Or, rather, how has it been responding? Because it’s clear the company has been preparing for this moment for some time. Last year, it accelerated upgrade eligibility for iPhone customers, making it easier for them to get the iPhone 4 when Apple released it. And it locked them all into two-year contracts in the process. And then, last week, it drastically reduced the price of the iPhone 3GS, halving it to $49 from $99.

Presumably, AT&T could follow this with additional pricing promotions that could further limit iPhone subscriber defections to Verizon, though at this point one could argue that it’s as well prepared for its loss of iPhone exclusivity as it will ever be.

Why? Two big reasons:

1. According to Piper Jaffray analyst Christopher Larsen, nearly 80 percent of AT&T iPhone users are currently on family or corporate plans, which makes switching to a new carrier a difficult proposition.
2. Approximately 75 percent of them still have at least a year left on their contracts.

And there’s a third wild-card reason as well: How Verizon’s network fares after a big influx of data-heavy iPhone subscribers. That’s tough to predict, but two analysts I’ve spoken with said they expect Verizon to suffer some network growing pains, though not as bad as the ones suffered by AT&T. Ultimately, Verizon is starting off with a better network, and CDMA is said to be a more spectrally efficient standard than UMTS.

So will there be some AT&T subscribers who switch to Verizon when it begins selling the iPhone? Certainly. But they may not be nearly as large in number as you might think.

“AT&T has done everything it can,” Needham and Co. analyst Charlie Wolf told me this morning. “The company locked in a lot of iPhone owners by waiving early termination fees last summer. It’s moved aggressively to add a bunch of BlackBerrys and Android phones. And it should be remembered that AT&T will continue to sell the iPhone. So I doubt that the loss of subscribers to Verizon will be that large. But it could be material as it pertains to the bragging rights between AT&T and Verizon. “

PREVIOUSLY:

• Why Verizon’s iPhone Won’t Be So Bad for RIM
• How Might the Verizon iPhone Differ From the iPhone 4 (Besides Being Able to Make Calls)?
• Tired: Speculating About Verizon iPhone. Wired: Speculating About Verizon iPhone Sales.
• Verizon iPhone to Debut With Unlimited Data Plan
• Apple CEO Likely to Appear at Verizon iPhone Event
• Verizon Event Set for Tuesday–iPhone Time

Says Ratcliffe: “Channel checks by our communications equipment and semiconductor research partners give us greater confidence that Verizon will get an iPhone in early 2011, and we are now incorporating that belief into our models for AT&T and Verizon.”

Interestingly, Ratcliffe doesn’t see the end of AT&T’s iPhone-exclusivity deal with Apple (AAPL) heralding a subscriber exodus at the carrier. While he acknowledges that perception issues with AT&T’s network quality will inevitably drive some customers to flee to Verizon, he believes that many will stay put.

All told, the analyst expects approximately 500,000 to one million “switchers,” a relatively small portion of the nine million iPhones he says Verizon will activate in 2011 (click on charts below to enlarge).

“We don’t believe that the addition of a Verizon iPhone will be a seismic event in the wireless competitive environment, although we do expect it to result in a modest spike in AT&T churn, as customers who love their iPhones but have become unhappy with AT&T’s network take advantage of the alternative,” Ratcliffe writes.

“Overall, however, we believe that smartphone customers are relatively sticky, particularly given that (a) 70% of AT&T postpaid customers are on family plans (which would necessitate a group switch), (b) switching cost for customers currently in contract would be $375-525 per handset, (c) approximately 40% of handsets are covered under corporate discount arrangements, many of which may not have VZ equivalents, (d) for many, if not most iPhone customers, the service quality being delivered on the AT&T network is in reality comparable to what they’d receive on Verizon’s network, and (e) switching will likely result in accepting a bandwidth-capped data offering, since (we believe) that Verizon is likely to launch tiered bandwidth pricing prior to the launch of an iPhone.”

So, while the expiration of AT&T’s iPhone-exclusivity deal certainly won’t be good news for the carrier, it’s not going to be a disaster. Ratcliffe figures the carrier will still activate six million iPhones in 2011, which is quite a bit fewer than the 10 million he says it will activate this year, but a sizable number nonetheless.

This morning, the retailer cut the price of iPhone 3GS devices with 16 gigabytes of memory from $197 to $97 with a two-year service contract. Wal-Mart claims the reduction is simply part of its “ongoing aggressive savings announcements.” But coming as it does amid speculation about the launch of a new iPhone (and rumors of the discontinuation of the 8GB iPhone 3G), it is being interpreted as a move to clear out inventory before that device arrives at market.

Meanwhile, Apple (AAPL) and AT&T (T) continue to sell the 16GB iPhone 3GS at its original price, though I can’t imagine that this will continue much longer. When Apple introduced the iPhone 3GS in June 2009, AT&T slashed the price of the entry-level 8GB iPhone 3G to $99.

The company is expected to do the same thing this year with the low-end 3GS. And, as it did last year, that price cut will likely spur adoption of the device among the lower tiers of AT&T’s customer base. As BTIG Research analyst Walter Piecyk observed in a note to clients this morning:

We estimate that last years price cut of the iPhone 3G to $99 stimulated more than 3 million phone sales to existing AT&T customers that helped the company further penetrate the family plan with higher ARPU, lower churn customers. We believe the impact could be even larger this year for AT&T given its the broad market acceptance of the iPhone, the halo impact of the iPad and the installed base of iPhones that will need to be upgraded to a 3GS phone in order to benefit from Apple’s latest upgrade to its iPhone OS 4.0.

Riffing on rumors of a Verizon (VZ) iPhone, Morgan Stanley (MS) analyst Katy Huberty theorizes in a research note this morning that given the opportunity, nearly 17 percent of the carrier’s customers would upgrade to an iPhone (see chart below; click charts to enlarge).

“According to our [Alphawise U.S. consumer iPhone survey], there is substantial pent up iPhone demand within the Verizon installed base as 16.8 percent of Verizon subscribers said they are ‘very likely’ to purchase an iPhone if offered on the Verizon Network,” Huberty writes.

“This 16.8 percent is higher than AT&T subscriber’s 14.6 percent extreme interest in the current AT&T iPhone,” Huberty elaborates, “and well above the overall iPhone extreme interest of 7.5 percent.”

Assuming Verizon does add the iPhone to its smartphone lineup and that most of its subscribers who said they were “very likely” to purchase the device do so over a two-year period, Huberty figures Verizon stands to sell about seven million to eight million iPhones annually.

Interestingly, Huberty’s forecast for Phone demand at Verizon does not assume sizable subscriber losses at AT&T. In her view, the end of the carrier’s iPhone-exclusivity deal won’t be the blow some observers claim. AT&T (T) and Apple (AAPL) will obviously remain partners, she says.

In markets where the iPhone has gone from single-carrier to multiple-carrier distribution–France, for example–the carrier that lost exclusivity hasn’t suffered much at all. Beyond this, there’s the issue of early-termination fees, which will make it difficult for current AT&T iPhone users to flee. Says Huberty:

• 60 percent of the iPhone base is locked until 2H11/1Q12. An iPhone refresh could bring a new wave of subs to AT&T and extend the lock-down of those who upgrade. 80 percent of AT&T’s postpaid subs are sticky customers (70 percent are on a Family Plan (FP); 40 percent on business discounts).
• For current subs, the Early Termination Fee (ETF) is $175 falling $5/mo for the term of the contract; for new smartphone subs it’s $325, falling by $10/mo. Every line on a FP has a contract/ETF of its own. In addition, customers would have to pay for a new device if switching carriers.

One final point: Huberty sees Apple shares hitting $400 sometime in 2011. Why? “The market underestimates the earnings power of Apple’s mobile Internet devices,” she wrote. “We view the combination of new product launches, broader distribution [carrier, international, enterprise], more attractive pricing and strong upgrade rates as the key demand drivers over the next two years.”

Though it isn’t always obvious, the technology industry sees senior citizens as a target demographic — especially where cellphones are concerned. Mobile phones could act as valuable lifelines in health-related situations and, at the very least, provide an easier way for relatives to keep in touch. Major cellphone carriers offer models that they say are easier for seniors to use thanks to big buttons and large screen fonts. But some companies go a step further. GreatCall Inc., for example, designed its Jitterbug cellphone specifically to appeal to non-techies, including — but not limited to — senior citizens. It shirks phone extras like Internet access for simplicity and includes a concierge service that does things like remotely adding numbers to the phone so users don’t have to do it.

This week, I took a look at a cellphone that was designed specifically for senior citizens: the ClarityLife C900. It’s the first cellphone from Clarity (clarityproducts.com), a division of Plantronics Inc. (PLT) that specializes in telephony (landlines and other products) for people with hearing loss. The cellphone incorporates features that are useful for someone who may be hard of hearing or using a hearing aid.

The C900 is a bulky slider phone with a top half that slides up, revealing a number keypad below; number keys each measure a half-inch square. This might be a deterrent for seniors who want their phone to look hip or slip easily into a pocket. But Clarity says the phone’s deliberately large size makes it easier to hold and use, and accommodates a roomy 2.5-inch screen.

I found the C900 relatively easy to navigate with sensible on-screen commands, though there were a few times when I couldn’t back out of a screen and had to close the slider to start over. Friends’ voices sounded loud and full when heard through this cellphone, though it lacks a speakerphone, which my grandparents could use for calling relatives and singing “Happy Birthday” together.

The $270 ClarityLife C900 has oversized buttons and a red emergency button on the back that, when pressed, calls five contacts.

The C900 costs $270 — a steep price because it’s “unlocked,” or not tied to any one carrier, but according to Clarity’s research, senior citizens don’t like to get into long-term contracts like two-year deals. This unlocked model will work on any GSM network, like T-Mobile or AT&T (T), but buyers must take the phone to a carrier’s store to get it set up and working. The phone also could be added as one of the lines in an existing family plan.

People who would rather save money than avoid contracts can get the ClarityLife for $185 tied into a one-year service deal with T-Mobile. These monthly service prices range from $19 pay-as-you-go (20 cents a minute) to $99 for unlimited calling.

The hearing-related features on this cellphone include a 20-decibel speaker and a way to notify people of incoming calls using simultaneous ringing, vibrating and a flashing green light. All the buttons on the device make loud noises, including those that control volume. The C900 is also hearing-aid-compliant, meaning it won’t cause static interference when held up to an ear with a hearing aid.

The C900 has a large, red button on its back side that, when enabled and pressed, automatically calls and/or sends text messages to a list of five emergency contacts until it reaches someone. These contacts are notified via an automatic dialing system and must press “0″ when they answer to accept the emergency call so the system knows that a real person picked up, instead of a voicemail or answering machine. Five postcards with instructions come with this phone, and can be mailed to emergency contacts so they know what to do if they receive an emergency call from the C900 phone. Users could potentially add “911″ to their list of emergency callers.

Most people will likely use the C900 in its closed slider position, revealing just four buttons at a time. These oversized buttons can scroll through contacts, call friends and end calls. A feature called “Top 10″ lets users add their 10 most frequently called numbers in the order they prefer, which is a refreshing change from the alphabetical listing that most phones use.

The C900 accepts and sends SMS, or text messages, and comes loaded with nine canned text messages including the ominous, “I don’t have much time.” An extremely loud chime sounds when messages are received or sent.

Other helpful features include a hard button on the phone’s top edge that opens an alarm-clock function, and a button for an ultra-bright, built-in flashlight. This could come in handy, though it must be held down to stay on.

Clarity says that the C900′s battery life lasts for three hours of talk time or 150 hours in standby, and that it takes one hour to fully charge after the phone’s first-time-use four-hour charge. I left my fully charged C900 powered off for a couple weeks and it still had a full charge when I turned it back on again. This could be really helpful for people who forget to charge their phone, but want to grab it to take along on a trip.

A phonebook entry titled “Customer Care” comes preprogrammed on all ClarityLife C900s. This number is answered by Clarity’s customer-service team, people who are trained to consider a caller’s specific issues, such as hearing or memory loss. The representatives speak slowly, avoid tech jargon, and can use an amplifier to make their voices louder and easier to hear.

The ClarityLife C900 is expensive, but this phone’s hearing-targeted features will be appreciated by many seniors, as will its oversized buttons and easy-to-hold size and shape.

Write to Katherine Boehret at mossbergsolution@wsj.com

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