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Verizon Wireless Gets iPhone 4 with Mobile Hotspot Capability

Verizon Wireless announced that a long-time Apple rumor will finally become reality. At a press event in New York, the company said it will sell the iPhone 4 starting on 3 February 2011 for current Verizon customers and 10 February 2011 for new customers. The phone will cost $199.99 for a 16 GB model or $299.99 for the 32 GB model.

Subscribers must sign up for a voice plan and agree to a 2-year commitment with a hefty cancellation penalty. A data plan will also be required, but pricing for that hasn’t been announced yet. The deal also means that AT&T’s iPhone exclusivity has ended, which suggests that the iPhone could appear on other carriers.

Verizon’s iPhone 4 is functionally the same as that offered by Apple and AT&T (dual cameras, Retina display, and so forth), but with two key differences.

CDMA, not LTE — There was much speculation that Apple and Verizon would release an LTE (Long Term Evolution) compatible iPhone, using the fourth-generation (4G) mobile broadband standard that Verizon Wireless started putting in place in late 2010. AT&T is also committed to LTE starting in mid-2011, and it’s the path for most carriers worldwide for their next-generation networks.

But LTE is in its infancy, and carriers haven’t even agreed on how to handle voice calls over the network. The Verizon network operates in only a few cities so far, and AT&T and Verizon don’t plan to cover all urban areas with LTE until 2013. The current chips are too large and consume too much electricity, as well. It could be until 2012 before enough coverage and the right silicon exists for an iPhone with LTE built in. Verizon doesn’t have any LTE phones yet from any maker; the first are likely months away, and will be beasts of compromise.

Instead, the Verizon iPhone uses 2G and 3G CDMA standards (RTT and EVDO, technically). The 3G flavor—Evolution Data Only—cannot carry both voice calls and transfer data at the same time. However, voice calls and Wi-Fi can be used simultaneously.

AT&T, T-Mobile, and most phone networks in the world use GSM; LTE is part of the evolution of that standard, and Verizon is switching boats for its 4G network. Apple COO Tim Cook, on hand for the announcement, explained that the two companies’ priority was to bring the iPhone to Verizon sooner, meaning that waiting for LTE chips and LTE coverage wasn’t an option.

In practice the lack of LTE shouldn’t matter to most people—the draw of a Verizon iPhone is that people who are already Verizon customers, or who live in areas where AT&T’s network is spotty, can now switch to the iPhone. The greatest limitation for those who have previously used an iPhone will be the lack of simultaneous voice and data connections. It won’t be possible, for example, to look up something on the Web over 3G while on a call.

Mobile Hotspot — The only real surprise is that the Verizon iPhone will include a mobile hotspot option to allow up to five devices to connect via Wi-Fi. The phone acts as a portable cellular router, just like the MiFi. Service can also be shared directly with a computer connected via Bluetooth or using a USB dock cable. (Apple already lets GSM carriers offer tethering via USB and Bluetooth.)

As with the data subscription plans, pricing wasn’t announced for this feature. Verizon offers the same feature at no cost to Palm Plus owners (as a promotional feature), and charges $20 per month for up to 2 GB of usage to other smartphone owners.

Because of the inability of CDMA to support simultaneous voice and data access, answering an incoming phone call will likely pause the hotspot connection.

Nothing in the iPhone’s hardware suggests that the hotspot feature is unique to Verizon. Rather, it’s encouraging to see the company compete with AT&T, which has never been quick to adopt existing features like data tethering. According the Los Angeles Times, AT&T is evaluating adding a mobile hotspot feature.

According to press on the scene, the volume and mute buttons have been repositioned slightly, so many existing cases likely won’t fit the new phone. The antennas are also in different places around the iPhone’s edge, though the “death grip” spot at the lower left remains unchanged (see “Apple Responds to iPhone 4 Antenna Issue,” 16 July 2010). Ars Technica has posted a nice set of photos comparing the two models.

The Promised Air? — I think it’s safe to predict that a Verizon iPhone will be a hit, more so from pent-up demand by existing Verizon Wireless customers who’ve watched their friends enjoy the iPhone for several years than from disgruntled AT&T customers looking for better coverage—although I’m sure the latter do exist in significant numbers.

The bigger question is whether Verizon’s network can handle the influx of traffic. AT&T has struggled from the beginning to keep up with data demands of iPhone users (and now people who own smartphones from other handset makers), investing billions in infrastructure. At the press event last week, Verizon mentioned that the company has been testing thousands of devices over several months, and that the company has made improvements to its infrastructure.

Verizon already has millions of Android, Palm, and other smartphone users with decent browsers, app stores, and features similar to the iPhone. Even with a large influx of new iPhone customers, instead of switchers from current Verizon smartphones, the network will likely absorb iPhone usage without much of a hiccup.

The Verizon iPhone 4 won’t be the magical cure to people’s cellular woes. Verizon Wireless is, after all, a cellular provider, and none of them have stellar track records when dealing with customers. What’s more important about a Verizon iPhone is that AT&T’s exclusivity has ended, forcing it to compete with another carrier, and opening up Apple’s market to millions of new customers.

Although Apple has never chased market share the way other companies do (and the way technology pundits want Apple to), the quick rise of smartphones running Google’s Android operating system is no doubt eating into Apple’s potential profits.

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