Verizon iPhone? Where There's Smoke....

Last Updated Oct 6, 2010 4:54 PM EDT

Rumors about Apple and Verizon striking a deal that will end AT&T's exclusive hold over the iPhone surfaced in the Wall Street Journal this week. With the WSJ reporting that San Diego-based Qualcomm is making component parts that will allow the iPhone to survive on Verizon's currently incompatible CDMA technology.

No one from Apple, Verizon or Qualcomm would confirm the rumor. But Twitter was all a-tweet with iPhone experts blogging about why they thought that, this time, the rumor was true.

iPhoneHacks, for example, explained that AT&T had sent smoke signals that they knew a competitive deal was afoot when they gave customers the ability to upgrade early to get iPhones. At the same time, they nearly doubled early termination fees, in an apparent attempt to keep customers in house even after the competitor emerged.

As mentioned in an earlier post here, AT&T customers would pay $325 to cancel their iPhone agreement after the first month. But the early termination charges drop by $10 for each month you've owned the phone. That means that somebody who dumps AT&T for Verizon after a year would still pay a hefty $205 in early termination fees.

Verizon has also been working on a next-generation system that's supposed to make reception clearer and calls more reliable. Besides, this gives Apple the opportunity to create another upgraded version of the iPhone, which has always fueled sales in the past, iPhoneHacks said.

Meanwhile, several other iPhone enthusiasts mentioned that Wall Street Journal's Yukari Iwatani Kane is "notoriously" well-informed. Or, for those of us who really appreciate reporters who know their beat, we'll say "gloriously" well informed.

The rumors are also remarkably consistent and detailed, with predictions that the deal will be announced within months and the new phones will be available in January.

The stock prices of all four companies rose in early trading Wednesday, with Verizon up 28 cents to $33.36; Qualcomm up 39 cents to $44.65; AT&T up 4 cents to $27.37 and Apple up 25 cents to $289.19.

So, we'll reiterate what we said in June. If you're not wild about AT&T, hold off on getting a new iPhone. You might be able to avoid cancellation fees and get a better phone contract. Better yet, you might also miss the next round of debugging that bedeviled the millions of enthusiasts who stood in line so they could get the iPhone first.

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