iPhone Defections Good for AT&T, Better for Wireless Broadband

Of those people that purchased the new Apple 3G iPhone this summer, some 30 percent of them defected to AT&T from other networks, according to a report out today from analysis firm The NPD Group. With about 23 percent of people switching carriers between June and August, that’s a lot of churn, but since two-thirds of the AT&T iPhone newcomers came from Verizon (47 percent) or Sprint (19 percent), both of whom have good 3G networks, my guess is defectors were seduced by getting comparable speeds on a hot phone now available at a reasonable price.

When the iPhone launched on the pokey EDGE network last year, the Apple faithful flocked to the device, but the slow network triggered a flood of complaints. The newer version launched in June (and went on sale in July) with a lower price tag and faster speeds. I imagine a mix of the two is what tempted those on the fence, and made the iPhone 3G the top-selling smartphone during the summer months, according to NPD. It was followed by the BlackBerry Curve, BlackBerry Pearl and the Palm Centro.

That is mostly good news for consumers, who are making clear to carriers that network quality and ability to get online are important to them. Now that carriers recognize how much consumers value the 3G experience, expect to see more phones optimized for web surfing — and more network upgrades.  However, the price sensitivity means that carriers aren’t likely to abandon the subsidized handset model anytime soon, which gives rise to evils like two-year contracts and high termination fees. This might feel bitterly ironic to those consumers who held off on the iPhone for a year because they were waiting for a better network. So far, many find the actual AT&T network and iPhone experience disappointing.