Video: Apple reportedly working on iPhone for Verizon

msnbc.com news services
updated 3/30/2010 8:54:50 PM ET 2010-03-31T00:54:50

Apple may be working on an iPhone designed for Verizon Wireless, according to The Wall Street Journal. Currently AT&T is the only U.S. phone company that carries the iPhone.

Citing unnamed sources, The Journal said Monday that Apple is planning to debut a new iPhone this summer, and on top of that appears to be working on a model for Verizon. The report says it is unclear when the Verizon model would be available.

Apple spokeswoman Natalie Kerris says the company does not comment on rumors or speculation. Verizon Wireless also has no comment. AT&T spokesman Mark Siegel told The Associated Press the iPhone will be an important device for the company for quite some time.

The new iPhone model would have CDMA capability, The Journal said. CDMA is the cellular technology used by both Verizon Wireless and Sprint, but not by AT&T or T-Mobile, which use the more widespread GSM technology.

Both AT&T and Verizon Wireless are moving to fourth-generation, or 4G, networks in the next few years, and both will use the same technology for that faster standard, known as LTE, or Long Term Evolution. Verizon Wireless plans to start rolling out its 4G network in some markets later this year; AT&T, in early 2011. 

Right now, Verizon Wireless is the largest wireless carrier in the United States, with 91.2 million subscribers at the end of 2009, compared to AT&T, with 85.1 million subscribers.

A boon for AT&T
AT&T has thrived as the sole U.S. iPhone carrier despite paying a massive subsidy to Apple for the exclusive rights to offer the phone.

But the iPhone's popularity has taxed AT&T's networks in cities such as New York and San Francisco, leaving the carrier vulnerable to an aggressive ad campaign from Verizon. AT&T said in January it would spend an additional $2 billion to improve its 3G, or third-generation, wireless network this year.

Apple and AT&T have not said when their exclusive deal will end, though some analysts have predicted Apple will begin offering the iPhone through multiple U.S. carriers sometime after it unveils the next-generation iPhone this summer.

Brian Marshall, an analyst for Broadpoint AmTech, estimates AT&T pays Apple $450 per iPhone, more than the $300 he estimates all other carriers pay per device.

More carriers, more customers
But having more than one U.S. iPhone carrier can only help Apple, Marshall said. In the United Kingdom, Canada, Brazil and France, the most recent markets to switch from a single iPhone carrier to multiple, unit sales took off when customers on more carriers could choose the phone.

Morgan Keegan analyst Tavis McCourt cautioned that it's not certain that Apple and Verizon could agree on terms for an iPhone that runs on CDMA networks. CDMA capability could also be used to get the iPhone onto the networks of China Telecom Ltd. and South Korea's SK Telecom.

Several analysts said it appears AT&T will still be the only iPhone carrier in the U.S. at least through 2010.

Marshall believes Apple extended the deal until 2011 in exchange for a flexible data plan for the iPad, Apple's new tablet device, due out April 3. People who buy iPads with cellular data connections can pay AT&T month by month for service, instead of having to sign a contract, and choose a $15 or $30 monthly plan based on data consumption.

Taiwanese manufacturer
Apple, The Journal said, "is developing a new iPhone to debut this summer and also appears to be working on a model for U.S. mobile phone operator Verizon Wireless, say people briefed on the matter.

"The people briefed on the matter said one of the new iPhones is being manufactured by Taiwanese contract manufacturer Hon Hai Precision Industry Co., which produced Apple's previous iPhones," The Journal said.

"The model that has CDMA capability, used by Verizon Wireless, is being manufactured by Pegatron Technology Corp., the contract manufacturing subsidiary of Taiwan's ASUSTeK Computer Inc., said these people.

"One person familiar with the situation said Pegatron is scheduled to start mass producing the CDMA iPhones in September, but it was unclear when Apple might make the model available."

Last week, Apple said it is making some of its iPhone models available at full price without a contract from AT&T. However, the new phones are still "locked" to AT&T and will not work with any other cellular carrier unless they're modified.

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