Mac Musings

CDMA iPhone 4 Opens New Markets for Apple

Dan Knight - 2011.01.12 - Tip Jar

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Although everyone seems to be calling it "the Verizon iPhone", the simple truth is that the new CMDA iPhone 4 introduced on Tuesday will not be a Verizon exclusive - no more than the iPhone was an AT&T exclusive until now.

The iPhone was exclusive to AT&T in the US market, and it's very possible that it will be exclusive to Verizon in the US, but there's also a huge market for a CDMA iPhone in other parts of the world. Analysts are already predicting that the "Verizon" iPhone will be available to China Telecom and India's Reliance Communications.

Verizon is the biggest wireless carrier in the US, with Wikipedia currently reporting 93.2 million subscribers (just 400,000 ahead of AT&T). The CDMA iPhone will help Verizon hold on to subscribers who might otherwise have switched to AT&T for the iPhone, and it will also be a magnet for those using other services as well as disaffected AT&T users. It's not unrealistic that Verizon Wireless could have 8-10 million iPhone users within a year - and perhaps a lot more.

China Telecom holds third place among wireless carriers in the world's most populous nation. According to Wikipedia, it has 43 million wireless customers. Adding 4-6 million iPhone users within a year isn't unrealistic.

Reliance Communications claims to have 56 million CDMA subscribers, which is potentially 5-8 million iPhones.

Around the world, there are dozens (perhaps hundreds) of wireless carriers still using CDMA, so it's feasible that Apple could sell 20 million CDMA iPhones in 2011.

Competitive Rates

Macworld has examined current voice, messaging, and data rates from Verizon and AT&T and made some interesting discoveries:

  1. Individual voice plans offer exactly the same packages at exactly the same prices.
  2. AT&T has a lowball $60 550 minute family voice plan, while Verizon has a top-end 2,000 minute family voice plan for $100. The the 700 and 1,400 minute levels, rates are identical.
  3. Messaging plans start at $5, which gives you 200 texts on AT&T or 250 on Verizon. Verizon doubles that for $10, while AT&T offers 1,500 texts for $15. For $20, Verizon gives you 5,000 messages per month, but AT&T has unlimited individual messaging at the same price. Both have unlimited family messaging for $30.
  4. Data plans start at $15, which gives you 150 MB on Verizon or 200 MB on AT&T. AT&T offers 2 GB for $25 with no unlimited option, while Verizon has a $30/month unlimited plan.

Cheapest Plans

For an individual user, we're looking at $40 for voice, $5 for basic messaging (6-8 per day), and $15 for data, for a grand total of $60. Both offer unlimited mobile-to-mobile calling within their network. With the $10 texting plan, Verizon users also have unlimited texting to other Verizon Wireless users.

On the family side, you can get started with AT&T for $80, $10 less than Verizon - but for less minutes as well. With free mobile calls within each network, you might find the low-end plans adequate.

Midrange Plans

900 minutes should be plenty for most individual users. That's $60 from either carrier. 200 to 250 texts a month is enough for some, but most users will feel more comfortable with a lot more than that. Verizon's $10 500 message package might be enough; AT&T subscribers will have to jump to 1,500 texts for $15. This gives Verizon a $5 price advantage for midrange users.

Do note that Verizon subscribers with a texting plan for 500 or more messages get unlimited texting within the Verizon network. If AT&T has a similar program, I can't find it.

Looking at family plans, 700 minutes is probably adequate for 2-3 users. $70 a month whether you choose AT&T or Verizon. 500 texts is probably inadequate for a family plan, which means Verizon user will jump to the $20 5,000 message plan. 1,500 text for $15 from AT&T should suffice for most, giving AT&T a $5 edge here.

For more family users, say four or five, 1,400 minutes makes more sense, which boosts us to $90, and as that likely includes some teens, the family unlimited option is probably your best bet - $30 from either carrier, although if most of your texts are to Verizon users, Verizon's unlimited in-network messaging could make the $20 5,000 message package a real option.

Families might be able to save $10 with Verizon if they don't do excessive out-of-network texting.

It's very difficult to predict data usage, but if you have 3 to 5 users, the top-end data packages probably make the most sense - $25 for 2 GB through AT&T or $30 for unlimited though Verizon. In the end, a Verizon family opting for the 5,000 message package and unlimited data is $5 ahead of AT&T with unlimited messaging and a 2 GB data package.

The Top End

Both carriers have unlimited individual calling for $70. AT&T offers unlimited texting for $20 and 2 GB of data for $25, bringing our total to $115. With Verizon, unlimited texting adds $30 and unlimited data $30, which gives us a total of $130 per month.

As for family plans, Verizon has unlimited talk for $120, as does AT&T. Unlimited family texting adds $30, keeping things neck-and-neck. The big question is whether you'll use more than 2 GB of data per month. If so, you have a $5 advantage with AT&T. If you need more than that, spend the extra $5 for Verizon.

Intangibles

We're not looking at coverage maps, G3 speed, customer service, or reliability here. All we're looking at is the bottom line cost of service.

Coverage maps don't tell you how good coverage is in your home or workplace or while driving between point A and point B. They give a good general picture, but you may find yourself unable to make or receive phone calls or text messages in the mall or at a friend's house. Check with people you know to see what real world coverage is like in the places you frequent.

Faster G3 is better than slower G3, but any G3 is better than no G3, which is the crux of the AT&T vs. Verizon network argument. Each side has merit, but living in a state with lots of wide open expanses, I'd lean toward broader coverage.

Verizon has it all over AT&T when it comes to reliability and customer service, but on the flip side, if you buy a CDMA iPhone, you won't be able to talk and use the Internet at the same time. At present, CDMA is strictly voice or data, not both at the same time - although that's expected to change in the coming year.

One AT&T Advantage

One thing we haven't looked at: AT&T offers the 8 GB iPhone 3GS for $49, but there's no CDMA version. If you can get by with 8 GB of storage, you can save $150 by choosing the iPhone 3GS. Until the next generation iPhone ships in late June or so, that's a real advantage for AT&T.

Verizon has a short-term advantage in that its iPhone 4 will be able to work as a shared WiFi access point immediately. On the AT&T side, expect it later this year.

Perfect Timing

The availability of a CDMA iPhone couldn't come at a better time. Now that Android has squeezed past iPhone - primarily because Verizon could sell Android phones but not an iPhone - it's going to be interesting to see what happens when America's largest wireless carrier has the iPhone.

I expect to see a real dip in Android sales in January, February, and possibly into March as potential buyers wait for the CDMA iPhone. After that, all bets are off.

Better Off Waiting

Frankly, 4G is the wave of the future, and the iPhone 4 doesn't yet support it. (This could be one reason Android is gaining traction, as 4G is available in several metropolitan areas.) My gut feeling is that the next generation iPhone will have 4G, since both Verizon and AT&T are busy deploying it in more and more areas.

If you buy a CDMA iPhone now, you may kick yourself when 4G service comes to your neighborhood, because you probably won't be able to upgrade to a 4G iPhone until you've been under contract for 1-1/2 to 2 years.

I've been a Verizon user since Alltel was merged into it, and as tempting as the iPhone is, I'm going to hold off. If I can keep using my current mobile phone until June 15, I will be free and clear to change carriers without any early termination fees - and the next generation iPhone should be available shortly after that.

Not that I plan on buying one, but the possibility of eventually doing so is going to be a factor in whether I stick with Verizon or switch to AT&T.

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Dan Knight has been using Macs since 1986, sold Macs for several years, supported them for many more years, and has been publishing Low End Mac since April 1997. If you find Dan's articles helpful, please consider making a donation to his tip jar.

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