Apple reportedly is negotiating with Verizon Communications about a distribution deal that would end the AT&T (News - Alert) exclusive on the iPhone by 2010, says USA Today. Verizon originally had declined an exclusive deal with Apple, apparently unwilling to revenue share with Apple (News - Alert) for the privilege. Given the obvious revenue and subscriber lift AT&T has gained, that decision appears to have been a mistake.

 

To be sure, both AT&T and Verizon Communications have continued to pile on net new mobile subscribers. Verizon first-quarter profit rose 5.3 percent as the largest U.S. mobile-phone company added a1.3 million net wireless customers (internal growth), not including the subscribers Verizon acquired when it bought Alltel (News - Alert).

 

In fact, Verizon actually added more net new customers than AT&T did. Wireless revenue was up 29.6 percent, including Alltel. Sales rose nine percent for legacy Verizon, without including the Alltel contributions.

 

Still, the iPhone (News - Alert) has continued to fuel market share gains by AT&T at the expense of other mobile providers, virtually everyone acknowledges.

 

AT&T signed up 1.6 million iPhone customers during the quarter, and 40 percent of them are customers new to AT&T. AT&T gained a total of 1.2 million net new mobile subscribers in the first quarter. One might argue that the iPhone single-handedly was driving mobile subscription results.

 

And since every iPhone automatically comes with a data services plan, the iPhone also is driving a measurable percentage of AT&T's overall wireless data revenues attributable to services other than text messaging, as well. Wireless data revenue increased 38.6 percent to $3.2 billion in the first quarter.

 

A Verizon deal would give Apple access to 80 million more customers, a policy Apple is following in some other countries globally.