Friday, July 24, 2009, 01:55 pm

As AT&T gains on Verizon, CEO says exclusive iPhone fleeting

By Sam Oliver

While AT&T added more customers last quarter than competitor Verizon -- thanks in large part to the iPhone -- AT&T's CEO admitted this week that his company won't have exclusivity on Apple's phone forever.

The concession by Randall Stephenson at a Fortune conference, as reported by PC World, comes as the chief executive is reportedly working behind the scenes to extend AT&T's exclusive contract with Apple.

Stephenson's comments were cryptic, at best. The CEO simply said that iPhone exclusivity with AT&T will not last forever. However, he did not elaborate.

On Friday, Verizon Wireless announced that it added 1.1 million subscribers during the last financial quarter. But during the same frame, AT&T increased its total number of customers by 1.4 million.

Many of AT&T's new customers are coming due to the exclusive iPhone contract. This week AT&T announced that more than 2.4 million iPhones were activated during the last quarter, with more than a third of those new customers.

That means of AT&T's 1.4 million new customers in the June quarter, at least 800,000 were iPhone subscribers.

AT&T's total number of customers sits at 79.6 million, which is 6.7 million higher than last year. Though it is still behind Verizon's 87.7 million total subscribers, the No. 2 carrier is gaining ground.

But without iPhone exclusivity, some believe AT&T would suffer due to alleged network superiority from Verizon Wireless. Pali Research has projected that AT&T will net less than 1 million new subscribers in 2010, compared with the 4 million it gained in 2008. The report operates under the assumption that the iPhone will leap to Verizon's network once the contract has expired.

"As the iPhone exclusivity period rolls off between AT&T Wireless and Apple, a material number of AT&T customers will flock to Verizon’s superior network," the firm stated. "We estimate that nearly a third of AT&T’s post-paid customers are being retained by AT&T primarily because of the iPhone exclusivity."