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Life after iPhone

The device has been great for AT&T. What will the telco do for an encore?

By Jon Fortt, senior writer
Last Updated: January 7, 2009: 4:21 PM ET

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AT&T CEO Randall Stephenson has big plans for your mobile device.

(Fortune Magazine) -- What will AT&T do after the iPhone?

The nation's No. 1 wireless operator has benefited handsomely from its deal to be the exclusive U.S. carrier of Apple's runaway hit. Since AT&T joined forces with Apple, the phone company has welcomed about five million iPhones onto its network and gained much-needed cred in the wireless Internet space. Its iPhone subscribers are less likely to jump to a competitor, and they spend twice as much on their monthly bills as the average wireless user.

As a result, AT&T (T, Fortune 500), with 75 million wireless users, has widened its lead over No. 2 Verizon (VZ, Fortune 500), which has 71 million users. The iPhone's only shortcoming may be its incompatibility with some corporate IT systems. (See "Can the iPhone go corporate")

But the iPhone isn't forever. Neither Apple (AAPL, Fortune 500) nor AT&T will say when their monogamous relationship will end, but industry analysts estimate that AT&T has only a few more years as Apple's American one-and-only. With the clock ticking, AT&T is scrambling to find ways to maintain and bolster its ability to sell high-volume, high-margin wireless services to consumers and businesses.

Now CEO Randall Stephenson and other executives of AT&T are pushing the notion of its wireless phones as indispensable lifestyle devices that customers will use to surf the web, remotely program their DVRs or home-alarm systems, and securely connect to their corporate networks.

To make that vision a reality, AT&T is making some Silicon Valley-flavored moves. Its purchase of Wi-Fi provider Wayport should help business customers get work done faster on the road. And a project brewing in the company's labs would let consumers send video from a touchscreen phone to an AT&T digital video recorder with the flick of a finger.

It is unclear if any phone company can make the leap from wireless operator to applications developer, but the iPhone certainly has made AT&T's job a bit easier by introducing millions of consumers to the possibilities of wireless data - and that's a benefit AT&T will enjoy long after the end of its exclusive deal with Apple  To top of page

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