Verizon: Pay Apple now or pay Broadcom later.

Here’s a quick summary of the facts so far:

  • Verizon turned down Apple to be the exclusive carrier for the iPhone, primarily due to Apple’s “financial terms.” Apple didn’t want to play the subsidy game, instead wanting a piece of the action for each phone sold. Verizon wouldn’t have it.
  • Verizon is in need of new phones to compete with the iPhone, but is unable to get them as planned due to their being banned by the FCC because the Qualcomm chips they contain violate Broadcom patents.

The above represents the gist of the situation as it now stands.

So what does Verizon do? They ink a deal with Broadcom to pay $6 for every phone that violates Broadcom’s patents. They wouldn’t pay Apple, now they have to pay Broadcomm.

What makes this so interesting is that Qualcomm is actively fighting the ban. Further, Verizon and Qualcomm petitioned the FCC to have the ban overturned. And yet, here is Verizon coughing up money for the phones.

Why doesn’t Verizon wait for a decision regarding the ban? Because it appears their current offerings aren’t getting the job done, so they need new phones. Further, the iPhone has them running; they can’t afford to wait around for the FCC to act (or not).

What’s funny is that these phones, such as the Motorola RAZR2, are not going to compete with the iPhone as well as Verizon is dreaming. The good news for Verizon is that if the phones don’t compete well then they won’t have to shell out their six bucks very often.

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6 thoughts on “Verizon: Pay Apple now or pay Broadcom later.

  1. I couldn’t agree more about having the carriers concentrating on the network (or ‘signal’).

    On 7/12 in “iPhone competitors visit a river in Egypt”, I wrote this:

    “I’ve got a great idea. Why not have the carriers worry about their primary reason for existence: the signal? Quit the other crap and deploy faster and stronger signals to more places. They could make their money on $80+ monthly voice/data plans that customers actually feel provide their money’s worth, instead of building proprietary networks and ‘services’ to peddle a bunch of stuff we have or could get elsewhere if they didn’t cripple our phone so much.”

  2. Hopefully this is the beginning of the end of Phone companies selling others phones. We don’t buy our TV’s from the cable company, why should we buy the phone from the cellphone company? Apple/Sony/Nokia/Ericcson and the customer would all be better off if ATT/Verizon, etc concentrated on the NETWORK. Reception anyone?

  3. Yes, a pity Verizon did not pick up the iPhone, they have a better service. Not sure I would have bought this iPhone 1.0 though 🙂

  4. Whether the iPhone is a smartphone only became a question because of the campaign begun to clearly “define” what a smartphone is so that the iPhone could be excluded.

    Big deal. Users know what they consider a smart phone, and no definition is going to change the obvious.

    More importantly, the point of my article stands whether you consider the iPhone a phone, smartphone, or hand-held computer. It’s simply that Verizon sees the obvious iPhone threat and is making moves to do something about it. Good for them. Seriously.

    What I found funny is that in order to make these moves they have to cough up extra dollars per phone, something they obviously did not want to do when Apple came calling.

  5. Good thing the iPhone is not a smartphone or else the other carriers would be really worried.

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