Verizon Wireless has been beefing up its network and believes it will have no problem handling iPhone-type loads, a claim that could be put to the test this year if the carrier signs up millions of subscribers using the Apple Inc. device.
Verizon Wireless, the country's largest wireless carrier, is confident enough in its network that it will offer unlimited data-use plans when it starts selling the iPhone around the end of this month, a person familiar with the matter said. Such plans would provide a key means of distinguishing its service from rival AT&T Inc., which limits how much Internet data such as videos and photos its customers may use each month.
AT&T has struggled to overcome complaints about network quality ever since it started exclusively selling the iPhone in the U.S. in 2007. That contributed to a decision last summer to offer new iPhone and other smartphone customers only pricing plans that cap how much data they send and receive..
The move was aimed in part at gaining a measure of control over heavy iPhone users, who have overtaxed the carrier's network, leading to complaints about dropped calls and spotty service.
It wasn't clear how long Verizon would offer unlimited-data plans. Its executives have said repeatedly that the industry needs to move to some form of tiered pricing—charging different prices for different amounts of data use—as mobile Internet service use rises, but for the moment the carrier is sticking to its existing plans.
Verizon Wireless, majority-owned by Verizon Communications Inc., has a lot at stake as it starts to carry the iPhone, which it will announce Tuesday at an event in New York City, people familiar with the matter say. Verizon more than any other U.S. carrier has built its reputation on its network quality, and any stumble in handling iPhone traffic will call into question Verizon's major selling point. On the other hand, if it does handle the iPhone well, then AT&T will have a harder time arguing it didn't mismanage its own network.
Verizon executives point to their network's success handling already heavy laptop traffic and a growing number of data-guzzling Android-based smartphone users on its main, 3G network.
"Whether they are iPhones or Droids, they are smartphones," Verizon Chief Executive Ivan G. Seidenberg said in a mid-November interview. "Regardless of the mix, we are prepared to carry more data."
Anthony J. Melone, Verizon's chief technology officer, said Sunday the company invested heavily in its 3G network last year to handle surging smartphone traffic. At the end of September, the carrier had some nine million Android subscribers, up from none a year earlier, according to Majestic Research.
Verizon also has been building a new, faster 4G network that it launched in December. Mr. Melone said that network will help by handling a lot of new data traffic and offloading demand from its 3G network as existing customers upgrade to faster wireless service.
"We added enormous capacity to the network in one fell swoop," Mr. Melone said. "It is there waiting for us to grow into it. That will help me tremendously with my 3G network."
Mr. Melone wouldn't comment on how the network would handle the iPhone, but said, "All of this planning can support any successful device."
AT&T has acknowledged it underestimated the stress the iPhone would put on its network. The carrier boosted spending this year particularly in the key markets of New York City and San Francisco, but still struggles with the perception its network is weak.
In December, a survey by Consumer Reports put AT&T's network quality in last place. Verizon, meanwhile, was the top-ranked major carrier.
AT&T says its network is faster and has advantages like allowing users to browse the Web while talking on the phone.
The design of Verizon's network, which uses a different technology called CDMA, has to this point allowed only one or the other.
"We think customers will prefer AT&T's faster speeds and better functionality," said an AT&T spokesman said.
Brisk demand is expected. Analysts think Verizon, which has 93 million subscribers, could sell nine million to 12 million iPhones this year, a huge boost in the phone's key U.S. market.
To put that into perspective,AT&T sold 11.1 million iPhones in the first nine months of 2010. Piper Jaffray & Co. projects a full-year total of 14.5 million iPhones for AT&T, accounting for 12% of Apple's overall revenue and 30% of its iPhone sales. In its fiscal year ended in September, Apple reported revenue of $20.34 billion.
Piper Jaffray analyst Gene Munster said Wall Street is expecting sales of the Verizon iPhone to boost Apple's overall sales by 5%—or more if Verizon does a better job of luring new customers than it does turncoats from AT&T.
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