Monday, April 18, 2011

Telecom: Verizon iPhone launch offers 'no surprises' for Canadian carriers

By Jamie Sturgeon | Montreal Gazette | Jan. 12

TORONTO — U.S. telecom giant Verizon Wireless announced Tuesday it will begin selling a version of the vaunted iPhone designed to run only on its existing 3G network for now, a likely relief for mobile operators here.

The long-awaited news quashed outside speculation that Verizon was preparing to launch the immensely popular Apple Inc. smartphone on its new but smaller next-generation "4G" system, a move that would have held implications for Canadian operators.

While the game has just changed dramatically for Dallas-based AT&T, Tuesday's news alters nothing for Canadian carriers Rogers Communications Inc., BCE Inc.'s Bell Mobility or Telus Corp. There were "no surprises," according to a source within Rogers.

But that's not to say there wasn't the potential.

Verizon, which has coveted the top-selling device since its launch with AT&T more than three years ago, is fast deploying 4G networks in select U.S. cities.

Speculation had arisen in recent weeks that the carrier would finally land the device and it would perhaps support 4G, touted to deliver ultra-fast data transfer speeds that trump even desktop Internet connections.

Had Apple introduced a 4G device with Verizon on Tuesday, the entire universe of handset makers, network vendors and app developers would have rapidly shifted its focus toward next-gen development, observers say.

The impact on Rogers, Bell and Telus — all of whom plan to adopt 4G down the road — could have been substantial, accelerating timetables, capital spending and rollout plans.

"It's one of the most iconic devices out there. One of the drawbacks on LTE (long term evolution) right now is that there are lots of data sticks but not many devices yet. Getting a huge device like that would change the landscape," one Bay St. telecom analyst said.

"It would have increased the incentive for Rogers, Bell and Telus to move faster."

Verizon, the largest carrier in the U.S., with 93 million subscribers, stoked rumours by unveiling 10 new 4G-capable devices at the Consumer Electronics Show in Las Vegas last week, indicating that some will go on sale by the middle of the year.

Verizon, however, has opted for the wider selling opportunity its 3G network gives it over the technological advantage offered by 4G, introducing a version of the phone equipped to operate only on its legacy network.

"We have a tremendous 3G network," Verizon's CEO Dan Mead said at a press event when asked about the decision.

Technological constraints also weighed. The first set of chips designed for Verizon's 4G network would require Apple to change the device's casing, forcing "design changes we wouldn't make," said Tim Cook, Apple's chief operating officer.

The decision means operators like Rogers, Bell and Telus can stay the course on their current plans, which will see mobile modems stick to using the new standard introduced in Canada later this year, and only in select areas.

For AT&T, it means the U.S. carrier is about to endure a repeat of what Rogers faced in November 2009 when Bell and Telus activated a multibillion-dollar joint network capable of supporting the iPhone.

Apple, looking to boost sales against Research in Motion Ltd.'s BlackBerry and the growing tide of Google Inc.'s Android-powered handsets, began selling through the two Canadian incumbents then.

Rogers's market share in wireless has been "rebalancing" to reflect the erased advantage ever since.

Financial Post
jasturgeon@nationalpost.com

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