What Will the iPhone Mean for Verizon?

Shortly after the initial release of the first-generation Apple iPhone, consumers illustrated their eagerness to have now popular device available for use on networks other than AT&T.  In fact, I have personally heard from a number of people who have said that the only reason that they haven’t purchased an iPhone is because doing so would require them to use the dreaded AT&T network.  Time and time again, rumors have floated around the Internet that mobile network Verizon was to carry the much sought-after iPhone on their network as well.  And time and time again, these rumors have turned out to be nothing more than wishful thinking and has led to nothing more than letdowns for consumers.  But after four years, today will be a turning point in the fact that Verizon will hold an event that will announce the much-anticipated availability of the iPhone on the Verizon network.

But what will the availability of the iPhone on Verizon’s network mean for one of the nation’s largest telecommunications providers?

First and foremost, an iPhone on the Verizon network will settle the debate over performance issues on different wireless networks.  You see, for the past couple of years, AT&T and Verizon have been going back and forth in a toddler-like argument in regards to which carrier had the fastest mobile network.  One of the biggest things that has prevented such an argument from being settled by the consumers was the fact that the iPhone wasn’t available on Verizon’s network, and thus the network performance couldn’t be tested apples to apples.

In a previous article, I discussed some of the contributing factors that lead to users looking down at the AT&T mobile network and ultimately raised the question as to whether or not AT&T was being used as a scapegoat for flaws in the iPhone.  In this article, I questioned whether there was any mobile network that was “able to handle the sheer volume of traffic” that was “generated from the data-intensive iPhone.”  I went on to explain how easy it was for iPhone users to engage in bandwidth intensive activities from their handsets, and ultimately came to the conclusion that the iPhone being exclusive to the AT&T network meant that the network was suffering from high loads which wouldn’t necessarily be seen if iPhone users were spread amongst a handful of networks.

More than anything, however, I personally think that the Verizon iPhone will increase the competition between AT&T and Verizon. Having said this, users who previously stayed at AT&T solely because of the iPhone will now be able to choose networks based on the performance as opposed to simply the handset options sported by a particular network.  For consumers, this may mean better pricing on not only the handset itself, but the plans available on the different networks as well.  Verizon seems to have already kicked-off this competition by announcing the availability of an ulimited data plan – something that AT&T phased-out a while back.  On top of this, we can expect that both AT&T and Verizon will continue to upgrade their networks in order to improve coverage area, speed, and reliability; three factors that are important to every mobile user.

But the concept of increased competition leads to yet another question.  Will iPhone users migrate to Verizon?  While there is no doubt in my mind that the iPhone will be a hot product for existing Verizon users who will opt to upgrade their current handsets to the iPhone, the fact that many AT&T users are under contracts with AT&T may damper Verizon’s success; at least until said contracts expire and users will be able to transfer networks without any fees.  So while the iPhone’s success on the Verizon network won’t necessarily be immediate, I’m sure that Verizon’s customer-base will increase as more and more users are able to move networks.

While Verizon is sure to be successful with the iPhone, it’s also important to consider that the company will end up taking a significant loss by selling the iPhone to consumers.  This is because Verizon, like most mobile providers, subsidizes the cost of the phones that they sell.  This means that they pay a certain amount of the cost of a handset in oder to lower prices to consumers and attract them to their networks.  At about $400 per pop, this is expected to cost Verizon up to $5 billion in 2011 alone.  While this will be a burden on Verizon to begin with, the coming years will likely make up for it as the company sees an increased number of users and makes up for its losses as part of the subscription cost – as is standard practice for telecommunications providers.

At the end of the day, I am joyous that the availability of the iPhone on the Verizon network will at very least alleviate the number of rumors that we see on a continuous basis.  Although, I’m sure this event will open the doors for the availability of the iPhone on other networks, leading the way for even more rumors down the road.

What do you think of the Verizon iPhone?  Will you consider purchasing an iPhone on the Verizon network?  What good do you think will come of all this?  Let us know in the comments!