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Rumor: Apple could announce end of AT&T iPhone exclusivity Wed.

Citing an anonymous "inside source," HotHardware has reported AT&T could lose their iPhone exclusivity on Wednesday, when Apple is also expected to introduce its long-awaited touchscreen tablet.

The report does not go as far as to claim what other U.S. carriers could offer the iPhone. But a source allegedly told the Web site that AT&T is "tired of taking the heat" for poor reception from iPhone users. In short, the report claims, AT&T officials believe the iPhone is hurting the company's image, and they are no longer interested in having exclusive access to Apple's handset.

"Inside of AT&T, we are hearing that the iPhone is causing more trouble than ever before," the report said. "On some level, having the iPhone is hurting AT&T's image. Because they are the only company to carry it, and it's such a data hog, it's largely to blame for AT&T's network troubles. We don't remember hearing about AT&T's 'horrible network' before the iPhone— do you?"

HotHardware alleges, without any evidence to support the claim, that the iPhone doesn't handle the switch from 3G to EDGE connections well, and frequently drops calls when 3G access is lost.

The report cites AT&T's multitude of announcements earlier this month as evidence that the nation's second-largest wireless carrier is already looking toward its post-exclusivity. The company announced it will launch its first five Android-based handsets in the first half of 2010, as well as two Palm webOS-based devices, and a new mobile application platform for non-smartphones.

"Now, it seems the puzzle pieces are beginning to slot together," the report said. "It's possible that AT&T recently went searching for deals with other phone makers in order to proactively bolster its smartphone lineup for when this day-of-doom would come.

"AT&T has gained a huge amount of subscribers from being the only operator with the iPhone, and if it loses that advantage, it'll need some other cutting-edge, high-brow phones to keep people's attention."

Most of the focus and hype leading to Apple's event, scheduled for Wednesday at 10 a.m. Pacific time, has focused on the company's long-rumored tablet device. But there have also been scattered reports that Apple could also use the event to introduce the latest update to the iPhone software with iPhone OS 4.0.

If Apple does announce the end of AT&T's iPhone exclusivity this week, the most anticipated partner would be the largest wireless provider in the U.S., Verizon. However, Verizon's network relies on CDMA-based phones, and Apple has not yet made a version of the iPhone compatible with Verizon.

Another option could be the smallest of the "big four" U.S. carriers, T-Mobile. While some have predicted the iPhone could find a home on the network in 2010 due to its GSM-based network being compatible with Apple's handset, there is one technical limitation: the iPhone is not currently capable of connecting to T-MObile's high-speed 3G network.

T-Mobile 3G operates on a unique 1700MHz spectrum. The iPhone is currently compatible with UMTS/HSDPA 3G connections at the frequencies 850MHz, 1900MHz and 2100MHz. It would be necessary, therefore, for Apple to build a new hardware model that supports T-Mobile's 3G frequency.

As for AT&T's reputation, the company of late has strongly defended itself against Verizon in an ongoing advertising campaign featuring actor Luke Wilson. The battle has raged for months, since Verizon began airing commercials that criticize AT&T's network and parody Apple's "There's an app for that" slogan with the tagline "There's a map for that."