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A customer looks at an iPhone 4 (ERIC THAYER)
A customer looks at an iPhone 4 (ERIC THAYER)

Verizon cracks AT&T's grip on iPhone Add to ...

Verizon Wireless will begin offering the iPhone in February, shattering AT&T Inc.'s three-and-a-half year exclusivity on the wildly popular smart phone in one of the world's most important markets for high-end mobile devices.

The arrangement announced on Tuesday by Verizon, which has around 90 million wireless customers, and Apple Inc., which is desperately trying to stem the popularity of rival smart phones running Google Inc.'s Android operating system, could dramatically alter the makeup of the United States' wireless market.

Google, which gives its operating system to mobile handset makers to ensure the popularity of its ubiquitous search Website, is likely to feel the greatest sting as competition heats up among both Verizon and AT&T to sell as many iPhones as possible. Smart phones by handset manufacturers such as HTC and Samsung have become incredibly popular, pushing Android devices past iPhones in the U.S. market for new subscribers and making them second only to BlackBerrys made by Waterloo, Ont.-based Research In Motion Ltd.

"This is an important step for the industry as two great companies join forces to give wireless customers one of the most important technological additions to the mobile landscape this century," Lowell McAdam, Verizon's president and chief operating officer, said in a release.

The partnership between the two companies evolved over the past two years, company executives said at a press event in New York, but has been the source of intense speculation over the past year. This seemingly minor quirk of the wireless industry - one provider offering a phone that no other provider can - has been distorted by the unrivalled popularity of the iPhone; it is essentially responsible for popularizing advanced, touch-screen phones among consumers, an accomplishment similar to what BlackBerrys achieved among business clients.

Without an exclusive hold on the iPhone, AT&T may be forced to lower prices on rate plans or innovate on how it sells the device. AT&T is also likely to start being more aggressive in how it markets its own Android devices.

Without the iPhone over the past few years, Verizon has been extremely creative with advertising campaigns touting Android and mocking the wireless network congestion that has resulted from the iPhone, a device which can take up a huge amount of space on a carrier's wireless network. The huge amounts of traffic, which can slow down data and lead to dropped calls, led to a widespread consumer backlash among AT&T's huge iPhone customer base, with many complaining on Facebook and message boards that they would switch to Verizon as soon as the carrier began offering service for the device.

The situation is somewhat similar to Canada's before November, 2009. Rogers Communications Inc. was the first Canadian wireless operator to be able to offer the iPhone, because of a network advantage. BCE Inc.'s Bell Mobility and Telus Corp. teamed up to build out a new network, which they launched in late 2009, leveling the field and starting an erosion of Rogers' market advantage that has continued in recent quarters.

The device will be available on Verizon starting on February 10.

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