Thursday, February 3, 2011

Is Verizon (NYSE:VZ) Ruining Apple (NASDAQ:AAPL) iPhone Opportunity?

There has been some chatter around the web today on Verizon (NYSE:VZ) possibly ruining the golden opportunity they have with the Apple (NASDAQ:AAPL) iPhone.

The source of the consternation of some is a company memo concerning the handling of heavy users.

It said:

"Verizon Wireless strives to provide customers the best experience when using our network, a shared resource among tens of millions of customers. To help achieve this, if you use an extraordinary amount of data and fall within the top 5% of Verizon Wireless data users we may reduce your data throughput speeds periodically for the remainder of your then current and immediately following billing cycle to ensure high quality network performance for other users at locations and times of peak demand. Our proactive management of the Verizon Wireless network is designed to ensure that the remaining 95% of data customers aren’t negatively affected by the inordinate data consumption of just a few users."

This is in response to the disaster of AT&T (NYSE:T), which struggled with its ability to handle the enormous amount of data transfer associated with iPhone users.

Verizon is attempting to head off a potential disaster the enormous number of new users could result in, possibly repeating the AT&T experience, which would result in no real differentiation for users.

On the other hand, it's highly probable many AT&T users will remain using the service to see if the exodus of iPhone users to Verizon makes the network fast and more reliable.

I don't think this is a game-changer at all, and other than those using outrageous amounts of network resources, it should be considered a more positive experience, based on nothing more than fewer users being on each network than AT&T bore itself.

It may be a little bit of a black eye, but assuming Verizon iPhone users have a better experience, it shouldn't drag on the company.

Verizon was trading at $36.30, up $0.14, or 0.39 percent, as of 1:53 PM EST.

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