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Thursday, September 10, 2009, 11:05 am PT (02:05 pm ET)

Apple predicted to extend exclusive contract with AT&T

While most predictions of late suggest Apple will end its exclusive iPhone arrangement with AT&T next year, a new analysis bucks that line of thinking.

In a new report filed Thursday, iSuppli Corp. predicts that Apple will extend its exclusive deal with AT&T next year, based on anticipated growth of High Speed Packet Access technology being adopted by the wireless carrier. The report states that HSPA subscribers are projected to hit 1.4 billion in 2012, while competing standard EVDO, used by Verizon, will have only 304.6 million users by 2013.

"Speculation is rife that Apple will end its exclusive U.S. iPhone service deal with AT&T when the current contract expires in June 2010 and begin to offer phones that work with the Verizon network," said Francis Sideco, principal analyst, wireless communications. "However, iSuppli doesn’t believe this will be the case."

But the same report questions whether extending the contract with Apple would be a good idea for AT&T. It states that the iPhone has been a "mixed blessing" for the wireless carrier, bringing new subscribers but creating bandwidth shortages across the network.

"Facing dropped calls, service interruptions and slow download speeds, iPhone users in certain markets are blaming AT&T," said Jagdish Rebello, director and principal analyst. "iPhone users are overloading AT&T’s network with data traffic generated by the download and usage of apps. However, the real problem is that AT&T has not found a way to monetize data traffic generated by the iPhone."

iSuppli graph


In recent weeks, AT&T has conceded that its network performance has been less than optimal. In response, the company has vowed to improve, and plans to invest more than $17 billion in the next year to improve its wireless service.

However, the report suggests that Apple could still strike a wireless data deal with Verizon — but for a product other than the iPhone. The report states that there is no evidence that the current contract with AT&T would prevent Apple from going to Verizon for its long-rumored tablet device, a connected iPod touch, a netbook, or perhaps a new model of the iPhone.