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The Verizon iPhone Report: Taking the Easy Way Out

There were loads of expectations ahead of Tuesday’s announcement that Verizon Wireless would put the iPhone on sale beginning on February 10th. Add all of them up, then consider the simplest and quickest path to availability, and you end up with the latter. Even Steve Jobs didn’t consider the event important enough to show up; he sent along his “First Officer,” COO Tim Cook instead to join Verizon COO Lowell McAdam for the session.

Just the other day, I read a blog suggesting Apple would be offering a specially crafted iPhone 4G model, delivering compatibility with Verizon’s CDMA network, AT&T’s GSM, and the upcoming LTE or 4G protocol. The author of that speculative wet dream didn’t consider that it might cost more to build a “world phone,” and thus the price would be higher.

Another report suggested that Verizon’s iPhone would cost $20 than AT&T’s, because CDMA chips are more expensive, while ignoring competitive considerations that would keep the prices as they are.

In an effort to get the product into the stores as quickly as possible, the product won’t support Verizon’s burgeoning LTE network. Apple says that they opted not to go with LTE because it would require design changes that would delay release of the product. That will likely have to await for the iPhone 5, or whatever it’s called, which is expected this summer.

The end result of the Apple/Verizon deal is an iPhone 4 that’s nearly identical to the current model, except for the CDMA hardware, a minor position change for the Mute switch, and antenna modifications required to support a different network. Whether those changes would reduce or eliminate the so-called “Death Grip” phenomenon, where reception deteriorates if you hold it the wrong way, wasn’t stated. While the definitive answers may not come until the product hits the streets, Ars Technica contributor Chris Foresman, who attended the session and got his hands on one of the Verizon iPhones, said that his attempts to duplicate the signal loss phenomenon failed. A similar experiment by a reporter from pcmag.com managed to reduce signal strength by one bar, but it required gripping the phone with both hands. Since this issue depends on signal strength, it may be that it never dipped low enough to cause a serious impact.

But then Verizon does claim to have better reception than AT&T, particularly in New York City, where the press briefing was held. So that may be the answer, but the jury is still out on that score. Unless, of course, the antenna changes addressed more than the switch to CDMA.

Forgetting any differences in contracts and data plans, there’s a significant limitation in the CDMA version, one touted often by AT&T in their ads. You won’t be able to make a phone call and browse the Internet at the same time. Clearly Verizon was unwilling or unable to modify its network architecture to allow for these simultaneous tasks, but customers who have already bought Android and BlackBerry smartphones from them don’t appear to be complaining too loudly. I’d chafe at this inconvenience, particularly when a caller asks me to look up something. It shouldn’t be necessary to call them back, or look for another device to perform that search.

However, Verizon trumps AT&T in one key respect: You’ll be allowed to use your iPhone as a wireless hot spot, supporting up to five devices. That’s an advantage that AT&T may be forced to offer as well, particularly if there’s a danger of losing lots of customers when they’re contracts are up.

The deal is also reported to be non-exclusive, meaning there’s nothing to stop Apple from offering an iPhone for customers of Sprint and T-Mobile, although media analysts aren’t expecting that to happen right away. Maybe by the time the iPhone 5 arrives, assuming the remaining major carriers in the U.S. are ready to agree to Apple’s requirements. Right now, all you are seeing is the usual corporate spin control.

The impact to AT&T’s bottom line, and that of Verizon Wireless, is also uncertain. Apple didn’t make this deal cheaply, and will grab as much as they can on each phone sold. But income from cell phone contracts are spread out over a two-year period, and Verizon clearly expects to come out way ahead.

While a Verizon iPhone shouldn’t come as a big surprise, since it’s been predicted from the first day AT&T offered the product, Apple’s competitors are suddenly placed in a very disadvantaged position. After all, Verizon didn’t stage special media events to tout the arrival of a new phone from HTC, Motorola or RIM on their network. To them, these handsets are just commodity products, and one is as good as the next so long as customers accept a two-year contract.

As I said in yesterday’s column, none of this tempts me to switch to Verizon when my AT&T contract is up. Service is good in these parts, and being able to host a Wi-Fi hot spot is not sufficient temptation for me to make the jump to a new provider, at least not so far.