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Will Apple End Exclusive iPhone Deal With AT&T?

Dismisses exploding French iPhones as caused by "external forces"

By Mark Huffman
ConsumerAffairs.com

August 31, 2009
American consumers who want an iPhone, Apple's iconic mobile device, must use it on the AT&T network. For now.

But in the last few months there have been persistent rumblings in the tech world that Apple might be ready to end its exclusive iPhone deal with AT&T. Now, the research firm of Piper Jaffray says such a move is a definite possibility.

In its latest research notes, the firm's analysts say Apple could end the exclusivity deal within the next 12 months, most likely when it introduces a new product in the summer of 2010.

Apple has just done something similar in France, where it announced an end to its exclusive iPhone deal with Orange and will soon offer the phone through a number of other French carriers.

Jaffray points out that Apple had 40 percent of the market in France with Orange, but is hungry for more. In the U.S. it says, the potential upside is even greater, since iPhone only has 19 percent of the U.S. market in its exclusive arrangement with AT&T. The research note suggests that, for some consumers, AT&T service may be a deal breaker.

"Every time I call to complain about their service, they tell me that they are repairing something, a tower is down, or they have no service in a certain region, Adib, of River Edge, New Jersey, told ConsumerAffairs.com. "But when I update my service, they tell me it is national and they cover or the highlighted areas. Well, I live in New Jersey and work and travel in the New York State area and that is highlighted on their maps, yet when I travel on the NJ Parkway or Turnpike, I have almost no service. When I travel Upstate NY on 87 North or the NY Thruway, there is no service."

In April , USA Today reported that Apple was in talks with Verizon about producing an iPhone for Verizon Wireless customers. Apple, for its part, played it coy, telling the Wall Street Journal "We have a great relationship with AT&T."

Sacre Bleu!

Meanwhile, Apple is grappling with an iPhone issue in France that has yet to arise in the U.S. A small number of French iPhone owners have complained that their iPhone spontaneously exploded.

Apple says it finds no evidence that overheating batteries had caused screens on some of its iPhone devices to explode. Instead, it blamed the incidents on unnamed "external force," a statement met with almost universal howls of derision by technology bloggers.

Consumer authorities in France, meanwhile, have begun an investigation into iPhone safety. Apple, for its part, continues to insist it's not the battery that's causing the problem.

"To date, there are no confirmed battery overheating incidents for iPhone 3GS and the number of reports we are investigating is in the single digits," Apple said in a statement to the French news agency AFP.

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