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Report of Apple-Verizon deal boosts shares, highlights regulatory debate

Shares of Apple and Verizon jumped at the open of trading Tuesday, on a report by the Wall Street Journal that the companies are planning to pair up on the iPhone later this year. The move would end the monopoly that AT&T has enjoyed as the exclusive service provider for the mobile device.

Shares of Apple rose about 2 percent at the start of trade to $237.48, before losing some of those gains by midmorning. Verizon’s stock rose about 3 percent to $31.40 on the report.

A spokesman at Verizon declined to comment on the report. A spokesperson from Apple didn’t immediately respond to a request for comment.

Users, investors and the mobile phone industry has been eagerly watching for any announcement by the nation’s biggest wireless carrier to begin offering the popular iPhone on its network.

And the deal comes amid complaints by small cellphone operators and public interest groups that exclusive cellphone contracts tend to hurt competition. Phonemakers seek relationships with the biggest carriers because AT&T, Verizon Wireless, T-Mobile and Sprint Nextel have the biggest subscriber bases and they pay for the expensive marketing costs of selling the devices.

Consumer groups had urged the Federal Communications Commission to consider a policy that would ban exclusive handset partnerships to spur competition. The agency didn’t include such a recommendation in its national broadband plan announced earlier this month.

Craig Moffett, an analyst at Bernstein Research, said there is great pent-up demand by Verizon customers for the iPhone. He said that AT&T would suffer from an iPhone deal with Verizon. In the fourth quarter of last year, Moffett said, it appeared that all of AT&T’s subscriber growth came from iPhone customers.

“IPhone availability will therefore mean an immediate acceleration for Verizon’s subscriber growth and, conversely, immediate share losses for AT&T,” Moffett said.

Shares of AT&T fell 1 percent to $26.24.

By Cecilia Kang  |  March 30, 2010; 11:01 AM ET
 
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Comments

VZ routinely cripples their phone to create a market for their add-on features. This will leave AT&T with an advantage; they'll be able to point the things you can do on theirphones that cost extra on VZ.

Posted by: gbooksdc | March 30, 2010 12:31 PM | Report abuse

I think the competition will be a good thing. Nobody should be trapped to one network’s coverage just because of what phone they prefer to use. Especially given how AT&T’s 3G coverage is either great or terrible depending where you are at any given time.

Royce Renteria

Posted by: justanothermember | March 30, 2010 2:16 PM | Report abuse

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