AT&T should be worried if, indeed, Apple is talking to Verizon about distributing iPhones.
Last week AT&T (T) said it sold 1.6 million iPhones in the first three months of 2009 and there were reports that it was talking to Apple (AAPL) about extending its exclusive agreement to sell the iPhone.
As someone who regretfully left Verizon's service and switched to AT&T's network when the iPhone was initially released in 2007, I can say there are many iPhone users who would leave AT&T for Verizon's network.
AT&T needs to continue improving its service network. Otherwise, if the USA Today report proves to be true, it will lose customers to Verizon.
Apple would benefit from the rumored deal by selling more iPhones as multiple phone companies would be offering them, much like AT&T and Verizon both sell different versions of Research in Motion's (RIMM) BlackBerry phones.
Verizon, so far, isn't refuting the rumors. "We have no announcements to make today relative to Apple. Historically we have not been dependent upon one device," Verizon COO and President Denny Strigl said during today's Verizon earnings conference call. Verizon is always open to discussions with any suppliers, he added.
According to USA Today's sources, Verizon and Apple management began "high-level" discussions a few months ago, when CEO Steve Jobs was overseeing day-to-day business. The sources declined to be named because they aren't authorized to speak publicly, the report said. The conversations have continued while Jobs has been on medical leave, the sources said. Apple declined comment about the story.
Apple would gain access to its 80 million customers by connecting with Verizon, Roger Entner, head of telecom research for Nielsen told the USA Today.
"Breaking the (iPhone) exclusivity with AT&T is a huge thing," Entner said. "That would send shivers into AT&T's stock and senior leadership." AT&T's stock was up 21 cents to $25.37 in early afternoon trading today, while Verizon's was down 42 cents to $30.58.
If Apple and Verizon form a venture, it would be a first time Apple created a phone for a CDMA wireless network. AT&T's network uses GSM technology. Apple and Verizon Wireless work together in Europe, where Vodafone, which co-owns Verizon Wireless, sells the iPhone.
Anthony Massucci is a senior reporter and columnist at DailyFinance.