AT&T to lose 26% of iPhone owners to Verizon, survey shows

U.S. consumers cite poor reception, dropped calls as reasons for switching

More than one-in-four iPhone owners now using AT&T will switch to Verizon, a U.S. consumer survey said today.

According to ChangeWave Research, 26 per cent of iPhone owners said that they will leave AT&T for Verizon. The biggest chunk of those consumers will make the switch in the first three months that Verizon offers the iPhone 4, with the bulk of the remainder dumping AT&T within the next year.

ChangeWave surveyed more than 4,000 U.S. consumers just days before Tuesday's announcement that Verizon will kick-off iPhone 4 sales on Feb. 10 .

Of the four major carriers in the U.S. -- AT&T, Sprint, T-Mobile and Verizon -- AT&T and T-Mobile had the highest percentage of subscribers who said that they planned to switch providers in the next 90 days. Both carriers' "churn rate" -- the percentage who plan to move to a different company -- was 15 per cent.

By comparison, Verizon's churn rate was only four per cent; Sprint's was 10 per cent.

AT&T's subscriber exodus has accelerated, said Paul Carton, director of research at ChangeWave, and at 15 per cent is the highest ever in his company's polling. As recently as last June, only nine per cent said they planned to abandon AT&T.

"The weakening loyalty of AT&T wireless customers is directly attributable to the upcoming release of a Verizon iPhone," Carton asserted in a survey results report published today.

Of all AT&T subscribers, not only those who already own an iPhone, 16 per cent said that they would switch to Verizon when the latter got Apple's smartphone. Far more -- 60 per cent -- said they would not, while 23 per cent answered "don't know."

The reasons respondents gave to explain why they would jump ship won't surprise iPhone owners. More than four-in-ten (42 per cent) pegged poor reception as a reason, while 27 per cent said AT&T's habit of dropping their calls was behind the move.

Both issues have irked customers since Apple launched the original iPhone in 2007, sparked several lawsuits and was at the heart of the "Antennagate" uproar last summer when users complained that holding the new iPhone 4 in certain ways resulted in poor reception and dropped calls.

AT&T has also been hammered by its customers in the pages of Consumer Reports, which last October ranked the carrier in last place among U.S. mobile service providers.

But ChangeWave said there was a bright spot for AT in its survey results: The carrier has improved its dropped-call rate. About 4.7 per cent of AT&T subscribers reported a dropped call in the last 90 days, down from six per cent when the question was last asked for a September 2010 survey.

Verizon's dropped call rate is just 1.7 per cent, according to subscribers polled by ChangeWave.

"The findings suggest AT&T is now taking concrete steps to try to improve long-standing service issues," said Carton. "But can it do so quickly enough to forestall large-scale defections to Verizon?"

While Carton said "no," and called the Verizon iPhone "a major transformational shift in the wireless industry," another analyst was less gloomy about AT&T's future, in large part because it's adding Android smartphones to its line-up.

Ross Rubin, the executive director of industry analysis at retail research firm NPD Group, said switchers shouldn't be considered a monolithic group. "There's a wide range of different constituencies that make up the group who will switch to Verizon," he said in an interview Wednesday, ticking off communities such as repatriating Verizon deserters, and Sprint and T-Mobile customers who want an iPhone but were unwilling to go to AT&T.

Just as big in the battle between AT&T and Verizon, Rubin argued, is the latter's attempt to bolster its puny portfolio of Android-based smartphones, the primary competition to Apple's iPhone. "Android accounted for about 70 per cent of Verizon's smartphone sales in the third quarter [of 2010]," he said. "That's a big target for Apple to take on."

Until recently, AT&T had not marketed Android phones, concentrating instead on the iPhone. But as the talk of Verizon getting the iPhone increased, AT&T announced it would offer more Android handsets to its customers in 2011.

"They have a relatively weak Android portfolio compared to Verizon's, but Android is now starting to grow its share at AT&T," said Rubin, citing data from NPD's surveys of retail smartphone sales.

Rubin said that because the Android versus iPhone data was sketchy -- the only carrier where the two went head-to-head in the U.S. was AT&T -- it was difficult to predict how the iPhone will do on the Android-heavy Verizon, or how many customers AT&T would lose to its rival.

"There's not enough data to be conclusive," admitted Rubin, "but Apple has competed very well at AT&T against that carrier's Android portfolio. So it could do quite well at other carriers, like Verizon, against Android."

Carton, however, was bullish on Verizon's chances to put distance between itself and AT&T now that it has the iPhone .

"For now the momentum clearly favors Verizon," he said.

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