What the iPhone 4S means for the carriers

iPhone madness is upon us. And the new iPhone 4S is likely to sell like hotcakes when it's released next week. So who will be the big winners and who will be the losers?

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
8 min read

Apple's much-anticipated new iPhone was unveiled today at the company's headquarters in California. And for the first time in iPhone history, three of the four major U.S. operators will be offering the latest version of the device.

AT&T, Sprint Nextel, and Verizon Wireless will each begin selling their version of the iPhone 4S on October 14. Apple and its carrier partners will begin taking preorders for the device on Friday. Even though the announcement of the new iPhone 4S may have disappointed some fans because it was not the hoped for redesign known as the iPhone 5, the new device is an improvement over the previous version of the iPhone.

It will sport a dual-core A5 processor, offering the device twice the processing power and seven times the graphics power of its predecessor, Apple said. And it also will have a new 8-megapixel camera with face detection. The upgraded camera will also be able to record video in full HD (1080p) at up to 30 frames per second.

If history is any indication, the new device is certain to be hot seller. Just how hot is yet to be seen. iPhone fans have waited more than a year for a new version of the device.

So what will the new iPhone 4 likely mean for each of the four major carriers? CNET breaks it down for you.

Sprint Nextel:
There's no question that Sprint is the biggest winner out of all the wireless operators when it comes to the iPhone 4S announcement. After more than four years of waiting in the wings, the No. 3 wireless operator in the U.S. will finally get its own version of the iconic smartphone. Like AT&T and Verizon Wireless before it, Sprint will now be able to partake in the iPhone frenzy.

And according to the Wall Street Journal, the carrier is betting big on the iPhone. It has reportedly agreed to purchase $20 billion worth of iPhones to sell to its customers, each with a subsidy of at least $500. The newspaper reports that under the deal, Sprint will purchase at least 30.5 million iPhones through the next four years, which makes the upfront cost about $20 billion. This is a bold bet for a company that had about 27.4 million postpaid subscribers at the end of April.

But Sprint may be hoping that it can lure iPhone fans from AT&T and Verizon with its unlimited data plans. Out of the three major carriers that will offer the iPhone 4S, Sprint is the only one with an unlimited data plan for smartphone customers.

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AT&T is the original wireless operator for the iPhone in the U.S. And it had the exclusive deal with Apple to sell the device here in the States for nearly four years, until Verizon started selling its own version of the smartphone in February. The added competition from Verizon did not slow AT&T's iPhone sales.

In fact, AT&T grew iPhone sales this year after the launch of the Verizon iPhone 4. Part of AT&T's continued success is attributable to the fact that the company is still selling the iPhone 3GS, the iPhone introduced in 2009, at a reduced price of $49.

Soon AT&T will be the only U.S. carrier selling three versions of the iPhone: the iPhone 4S starting at $199, the iPhone 4 starting at $99, and the iPhone 3GS, which will be free. (All these prices require a two-year AT&T contract.) The varying price points are likely to continue driving AT&T's iPhone sales.

Another major differentiator for AT&T is the fact that it will be the only U.S. carrier to offer the iPhone on a faster wireless network. It will not be the 4G LTE network that AT&T and Verizon Wireless are each building out. But the new iPhone 4S will support HSPA+, a speedier 3G network that AT&T offers and Verizon and Sprint Nextel do not offer.

AT&T claims the HSPA+ capability will allow for downloads that are twice as fast as the same device operating on 3G networks, including its own. But as noted in Tuesday's Ask Maggie column, the real-life benefits of AT&T's HSPA+ network may not be felt equally by all AT&T subscribers. As a result, the HSPA+ functionality may not be the big differentiator that AT&T may think it will be.

Under ideal conditions, the AT&T HSPA+ network is faster than other 3G wireless networks, including AT&T's current 3G network. But in the real world, conditions aren't always ideal. The biggest problem for AT&T is that fact that the company hasn't upgraded its backhaul throughout its network. Backhaul is the network that connects and transmits data from the cell towers to AT&T's backbone network.

What this means is that even if the wireless network that connects your phone to the cell tower is super fast, data traffic could still hit a bottleneck at the backhaul network if it's congested with traffic.

So in areas where the backhaul hasn't been upgraded, the HSPA+ benefits won't be felt.

AT&T says that it has deployed HSPA+ to nearly 100 percent of its mobile broadband network. But the company is still working to get these backhaul links upgraded. Mark Siegel, an AT&T spokesman, said the company expects two-thirds of its mobile broadband traffic will be carried on enhanced backhaul by the end of this year.

Verizon Wireless:
Like its competitors AT&T and Sprint, Verizon will sell lots and lots of the new iPhone 4S smartphones. There is little doubt about that. Verizon is the largest U.S. carrier, and it has become a significant channel for iPhone 4 sales. Even though many eager Apple fans are disappointed that the iPhone 4S won't support Verizon's fast 4G LTE network, there is still plenty to be happy about for Verizon iPhone customers.

The biggest improvement for Verizon iPhone customers is that the new iPhone 4S is a "world phone," which means that Verizon wireless customers can roam onto other carrier networks when they're traveling abroad. This is not possible with the current Verizon iPhone 4. And it's likely why the Verizon version of the iPhone 4 has a lower resale value than the AT&T GSM version of the same phone.

Sprint, which is also a CDMA carrier, will get the dual-mode CDMA/GSM chips from Qualcomm that will also be in Verizon's iPhone 4S. One thing that is still unclear, is whether Verizon and Sprint customers will be able to pop out their SIM cards while traveling abroad to slip in a SIM card from a local cell phone provider.

CNET Reviews section editor Kent German was at the Apple event on Tuesday. He asked an Apple representative to clarify whether the Sprint and Verizon handsets will come with a SIM card that will be locked to overseas roaming partners or if customers can use their own SIM card while they travel. This would essentially mean that the GSM portion of the phone would be unlcoked. Apple said that will depend on the carrier.

One other unanswered question for Verizon and Sprint subscribers of the iPhone 4S is whether the Qualcomm chips used in the Verizon and Sprint versions of the iPhone 4S also support SVDO, a technology that will finally allow for simultaneous voice and data sessions on phones operating on a CMDA network.

This is a big differentiator that AT&T has repeatedly pointed out between its version of the iPhone 4 and Verizon's version of the iPhone 4. Phones operating on CDMA networks, such as Verizon's and Sprint's, have traditionally used separate channels for voice and data communications. And it has not been possible for subscribers to use the data service while they also talk on the phone.

But the LSVDO technology, which can be included in the chips on the phones, makes this functionality possible on a CDMA network that uses the 3G technology EV-DO. Because the limitation is not baked into the CDMA network infrastructure, all it requires is a change in technology on the handsets.

At this point, it's unclear whether the chips used in the new iPhone 4S include SVDO. Verizon declined to comment. And Apple did not respond to requests for this information. So stay tuned for more information on that.

T-Mobile USA:
Along with rumors of a completely redesigned iPhone 5 and support for 4G LTE, one of the other rumors that never came to fruition for this new iPhone was that T-Mobile USA would get its own version of the iPhone. Now it's the only major U.S. carrier still without the iPhone.

These hopes were dashed last week when Cole Brodman, the company's chief marketing officer, posted a letter to customers on the company's blog, saying that while he would love to carry the iPhone, the company is currently focusing on "the best that Android has to offer."

But Brodman pointed out the significance and importance of the iPhone by noting in his letter that more than 1 million T-Mobile customers use an unlocked iPhone on the T-Mobile network. But these users are limited to slower 2G speeds because AT&T and T-Mobile don't use the same spectrum frequencies to deliver 3G service.

Even though T-Mobile, which is a GSM carrier like AT&T and also supports HSPA+, its customers will still not be able to take advantage of the HSPA+ speed boost from the iPhone 4S. And the reason is simple. AT&T is using the same spectrum bands it used for its traditional 3G service to deploy the HSPA+ service. And T-Mobile is using different bands for its HSPA+ service.

  • T-Mobile HSPA+: 1700/2100MHz ("AWS" spectrum)
  • AT&T HSPA+: 850/1900MHz

What this means for T-Mobile is that the company will be forced to compete against AT&T, Sprint, and Verizon with Google Android devices. From a technical standpoint, some of these devices surpass the iPhone 4S in several ways. The company recently announced the availability of the HTC Amaze 4G and Samsung Galaxy II.

These devices operate on T-Mobile's HSPA+ network, which is actually faster than AT&T's version of the technology. Not only has T-Mobile upgraded its network to the latest version of HSPA+, but the carrier is further along in its backhaul network upgrade. And it has a less congested network, which helps keep speeds for individual users high. What this means for wireless customers is that those using the HTC Amaze 4G and Samsung Galaxy II will likely experience faster speeds than iPhone 4S users on either AT&T's, Sprint's or Verizon's networks.

Still, T-Mobile is fighting an uphill battle. The only saving grace for the carrier is that the iPhone 4S is not the iPhone 5, which was expected to have a completely new design. Some Apple fans may be disappointed by this fact, which could drive some tech-savvy smartphone users to look more closely at Google Android devices with sexier specs and bigger screens.