According to the NPD Group, 30% of iPhone purchasers (and corresponding AT&T wireless subs) from June to August 2008 churned from other wireless providers. Nearly half of those new AT&T wireless subs came from Verizon Wireless, 24% from T-Mobile, and 19% from Sprint. So by NPD’s estimate, just under one-third of new AT&T wireless subs came to them as a direct result of the iPhone, and Verizon Wireless felt the most iPhone pain.

Lucky for Verizon, Sprint, on average, is losing 1 million subs per quarter in 2008, many of whom are fleeing to Verizon. So while Verizon lost a fair number of subs to AT&T and the iPhone, they made up for it by welcoming all those disgruntled Sprint customers. Upcoming third quarter numbers will provide a more revealing view of this competitive battle. So far, Verizon has fared quite well next to the iPhone challenge (thanks in part to the aforementioned Sprint). But the third quarter will be the first full quarter of the iPhone 3G bonanza. I’ve seen estimates that suggest 7 million+ total iPhone sales in the 3Q08 alone. All of those sales won’t be AT&T customers, but the majority will. Look for a blowout wireless quarter for AT&T. Now, will Sprint continue to deliver for Verizon?

T-Mobile has been busily trying to play catch up on the 3G front, and now that they have enough markets operational with 3G, customers can finally take advantage of their first true 3G phone. The Sony Ericsson TM506 is now available and offers a 2-megapixel cam, TeleNav navigation, video capture/playback, and stereo Bluetooth. It retails for $79.99 (after rebate).

Nielsen Mobile released a revealing study on mobile broadband which may offer some insight into the future of broadband and wireless. The study results reveal that there were 13 million users of 3G mobile data cards in the U.S. as of the end of 2Q08. Mobile data cards connect to laptops and PCs, allowing access to mobile broadband services over a cellular network. The cards come in a variety of formats, including PCMCIA cards, USB cards, and even come embedded in laptops. The study also revealed significant momentum, citing that 55% of these cards were purchased within the last twelve months. One of the more revealing findings indicated that this mobile broadband product is increasingly being used by everyday consumers, not just traveling professionals, or “prosumers” as they are often called. “It’s clear that data cards aren’t just for business travelers but are an increasingly popular choice for in-home, personal Internet access, too” said Nic Covey, director of insights at Nielsen Mobile. “Data cards aren’t just for road warriors—but also for couch and kitchen warriors.” Other interesting findings include:

• 43% of mobile data card users report they most often use their data card at home
• 15% say they typically use the card at work
• 9% say they use the card while commuting to/from work
• 40% of card users also have cable broadband and 34% also have DSL in their home
• 59% of mobile data card users say they might cut their wireline Internet service for data card use exclusively

The threat to wireline broadband service is fairly obvious. There will be a segment of mobile broadband users who will go exclusively wireless, just as they’ve done with voice. The advent of 4G wireless in coming years will certainly accelerate that trend. But I also believe there will still be significant opportunity to leverage both wireline and wireless broadband together. I interpret the findings of this study to also support the notion that broadband carriers who augment their wireline broadband with a wireless value add option can gain competitive advantage. If your value proposition to customers communicates a robust wireline broadband option, complemented by a broadband “lite” wireless option, at an acceptable price point, you may have a winner. Indeed, some leading companies are already executing such a vision. This strategy is exactly what Cablevision has in mind with their pending Wi-Fi mesh network in New York. The idea that I can buy a service that will seamlessly extend my broadband experience, both inside and outside of the home, is quite compelling. As the Nielsen study reveals – compelling to not only prosumers, but soccer moms too.

Shenandoah Telecommunications Company (Shentel) will upgrade their wireless network to 3G using Alcatel-Lucent gear. “The network upgrade includes the deployment of third-generation (3G) CDMA2000 1xEV-DO Revision A (Rev. A) technology." Shentel's wireless network, Shenandoah Personal Communications Company, is a Sprint PCS Affiliate of Sprint Nextel. Shentel serves markets in Virginia, West Virginia, Maryland and Pennsylvania. “With this upgrade to our network, we will be able to give our customers access to some of the most advanced wireless technology available today, technology that will provide unequalled quality and reliability for both their voice and data communications,” said Chris French, President of Shentel.

One of the most compelling story lines behind Friday’s release of the 3G iPhone was the term 3G itself. As I read and listened to all of the mainstream press, which included local radio “news” stories and local television news bottom screen tickers, I was amazed at the frequent use of the term 3G. Here’s a telecom term which causes great confusion even within the telecom industry, now being thrust into mainstream discussion. In some regards, Apple (and to some extent, AT&T) now owns the term 3G with the average consumer. They now control the perception of 3G, and it’s tied to the iPhone. Will they be able to leverage that ownership for additional competitive advantage? Perhaps. I suspect we’ll start to see other carriers now use the term 3G in their mainstream marketing messages, in a “hey, we have 3G too,” sort of way. It’s somewhat analogous to how Verizon has leveraged FTTH with FiOS. Mainstream consumers now perceive FTTH as FiOS. To the point where competitors are disingenuously claiming they offer FTTH too.

I can very easily see customers walking into Sprint and AT&T stores today, asking, do you have 3G? Those competitors will have to ensure they can place their 3G offering in the context of what the iPhone has to offer, not in the context of the actual technology explanation. Otherwise, they risk losing the attention span of those potential customers, who may opt for their perception of 3G, which is now, an iPhone.

As if the iPhone 3G launch needs more anticipation, the launch today of the iPhone App Store will contribute to it. Some may argue that the App Store launch is the more important event. The store will offer more than 500 options which can be used by the iPhone for applications including games, enterprise apps, e-commerce, social networking, and entertainment. This variety of applications will help the iPhone continue its evolutionary role of transforming the cell phone from just an advanced communications tool to a true portable user friendly computer and Internet gateway (it will be interesting to track the iPhone’s impact on the laptop computer). I’m not ignoring the iPhone’s competitors, including BlackBerry, Windows Mobile, Symbian/Nokia, or Palm, who collectively outnumber iPhone applications by the thousands. But Apple has the chance to establish the iPhone as the first true smartphone for the masses, beyond the usual smartphone suspects of geeks and business professionals. The App Store is one of many steps for that process. Other steps still need to occur, including getting the iPhone out from under that exclusive deal with that “quaint little” communications company that has a globe for a logo. What else needs to happen?

Apple CEO Steve Jobs confirmed the long rumored launch of the 3G version of the Apple iPhone today. Today's 3G iPhone news is not so much of a surprise, but its new pricing might be. The new 3G iPhone will come in two models, 8 and 16 GB models, costing $199 and $299 respectively. That's a significant drop in price over the previous cheapest iPhone model of $399. The new pricing reflects a revised partnership agreement between AT&T and Apple. Under the new terms, AT&T will not share iPhone monthly service revenue with Apple, but will subsidize the handset purchase, resulting in the lower costs. The new pricing will be offered based on a two year service agreement with AT&T. The new iPhone will be available July 11th.

The price drop will certainly put competitive pressure on iPhone's rivals, including the venerable BlackBerry and smartphones running Microsoft's Windows Mobile operating system. The iPhone has demonstrated already that it is a powerful player in the smartphone market and this price drop will surely strengthen its impact. RIM's BlackBerry has held its ground quite impressively against the iPhone. But the added features of the new 3G iPhone, which also includes GPS functionality, and a lower price will up the competitive ante with BlackBerry.

AT&T might also see a tangible bounce in subscriber additions due to this new 3G iPhone pricing strategy. AT&T Wireless CEO Ralph de la Vega said in a statement, "...The device is built, and priced, to sell." They are looking for "mass market" appeal. It may provide enough incentive for hundreds of thousands of additional Sprint customers, who are already leaving Sprint at the pace of 1 million+ per quarter, to churn over to AT&T. The biggest knock on AT&T and the iPhone was lack of true broadband wireless speed. With that barrier removed and this aggressively priced 3G iPhone, look out Sprint.

According to the latest smartphone sales figures, the BlackBerry is holding up just fine against Apple’s iPhone. In fact, in the face of the iPhone onslaught, BlackBerry is actually increasing their smartphone market share. For the first quarter 2008, the BlackBerry garnered 44.5% of smartphone sales, up from 35.1% in the previous quarter. The iPhone was second, with 19.2% of the market, declining from 26.7% from the previous quarter. Palm rounded out the top three, with 13.4% of smartphone sales, an increase from 7.9% in the previous quarter. The details are revealed in this InformationWeek article.

BlackBerry is working to expand its scope beyond just the enterprise to include everyday professional consumers, or “prosumers.” It appears their strategy may be paying off. They are introducing a series of new handsets, including the Bold, that appeal to working professionals. Those professionals may not care if their place of work supports BlackBerry or not. Part of the iPhone’s decline may be attributed to the anticipated release of a 3G version, which is rumored to be launched in mid June. Apple and AT&T are also just beginning an iPhone push into the enterprise market, which is BlackBerry’s historical strength. The real competitive comparison will begin once the iPhone’s 3G version is in play and it gains a foothold in the enterprise space.

Sprint is about to launch its latest response to the iPhone craze, the Samsung Instinct. The new Instinct is scheduled to be available on June 20th. Sprint hopes the Instinct may help stop the bleeding of subscribers who are leaving Sprint in droves. Prime beneficiaries of the Sprint exodus have been AT&T and Verizon. The iPhone may be just the excuse that hundreds of thousands of Sprint subscribers need to leave Sprint and go to AT&T. Sprint hopes the Instinct may cause some of those subscribers to pause and evaluate this iPhone “like” option. The Instinct is very iPhone like, offering many of the same features, including:

• touchscreen
• visual voicemail
• up to 8GB of memory
• music and other multimedia options
• web browsing

Unlike the iPhone, the Instinct offers a slide out QWERTY keyboard. Sprint may have some challenges with the Instinct because its scheduled release is right in the middle of the rumored release of the 3G iPhone, rumored to be announced on or around June 9th. The iPhone’s biggest drawback has been the lack of true 3G type wireless broadband speed, which handicapped the many web enabled applications of the iPhone. With that problem solved, the iPhone may be even a more formidable adversary than it has been in the past, which wouldn’t be good news for its competitor’s or the wireless providers who do not have access to it.

The Rural Cellular Association (RCA) has asked the FCC to investigate the common practice of exclusive handset distribution deals for major wireless carriers. RCA claims such practices are anti-competitive and deny rural consumers access to newer and popular wireless devices. Perhaps the poster child of this issue is the iPhone, and the exclusivity AT&T has with it in the U.S. But there are numerous other examples. The RCA assembled an outline of some of the leading handset exclusivity deals in an appendix of their filing. RCA says the situation is “… creating another ‘digital divide’ between urban and rural America.”

This is a tough issue. Exclusivity is a key weapon in the intense competitive battles between wireless carriers. You could easily argue that exclusivity is fair game in this competitive landscape. But RCA brings up valid points – wide swaths of consumers, almost at the statewide level, are unable to enjoy the benefits of these advanced devices, in large part due to exclusivity deals. Perhaps the more concerning argument is do these exclusivity deals create higher prices for consumers, which would not be the case if the devices were offered by competing carriers. The issue will only intensify as new 3G and 4G devices begin to penetrate the marketplace. These newer devices and the “cool” applications they provide will be fertile ground for exclusivity deals by wireless carriers, as they try to differentiate their service from their competitors. Unfortunately, there are no easy answers for this issue. It’s one of many debates created by a marketplace where multiple competitors are chasing billions of dollars of potential revenue. The stakes are quite high.