on its network by millions of data-guzzling iPhone owners, and has struggled to address customer complaints. Its reputation may suffer further damage if Verizon does not have the same problems with its network.

“There’s no comparison between the two carriers when it comes to consumer satisfaction,” said Paul Reynolds, an electronics editor at Consumer Reports, who keeps a close eye on wireless companies.

Mr. Reynolds said the magazine had found that in the last few years, Verizon was consistently ranked highest in satisfaction among its users.

AT&T, he said, is a different story.

Its customers “are consistently the least satisfied,” Mr. Reynolds said. “AT&T used to have company in the lower rung, but Sprint pulled itself up and moved into the top-tier carriers.”

Millions of wireless subscribers may hang in the balance.

Gene Munster, an analyst at Piper Jaffray, estimates that Verizon could activate as many as nine million iPhones in the coming year, or as much as 40 percent of its total smartphone sales for the year. Up to 6.5 million of those subscribers could be defectors from AT&T, he said.

The back-and-forth between the two companies has been going on for a while. Last year, Verizon ran a series of commercials showing purported dead zones in AT&T’s national coverage. They were accompanied by the tagline, “Before you pick a phone, pick a network.”

Analysts and experts expect the clash between the carriers to continue to play out in the public arena, most likely through similar barbed statements and ad campaigns, as each criticizes the other’s capabilities and services.

Charles Golvin, an analyst at Forrester Research, said that given Apple’s resistance to allowing carriers to put their brands on the iPhone, it was likely that phones from AT&T and Verizon would be indistinguishable on the outside. “It’s crucial that they have a message that emphasizes the quality of the network,” he said.

Verizon’s network could suffer from the same hiccups and traffic burdens that AT&T has struggled with — unless it has learned from AT&T’s mistakes.

“Verizon is awfully confident they won’t have any problems,” Mr. Moffett said. “But they’ve had a long time to prepare for this.”

Symbol
Price
 
Change
%Change
T
---
VZ
---
AAPL
---

Featured

Contact Technology

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Squawk Alley