April 17, 2012
One year ago, AT&T faced an uncertain future. Just weeks earlier, it had lost its iPhone exclusivity in the U.S., a product that made the company millions since Apple introduced it in 2007. Finally, the AT&T haters had reason to celebrate, as they could finally drop the Dallas, Texas-based company for Verizon Wireless and keep their favorite handset too. Unfortunately, for AT&T’s competitors anyway, the mass exodus didn’t happen, according to Forbes.
The factsDuring the first quarter of 2011 (the first without iPhone exclusivity), AT&T activated 3.6 million iPhones, which was 33 percent more than the year before. This was 63 percent more than those who purchased an iPhone from Verizon, the world’s largest mobile phone provider. Since then, AT&T has consistently activated more iPhones than the competition. In fact, during the final quarter of 2011, AT&T activated 7.6 million iPhones, more than Verizon and Sprint combined. Sprint, the nation's third largest carrier began selling the iPhone 4S in October.
AT&T has more to offer iPhone customersDespite having what many considered pitiable voice service and congested data networks, AT&T didn’t just survive, but it is thriving, even without the exclusivity. Better still, most of AT&T’s original iPhone customers remain, despite the added competition. AT&T’s ability to keep customers, while still adding more new customers than their competition happened for three main reasons. First, the company built a speedier HSPA+ network that is supported on the iPhone 4S and marketed as “4G.” Second, AT&T remains the only network to allow iPhone customers simultaneous voice and data on the iPhone. Finally, and perhaps most importantly, AT&T made it harder for people to move elsewhere. Customer stickiness, as it is called, turned out to be higher than anticipated.
“Switching to another carrier while on contract with AT&T entailed heavy penalty fees which deterred many from doing so. There were also many on family plans that made it difficult to transition one’s entire family to another carrier.”
But…This isn’t to say that Verizon and Sprint aren’t succeeding by being iPhone carriers. Verizon has activated close to 11 million iPhones in their first year alone, while Sprint has showed a “net postpaid” gain for the first time last year in the quarter that it sold the iPhone. Plus, according to a recent report by Comscore, AT&T’s smartphone lead over Verizon has dwindled since losing the iPhone exclusivity, which means that a lot of the iPhone activations on AT&T were done by existing subscribers whose contract had ended. In the end, AT&T remains alive and well mainly because it has remained competitive. As Forbes concludes:
“Despite widespread concerns about a service, customers may not be very willing to defect unless a competitor comes up with a compelling advantage to force the switch.”Personally, I remain an AT&T customer, despite having many of the same concerns mentioned above. However, I remain because I have a family plan, like using voice and data at the same time, and find AT&T's service much better for me than Verizon and Sprint. However, I live in Pennsylvania and understand that AT&T's network woes are much more prevalent in other parts of the country. Were you an original AT&T customer that switched once the iPhone moved to Verizon and Sprint? If not, why have you stayed at AT&T?