Does Verizon's iPhone launch signal a victory for small operators?

Sue MarekNow that the worst-kept secret of 2010 is finally a reality--Verizon Wireless (NYSE:VZ) will launch a CDMA version of the Apple (NASDAQ:AAPL) iPhone Feb. 3--the question on my mind is: Which U.S. carrier will be the next one to offer the iPhone? Does the end of AT&T Mobility's (NYSE:T) exclusivity on the iPhone signal a bigger victory for small operators that have been battling against the lock the large, Tier 1 operators have on the latest smartphones?

Just hours after Apple COO Tim Cook explained that the relationship between Apple and Verizon is not exclusive, the Rural Cellular Association released this statement from RCA President and CEO Steven Berry: "I hope that Verizon will re-affirm its previous commitment to allow smaller and regional carriers to obtain access to popular smartphone and other next generation devices six months after their launch. Further, I seek Verizon's support in encouraging Apple to make the iPhone and iPad available to all RCA members within six months of their release."

RCA is wisely pushing Verizon to stay true to the promise it made back in July 2009. At that time, Verizon Wireless said it would give small wireless carriers, those with 500,000 or fewer subscribers, access to all of its exclusive devices from all of its handset partners six months after Verizon launched the phone. Many believed (myself included) that then-Verizon Wireless CEO Lowell McAdam, who is now COO of Verizon Communications, made this commitment to rural operators as a way to deflect growing concerns from the FCC, the Department of Justice and Congress that large wireless operators were using their market buying power to get handset manufacturers to cut exclusive deals with them--thus leaving smaller operators out in the cold.

How long will it be before a third U.S. operator carriers the iPhone? Of course, Verizon's commitment to small operators was criticized for not going far enough--by only promising to provide smartphone access to operators that have 500,000 or fewer subscribers, the company was eliminating some of its more aggressive CDMA competitors such as U.S. Cellular and Cellular South.   

Now handset exclusivity isn't a new problem for the industry. Small operators (particularly CDMA operators) have struggled for a number of years to get access to high-profile devices. In fact, several CDMA operators joined forces in 2005 to create the Associated Carrier Group with the sole purpose of getting better deals on devices. That group continues to add new members and strive to get better visibility with vendors. But it's not easy--especially when you are dealing with companies like Apple.   

Verizon Wireless was not able to immediately respond to our request for comment as to whether it would honor its 2009 promise to rural operators. If the carrier chooses not too then RCA has a perfect opportunity to revisit the handset exclusivity debate. --Sue

P.S. See what some of the top analysts in the field are saying about what Verizon's launch of a CDMA version of the iPhone will mean for consumers, the wireless industry, and of course, AT&T. My colleague Phil Goldstein talked to several of the top minds in the industry on the topic and their opinions are compiled in this Sound Off.

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