Why Verizon Needs the iPhone

For months, we've been hearing rumors that Verizon (NYSE: VZ  ) is muscling in on AT&T's (NYSE: T  ) exclusive deal to distribute Apple's (Nasdaq: AAPL  ) iPhone. Now we know why: Verizon chairman and CEO Ivan Seidenberg covets the iPhone.

"This is a decision that is exclusively in Apple's court," Seidenberg told investors during its last earnings call. "We obviously would be interested [if] at any point in the future they thought it would make sense for them to have us as a partner. And so we will leave it with them on that score."

Sorry, Mr. Seidenberg, but I don't believe you. The ball is in your court, for three reasons.

First, yours is a primarily CDMA network, and the iPhone uses a GSM radio. That's a gulf that neither you nor Apple could overcome with technology changes. The easiest solution, for now, would be for Apple to build an iPhone with a CDMA radio. Trouble is, Apple doesn't have a history of building to others' tech specs; rather, it's known for creating its own. More recent dealings with Intel (Nasdaq: INTC  ) suggest that Apple is open to change in this area, but "open to change" isn't the same as "willing to change."

Second, Deutsche Telekom's (NYSE: DT  ) T-Mobile just introduced the first no-contract unlimited plan, which means the days of big subsidies and exclusive partnerships are probably numbered. Make a deal that works for Apple, and the iPhone can be yours.

Third, the iPhone carries 50% of the smartphone traffic in the U.S. today, mobile researcher AdMob reports. Research In Motion (Nasdaq: RIMM  ) , Palm (Nasdaq: PALM  ) , and even the varying Android handsets are laggards, while AT&T is monopolizing the market for high-value data traffic.

You know this isn't a sustainable formula for Verizon Wireless, sir. Posturing won't solve the problem. Do your investors a favor and talk with Apple about a deal.

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Fool contributor Tim Beyers had stock and options positions in Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Can you hear the Fool's disclosure policy now?


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  • Report this Comment On October 29, 2009, at 12:50 PM, TheBearcat wrote:

    It would also remain to be seen whether their network could handle the sudden huge surge in data needed by voracious iPhone users and their myriad apps. If they can meet or exceed ATT, or even not shy away from letting users stream TV over 3G (or equivalent) bandwidth, then they would be in a big advantage over ATT. But so far, it appears that wireless carriers have a history of woefully underestimating data needs of their users.

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