The success of the Apple (AAPL) iPad is not just a technology story. It's also a retail story.
Go into any AT&T (T) or Verizon (VZ) store and you'll see this clearly. Both have tablets, lots of tablets. Lots of lonely, over-priced tablets, gathering dust while iPads fly off the Apple Store shelves.
The carrier strategy of linking devices with service contracts doesn't work that well with the iPad, which was originally designed Wi-Fi only. To carriers, tablets represent a loss of market share and retail traffic, to a lot of users it costs more to serve than they may be worth. That's why they are so desperate to get app makers to pay for data transfers - they're bleeding.
Ironically, their best hope may lie in open source. The Mozilla Foundation is rolling out a new mobile phone design which is based entirely on open standards like HTML5. The idea is to get a patent-free device that can be sold at a rock-bottom price.
European carriers like Telefonica and Deutsche Telekom (DTEGF.PK) are reaching for the Mozilla design like refugees on a food truck. Such a phone would level the playing field now tilted entirely in the direction of Cupertino and, as a tablet, deliver something that might be practically free with a service contract.
The danger, of course, is that the carriers will do to Mozilla what they did to Android, namely, load the phone with proprietary "extras" designed to lock-in revenue, rather than focusing on building out Web app markets and selling hardware.
Personally I don't think they can, and the only way to play either of the big carriers is for the dividends, with yields on T currently at 5.77% with the 44 cent/share dividend and that on VZ at 5.24% with a 50 cent dividend.
Just remember that there's a reason for such fat yields, namely, an absence of capital appreciation and a serious risk going forward. Both companies are paying out about two-thirds of earnings in dividends, so if earnings drop pay-outs will have to decline.