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Verizon, Apple, and AT&T: A Battle of Incremental Proportions

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As every news organization, from Ars Technica to The Wall Street Journal is reporting today, two years of guessing and rumors are now correct: Verizon Wireless will carry the iPhone 4 starting in early February.

Let me be the first to say that, as an iPhone user, I am pleased that I now have a choice of carriers in the United States calling market. I'm also pleased that I may have a consistent chance to actually make a call that doesn't drop.

Yet, the new Verizon iPhone is, for better or worse, a throw-away phone that's going to have a number of people unhappy in their day-to-day use and very, very unhappy in just a few short months. 

Why all this unhappiness? Data services.

The new iPhone (or vPhone as it's already been dubbed by some) should have better-than-average calling features, given both Verizon's CDMA network and Apple's redesigned antenna location to address the issues that vexed left-handed users everywhere last summer when the original iPhone 4 was released.

If you want a phone to make good calls in the United States, then the iPhone—or any of the hundreds of other CDMA phones on Verizon's networks—should give you greater calling reliability than we've experienced on AT&T. I say "should," because it's uncertain what the Verizon network will do over the next few months as a number of existing Verizon customers move up to the vPhone.

If you want to make calls and check your location on a map, or see if OpenTable has an opening for you at a local restaurant—all the stuff that Apple shows in its ads—well, you'll not be able to do that. Given the CDMA nature of Verizon's aging network, phones must either be used to call or access data, but not both simultaneously.

That's problem number one for the Verizon iPhone, and Apple knows it. Steve Jobs was noticeably absent from the presentation, perhaps because this iPhone is a step backwards in terms of this type of feature. Apple's chief operating officer, Tim Cook, seemed very aware of the situation, noting that users will make the trade-off on data not being available on the call, just so that they can use the iPhone on Verizon.

Think about that for a second: Apple's releasing an iPhone that is a step backwards from its global status quo, and the best reason they can come up with for compelling users to use the Verizon iPhone is that Verizon users really want the phone. 

Verizon's marketed global phones before that use CDMA in the U.S. and non-U.S.-frequency GSM when its customers roam outside the U.S. market, so it's not like Apple and Verizon lack the ability to create a phone that would stand the test of time and basic travel usage. 

It's not that Apple's desperate for cash: With one of the highest market capitalizations on the planet, Apple could easily stand on its principles of global compatibility and non-exclusivity in its home mobile market. 

Yet, instead, Apple choses to ditch those principles for a quick fling, perhaps as a way to show it was out on the market again, hunting for a more open relationship. 

For those who have a history with Macintosh computers, it's going to be like the eMac: a dumbing down of capabilities to sell an all-in-one CRT-based Mac into schools several months after the iMac flat-panel version was released. People can't even give eMac's away on eBay these days.

So Apple creates a phone that is already obsolete, just to please Verizon, which has already moved past CDMA data delivery to the next big thing: LTE.

Verizon has just spent the last week touting its Long-Term Evolution (LTE) capabilities in Las Vegas at the Consumer Electronics Show, showing how data access and phone calls can occur simultaneously and even releasing a slew of new LTE-equipped phones.

But now they're undoing all that LTE goodness to push a phone that has much slower data rates than AT&T's data network, can't be used simultaneously for voice and data services, and for which only U.S.-based customers, with no plans to travel outside of the U.S., will find somewhat satisfying in terms of usage compatibility.

Will the new Verizon iPhone sell? Yes, there is significant pent-up demand from Verizon users: I've already received two texts in the space of the past ten minutes of writing from Verizon customers asking if I know particular details on the phone's pricing and early renewal plans. 

Will the new Verizon iPhone peel off business from AT&T Wireless? Perhaps, although AT&T began an assault on Verizon before the announcement, with one representative saying he didn't think existing iPhone users were "ready to live life in the slow lane," a reference to the comparatively slow data rate that Verizon's CDMA network provides.  

Verizon's offering of mobile hotspot capabilities, with up to five Wi-Fi enabled devices connecting to the iPhone for internet connection, will force AT&T to offer the same thing—a promise it made over a year ago that it's not had to keep, since it had no competition. 

Yet it seems Verizon's offering itself up for ridicule, bringing a toothpick, in the form of CDMA data, to a knife fight with AT&T.

Will the new Verizon iPhone make a lot of its new iPhone customers unhappy, when their Android-based friends are at much faster LTE speeds? Absolutely. And Verizon knows it.

"We have a tremendous 3G network," said Verizon Wireless CEO Dan Mead, "and we want to be sure we can take advantage of that."

Or maybe it's that they just want to take advantage of their customers' lack of understanding of what exactly they're getting: an iPhone that does less than the first-generation iPhone, when it comes to data, but it can make really good calls.

The data services issue is important enough, and has enough fear, uncertainty and doubt attached to it that we'll cover more of the 3G-3.5G-4G-LTE market sleight of hand next week. 

For now, suffice it to say that this new iPhone is not the user experience that anyone should have as their first experience with an Apple device. It seems the quick buck, and perhaps blind rage against AT&T, is the name of the game for Verizon's new iPhone 4—at least until the next shiny thing comes out in a few months.

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