The emergence of one--or even two--additional carriers selling the iPhone shouldn't change the competitive dynamics for AT&T, according to the company's chief executive.
"Anytime there's another competitor launching Apple's hit device, the expectations for what would happen to the carrier that had it before is overblown," AT&T Chief Executive Randall Stephenson told investors today during a conference hosted by Goldman Sachs. "The competitive dynamic will be no different than the last time."
AT&T faces the prospect of not one, but potentially two rivals selling the next version of the iPhone. The carrier has withstood Verizon Wireless getting the iPhone earlier this year well, having continued to add a high number of iPhone and smartphone customers even in the face of new competition. But Sprint Nextel could potentially get the iPhone as well, and this time, all the carriers would be getting the same phone at the same time.
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Stephenson reiterated the advantages of AT&T's iPhone, touting its faster network connection and ability to go around the world. It's unclear if those advantages will carry over to the next iPhone, with Verizon Chief Financial Officer Fran Shammo saying its next iPhone will also be a global device.
Verizon Chief Executive Lowell McAdam was at the Goldman conference yesterday, when he downplayed the threat of Sprint possibly getting the iPhone. Unlike Verizon and AT&T, Sprint might offer an iPhone with a truly unlimited data plan.
While he wouldn't himself confirm when the next iPhone would come out, he joked that former Vice President Al Gore had confirmed the device for next month. Gore, an influential member of Apple's board, yesterday plugged the new iPhones at a conference in South Africa.
If the iPhone were to come out in October, he said to expect a huge fourth quarter, which is typically already strong because of the holiday shopping season.
Pushing for the T-Mobile deal
While the competitive dynamics remain unchanged, Stephenson said they also remain tough in his justification for approving the company's acquisition of T-Mobile USA.
The U.S. Justice Department, alongside several state attorney generals and two carriers, have sued to block the deal, citing concerns over a concentration of power and the potential for increased prices.
Stephenson reiterated the company's move to run on two tracks: the first is through litigation and a second that is focused on a possible settlement. He made the case for moving through both processes as quickly as possible.
"(T-Mobile) is a diminishing asset and we need to move things along," Stephenson said.
He said AT&T was prepared to litigate aggressively, but was hopeful a resolution could be reached before the Feb. 13 trial date. He declined to speculate on when AT&T could come to a resolution with the Justice Department.
AT&T has argued that the merger would ease the company's spectrum constraints and enable the company to provide wireless broadband access to more people in the country. Opponents have argued that taking out the low-cost competitor would hurt consumer choice and lead to higher prices.
Stephenson, however, said he believes pricing for new products and services will likely drop down the line. That's particularly the case for new connected products in the home or in the, where the typical $25 data plan likely won't cut it. Stephenson said the market will have to look at the $5 to $20 threshold as a new rate for emerging data devices, but said this would likely happen over the next three to five years.
"There will be someone who makes this move," he said. "When they do, the dam will break and everyone will get in."
While that business would provide a tremendous amount of growth, it would provide some rockiness to the industry's ability to generate strong revenue per user in the short term.
In addition, the industry will move to a more data-centric plan, even for handsets, as more services are delivered through the Internet connection as opposed to the traditional wireless voice network, Stephenson said.
"It'll be a different composition," he said.
Smartphones, however, continue to be the bread-and-butter business for AT&T, driving growth in revenue and profits for the company. Apple and Google's Android platform "are running hot," Stephenson said, but he expects at least another operating system will compete for a strong third position.
With Microsoft being a large software developer, he said he sees the company with a significant role in the smartphone business. Research in Motion, which makes the BlackBerry smartphones, also has a lot of resources. He said both companies will make a run of it.
AT&T is often seen as a leading indicator of jobs because its enterprise business relies upon a higher headcount for more business. The company surprised analyst early this year by warning of continued weakness in the business area, a prediction that has held true so far.
Businesses haven't shown any signs of accelerating their hiring, indicating the jobs picture still looks weak, Stephenson said. He added that 2012 would look similar to this year.
"We do not anticipate any meaningful acceleration of growth," he said.