A New Chance For Apple (AAPL) To Gouge AT&T (T)

The deal under which AT&T (T) is the exclusive cellular carrier with rights to sell the Apple (AAPL) iPhones in the US will expire soon. The phone company believes that the partnership is essential to giving it an edge in its competition with Verizon Wireless (VOD)(VZ) and Sprint (S). So, it wants to extend its exclusivity arrangement with the PC and consumer electronics company.

According to The Wall Street Journal, AT&T’s CEO faces “keeping the iPhone away from rivals and finding the next hit devices, such as smart phones and multimedia handheld tablets.” That certainly give Apple the upper hand in any negotiations.

Apple is likely to be shopping its US exclusivity arrangement to Sprint, Verizon, and T-Mobile. The most desperate of these is Sprint which is still losing customers and market share. It may be willing to pay an exorbitant amount to get the hottest product in the handset business.

No matter which US carrier ends up with the iPhone deal, it will pay dearly. That is good news for Apple shareholders.

Douglas A. McIntyre