iPhone 5 Could Shake Up Wireless-Carrier War

Even before Apple answers the insatiable desire for a new iPhone, as its expected to do Tuesday, analysts and the media are sorting out the winners and losers.

One of the biggest questions is how the latest smartphone from the computing giant, almost predestined to be another smash hit, will affect the war among the top U.S. carriers.

AT&T Has the Edge

On the theory that a rising tide lifts all boats, AT&T, Verizon Wireless and, if reports are accurate, Sprint Nextel are likely to get a bounce from the iPhone 5, and possibly another lower-cost smartphone that could be debuted by new Apple CEO Tim Cook.

Currently loaded up with Android, BlackBerry, Palm and Windows Phone 7 devices, Sprint needs the iPhone to achieve some parity with its top rivals in offering all the top-rated operating systems. Verizon won that mantle earlier this year when Apple partnered with the carrier to offer an iPhone that ran on its CDMA network.

But AT&T, which enjoyed three years of iPhone exclusivity, is likely to maintain an edge with iPhone users for some time because so many of them are still locked into two-year contracts.

The company insists its doing well with new iPhone users, too, and activated 3.6 million of them during the first quarter of 2011 — up 33 percent from the same quarter of 2010, though that was slightly down sequentially from the end of 2010.

But AT&T, which declined a request for comment on the iPhone 5 Monday, as did Verizon, has long been plagued with low consumer satisfaction and connectivity problems for the iPhone in some areas.

Open To Change

“Folks are pretty upset with AT&T’s network,” said Rob Enderle, principal analyst with Enderle Group. “While AT&T has been building out furiously they are still having capacity issues, particularly in city centers, and their customer satisfaction scores are very low. This means folks are likely willing to explore Sprint and Verizon.”

In one scenario, Enderle said, AT&T may keep its marketing advantage if Apple rolls out an iPhone 5 capable of using HSPA+, sometimes referred to as “4G lite,” but not a version capable of the faster speed offered by long-term evolution 4G data networks. AT&T is the only one of the three carriers now using HSPA+. Both AT&T and Verizon are building 4G LTE networks; it is unclear if the rumored Sprint iPhone will use its high-speed WiMAX network.

Still, the novelty of a Sprint iPhone — a new model as well as the iPhone 4 — may also have some cache, and the carrier is bound to offer some perks for differentiation.

“Sprint is likely to be very aggressive on service price and iPhones are considered a premium product,” Enderle said. “They will likely lead with aggressively priced older models on very affordable plans and put pricing pressure on the other providers. Their network has more headroom as well, so folks should generally see more reliable data speeds [compared with] AT&T.”

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