AT&T will likely keep its exclusive hold on the iPhone for the next 12-18 months, rather than ending its exclusivity in mid-2010, writes Jonathan Chaplin of Credit Suisse in a note issued today. And because he thinks AT&T will have so much more time as the sole provider of Apple mobile phone goodness, he figures Ma Bell will have the chance to make the last year and half’s network problems a thing of the past in the minds of consumers as it pulls out all the stops in boosting network capacity.
An improved AT&T experience means consumers are less likely to run to another network at the end of the exclusivity period, leaving AT&T fat and happy and other carriers seeing marginal gains. From the report:
We believe there is a 75% probability that AT&T keeps exclusivity in 2010. We arrive at this probability through a two step process: First, we try to determine whether the Apple / AT&T agreement expires in 2010. The consensus view is that it does; however, we couldn’t find compelling evidence that this is the case. We conclude that there is only a 50% probability that it ends in 2010. Next, we try to determine whether AT&T bids for another year of exclusivity if exclusivity does end in 2010. We conclude that they would and that they can afford to compensate Apple such that Apple would be economically indifferent. Our approach yields a 25% probability for this outcome. Taken together, we see a 75% probability that AT&T keeps exclusivity for another year.
However, at the end of the exclusivity period he believes AT&T will make a CDMA device for Verizon and Sprint, which means anyone can can pick up an iPhone if that’s their heart’s desire. Personally, I’m happy enough with the Nexus One from Google and HTC, and I wonder after four years of waiting how many others will rush out to buy the hallowed iPhone. Chaplin also downgraded Verizon in light of his thesis and upgraded Research in Motion, the maker of the BlackBerry.
