Notice To Verizon: No Apple Is Not The End Of The World (VZ, AAPL,T)

Today Verizon (NYSE: VZ) saw its rating from Credit Suisse drop to 'Neutral' after the brokerage said it did not believe the iPhone will stray from exclusive AT&T (NYSE: T) service in 2010.

Shares of Verizon dropped considerably, falling 2% to a close of $28.63. This comes out of rampant speculation over the past few months regarding the possibility of AT&T losing its exclusive contract with Apple (NASDAQ: AAPL) in mid-2010. Several analysts predicted Verizon to be one of the companies to fill that void and pick up part of the iPhone service - either by itself or in conjunction with other service providers - but Credit Suisse believes there is a 75% chance that will not happen.

Investors who have shares in Verizon are probably disheartened at this downgrade, but I am here to say this: Let AT&T have Apple. You'll win in the long run.

Why?

A few simple reasons. The first is that AT&T has demonstrated repeatedly that its network can hardly bear the strain of the insatiable iPhone data network. As an iPhone user, I can attest to the fact that numerous service disruptions over the years have really aggravated many iPhone users who use AT&T solely because it is the only carrier they can use. This will grow exponentially after the iPad comes into heavy usage, and AT&T has given no sign that they will upgrade their network to compensate for the increased demand. They have promised for years to substantially upgrade the iPhone network and haven't; my faith that they will do so for the iPad is virtually non-existent.

Another reason is that AT&T's customer service is horrible. Notoriously so. I know off the top of my head dozens of people who switched from AT&T to other carriers (mostly Verizon, ironically enough) because of bad customer service, among other things.

Finally, I like how Verizon does business. I think their marketing showdown with AT&T drew first blood and hit the hardest, making AT&T's counter-measures seem more like a case of "Nuh uh!" instead of a viable, powerful message. Verizon has shown it can push phones, and I believe it will be more than ready to pick up service for other tablets once they are released.

Investors of Verizon shouldn't fret too much about today's performance. All it really means in the long run is that Verizon shares will be a little bit cheaper. Snap up more; in 2011 Apple will open the doors to Verizon and others, who will pick up the iPhone, iPad, and iWhatever and watch as AT&T loses its only advantage.

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