17% of Verizon Mobile Subs Would Switch to an iPhone?

AT&T’s iPhone-exclusivity deal hasn’t yet expired; nor has Apple announced plans to sell the device through a second U.S. carrier, despite what seems to be a constant stream of rumors.

But Morgan Stanley equity analyst Katy Huberty has estimated that nearly 17 percent of all Verizon mobile customers would upgrade to an iPhone when given a chance to do so.

“There is substantial pent up iPhone demand within the Verizon installed base as 16.8 percent of Verizon subscribers said they are ‘very likely’ to purchase an iPhone if offered on the Verizon Network,” Huberty says. “This 16.8 percent is higher than AT&T subscriber’s 14.6 percent extreme interest in the current AT&T iPhone and well above the overall iPhone extreme interest of 7.5 percent.”

Assuming Verizon does add the iPhone to its smartphone lineup and that most of its subscribers who said they were “very likely” to purchase the device do so over a two-year period, Huberty estimates Verizon would sell about seven million to eight million iPhones annually, for a couple of years, at least.

Huberty does not appear to be among those who believe existing iPhone customers on AT&T's network would switch over to Verizon. Sure, there will some switchers, but Huberty does not think it will be a sizable number of subscribers.

In markets where the iPhone has gone from single-carrier to multiple-carrier distribution, such as France, the original iPhone carrier that lost exclusivity hasn’t suffered much at all.

Beyond this, there’s the issue of early-termination fees, which will make it difficult for current AT&T iPhone users to flee, says Huberty: Also, since it appears 70 percent of U.S. wireless accounts, as well as about 70 percent of AT&T's accounts, are part of a family plan, it would be even harder to switch, as the entire family account would have to change.

The early termination fees for a five-line account would be substantial, depending on when in the two-year cycle the switch occurred.