Verizon's Android Success Augurs Well for Its iPhone

Verizon Wireless's embrace of Google Inc.'s Android operating system did more than provide the carrier with devices to compete with the iPhone. It also gave the company experience dealing with the data hogs who can hobble a wireless network.

That experience may help answer one of the big questions facing the nation's top wireless carrier ahead of its possible introduction of Apple Inc.'s phone next year: Can the company's network withstand millions of iPhone users?

Apple is making a version of the iPhone that Verizon Wireless will sell early next year, according to people familiar with the matter. The carrier has been meeting with Apple, adding capacity and testing its networks to prepare for the heavy data load from iPhone users.

 

The carrier is seeking to avoid the kind of public-relations hit AT&T Inc. took when iPhone users overtaxed its network, especially in New York and San Francisco.

In an interview last week, Verizon Wireless Chief Technology Officer Tony Melone wouldn't comment on the iPhone. But he said the company's network would be up to any challenge now that it has withstood the surge of data use on Android smartphones.

"The Android experience gives me confidence we can engineer a great data network," Mr. Melone said. "We are planning for growth. We build capacity, cushion and contingency."

At the end of September, Verizon Wireless had some nine million Android subscribers, up from none a year earlier, said Matthew Goodman, a senior analyst with Majestic Research.

AT&T is carrying a heavier load—16.5 million iPhone customers at the end of September, Mr. Goodman estimates. But Android users appear to consume more data than iPhone owners.

The average iPhone user consumes 344 megabytes of data a month, according to figures from Validas, a Missouri City, Texas, company that advises consumers and businesses on ways to lower their cellphone costs by analyzing their monthly phone bills. Validas produced the data by studying tens of thousands of consumer-billing statements.

By contrast, the average Verizon smartphone customer not using a BlackBerry—of which about 70% are Android users—consumes 485 megabytes a month, according to Validas.

"It does bode well for the Verizon network overall," said Mr. Goodman. "They should be able to handle the addition of the iPhone.

AT&T defended the quality of its network. "We have the most tested mobile broadband network in the U.S.," AT&T spokesman Mark Siegel said. "We have the fastest speeds, and we handle about half the mobile data traffic in the U.S.—nearly double that of our nearest competitor."

Toni Sacconaghi, a Sanford C. Bernstein analyst, estimates Verizon could add more than 13 million U.S. iPhone customers over a two-year period. He added that it's hard to know for sure how Verizon will perform when it gets the iPhone but that "failure to deliver strong performance could undermine our projections—significantly."

AT&T's executives have acknowledged that they underestimated the load that iPhone users would bring. Late last year, the company embarked on a major effort to improve service, particularly in New York City and San Francisco, boosting network spending by $2 billion. While much of the work has been completed in New York, San Francisco isn't yet up to the carrier's own quality standards Efforts to repair AT&T's image with customers are also lagging.

Mary Gazella, a 30-year-old life-insurance underwriter based in Manhattan, said network quality is her biggest issue. "I have been pretty impatient for the [Verizon Wireless] iPhone," she said. "The ability to know my calls aren't going to drop is more important to me."