Dear AT&T: Maybe It’s Time to Get On the iPhone Bandwagon
I’ve defended AT&T on occasion regarding the iPhone, but its latest moves (or non-moves) make it hard to do so.
To recap its defense, I’ve praised AT&T for the following:
- Without AT&T we don’t even have the iPhone as we know it. You think Verizon was gonna allow it? Heck, it’s been two years, and there’s still no Wi-Fi on Verizon’s phones.
- At the initial iPhone launch, the unlimited data at $20/month was better than most, and in-home activation was also new. (For 3G, the company raised the data rate to $30, but that was what it charged for other 3G phones, so it’s not as egregious as some think.)
- It leveraged its Wi-Fi hotspot service and made it free to iPhone (and other smartphone) users. This is huge, and something I use daily.
Yet, for all the good, AT&T lately is acting like a tanker that takes forever to turn. Apple’s comments about AT&T in the WWDC keynote on June 8 seemed tinged with dissatisfaction. In my opinion, AT&T has been a clear disappointment in four areas. Let’s take a look at those.
MMS
The iPhone will get it late this summer. Yes, all its other phones have it now, but the iPhone must wait. This is nonsense, and I don’t believe it’s due to any technical hurdle so much as fear on AT&T’s part that somehow its network will be negatively affected. I’ll discuss the network shortly, but AT&T should look at it this way: It can be criticized for poor coverage, dropped calls, and no MMS, or just for poor coverage and dropped calls. That’s its choice.
Tethering
This one’s worse than the above. Not only is it allowed for other phones (though it costs too much), but in the iPhone’s case, AT&T won’t even supply a date! Instead, AT&T just says “it’s coming,” as if that’s supposed to mean something. To me, this just implies that the company thinks its network will be negatively affected when it allows it, but I’m not buying it. The iPhone is not hammering its network because of the 10 percent of iPhone geeks grabbing a load of bandwidth, but rather because, of the millions of iPhone users, the remaining 90 percent use it much more than the average smartphone user.
To clarify that last statement, assume two groups: One, of 10 million BlackBerry Curve users, the other, 10 million iPhone users. Each group has their 10 percent using the system relatively heavily. The difference is the remaining 90 percent. Those Curve users hardly use it at all (relatively speaking), whereas the iPhone users do. Month after month of web market share figures confirm this fact. (This isn’t about the Curve — substitute any high-volume smartphone, and you’ll see the same thing).
So if AT&T really wanted to avoid the network being negatively affected, it’d have to stop adding new iPhone users, not limit the 10 percent who currently use it most. Tethering will not harm its network nearly as much as the flood of new customers getting on board with the cheaper 3G or new 3G S models, yet I don’t see AT&T rushing to limit them.
Low-Cost Data Plans (and $99 iPhone)
There were many rumors of a “low cost” data plan for the iPhone. Most suggested maybe $20 a month with a cap of 200MB or so. While that cap is small to me, it would likely cover most people attracted to the cheaper iPhone, and for those it didn’t, they could upgrade to an “unlimited” plan anyway.
I can’t help but think the $99 iPhone 3G and the rumored low-cost plan were meant as a one-two punch in the face of every smartphone vendor. The iPhone pretty much set the smartphone price floor at $199, and even then RIM’s Storm and Palm’s Pre required mail-in rebates to get there. Dropping it to $99 could be a huge blow.
But a $99 iPhone only harms the competition when people buy it, and staring at a ~$75 monthly bill will restrict sales. The rumored “low-rate” plan would drop that by $10-$15 a month, and with the $99 phone that would be a huge draw. But no new pricing has been announced, even though the $99 iPhone is here.
The Network
Whether it’s just an excuse or the real deal, this all comes down to AT&T’s network and the appearance it seems to convey that it’s a house of cards waiting to topple if it adds any new features for the iPhone crowd (though, strangely, it can add as many new iPhone customers as it wants). And all we get from AT&T on this is talk.
Here’s my advice to AT&T: Let half of the marketing people go. You know, the ones writing the press releases about improving the network with so much technology that soon we’ll be able to connect to the Hubble telescope and control it with our phones, and instead hire more people to actually do the upgrades. It’s cliché, but talk is cheap. When you brag about the advancements on paper, but don’t allow MMS and tethering, well, let’s just say I know into which action I put more stock.
Tweet This (43)
Dave Greenbaum on June 10th, 2009 at 9:13 am
Great job. I agree that AT&T saying it’s concerned about it’s network is in direct conflict with it’s marketing message. The iPhone is great, but if you rely on it, and can’t get service, your toast.
Additionally, the fact that Apple’s contract with them will expire next year, they aren’t exactly positioning themselves well to keep that US exclusivity
Portia on June 10th, 2009 at 9:29 am
I like your analysis re the network usage patterns of Iphone users in aggregate. At the end of the day though I have to think that ATT knows their network enough to calculate the effects of tethering and SMS. I know they want the money, I know they don’t want the attention (it makes verizons network ads seem more cogent). ATT may have real issues to which we do not have proper data.
Give it till the end of summer, we have waited on Apple for long enough to deliver the phone side tech.
PS Your defense of ATT re their choosing to jump into bed with Apple vs Verizon is so misunderstood by the rest of the bloggerati that it is uncanny how little kudo’s ATT gets for taking a huge risk with a company that had never made a phone before.
You should try to get an interview with someone at ATT other than the flacks, I can imagine they want to get a different take on the story.
TJ Draper on June 10th, 2009 at 9:38 am
I gotta tell you the only reason I’m not (still) with Verizon is because I put the iPhone on one side of the scale and Verizon’s awesome network in the other side, and the iPhone just slightly tips the scale… so I stick with AT&T’s crappy network for now.
Take a look at Verizon’s 3g roll out, then compare it to AT&T’s. Sure, AT&T’s network has made great strides forward in terms of footprint (quality is debatable), but they still have a LONG way to go to catch Verizon. And I NEVER dropped a call when I was on Verizon, except maybe once or twice. I drop calls with AT&T all the time even when I have full signal strength.
The sad thing is, HSDPA/UMTS “could” be so much better than EVDO, but in the hands of AT&T it just stinks!
/rant
Jeff Whitfield on June 10th, 2009 at 10:43 am
There’s one more thing you can add to the list of complaints with AT&T: 2 year contracts! Why is this a problem? Let’s say you bought an iPhone 3G last year. Well, now the iPhone 3G S is coming out and you’d like to upgrade. However, because AT&T has you on a 2 year contract they won’t let you upgrade your phone without paying an extra $200! Not only that but you have to pay an extra $18 upgrade fee anytime you upgrade! When the hell did they start doing that? As of right now I can’t upgrade my phone till March of next year. Ridiculous. I sure hope Apple strikes up a deal with other service providers because it sure does feel like AT&T is taking advantage of their little monopoly on the iPhone.
CVBruce on June 10th, 2009 at 11:01 am
Jeff,
I won’t comment about the $18 upgrade fee.
But the rest of it. Do you really think you would do any better with any other provider? The fault isn’t in the provider it is in the subsidized business model that all of them use. To give you a cheaper entry price, they have to make it up on the back end. That means that you have to subscribe for a given length of time. If you don’t like this, stop buying subsidized phones. Stop entering into contracts that you promise to pay them x amount of money for y amount of time. Or spend the $200 for the early termination fee.
No one said that having the latest and greatest gadget was going to be cheap.
Daniel on June 10th, 2009 at 11:03 am
I’m with Jeff. I haven’t had many problems with AT&T’s coverage (mostly because I rarely make calls on my cell, preferring to communicate online), but simply the fact that they’re holding back the iPhone’s features like this makes me question whether Apple should stick with them. And I thought I heard different numbers somewhere (though I also saw Newsy quote $200), but if the $200 price gap current customers need to pay to upgrade is right, that’s terrible marketing. Don’t you want to keep the people you already know will buy your product rather than giving them another reason to drop you?
Brad - BeerInBaltimore.com on June 10th, 2009 at 11:25 am
While I don’t have any real complaints about AT&T’s coverage, I’m beyond ticked off at having to wait for other 3.0/3GS features that everyone else around the world, will be enjoying next week. Ooh… and the fact I bought my 3G last July for $200 and now can’t get the 3GS for the same price, until 18 months later. No way I’m paying $400+ at launch.
Chris on June 10th, 2009 at 11:37 am
Verizon does have wi-fi on some of their phones. I know specifically that they have wi-fi on the Samsung Omnia because I had the phone. Verizon phones are terrible so I hope there is some truth behind either the pre or the iphone coming to Verizon in either the near or far future.
J on June 10th, 2009 at 11:38 am
I agree that THE REASON there are no more iPhone users is the monthly BILL… the monthly bill should be the same for all smart phones… or they should throw some extra services for free like Tethering for iPhone users… after all we pay a “special” iPhone rate
chrism on June 10th, 2009 at 11:52 am
ATT gave you $200+ off of the ACTUAL price of your phone in return for your commitment to a 2 year contract. That $200 is recouped by ATT over the course of the contract. They are not in the business of giving away free money. Those complaining about this don’t have a basic understanding of business and/or do not understand what a contract is.
chrism on June 10th, 2009 at 11:54 am
To sweeten the deal, ATT should really throw in unlimited texts in the $30 data price…. but I guess they will have to feel the heat from other devices like the Pre before they conceed anything.
Staff Comment Tom Reestman, TheAppleBlog on June 10th, 2009 at 12:00 pm
Jeff,
“However, because AT&T has you on a 2 year contract they won’t let you upgrade your phone without paying an extra $200!”
I left this off as a complaint with AT&T because AT&T is right and the complainers are wrong.
You’re not paying an “extra” $200. You’re paying $200 for the remaining year on a contract you signed but now want to break. Your 3G hardware subsidy of $400 last July was based on the promise you’d use it for TWO years, but you want to skip one of those years and just have AT&T swallow that $200? Um, no.
AT&T is basically providing a $200/year subsidy on the iPhone ($400 for a two-year contract). You still owe them one year ($200), so they’re offering you the new 3G S for two years with just a “one year” subsidy of $200. Assuming you honor the new contract, you will have received $600 worth of hardware subsidies on two iPhones over 3 years, which is what it should be.
I have no sympathy for people who got a $400 subsidy for two years now being upset they can’t get another $400 subsidy for another two years when they haven’t completed the two years (heck, not even one year!) they agreed to on the FIRST subsidy.
Geek on June 10th, 2009 at 12:06 pm
@chrism – You don’t understand the legacy of wireless carriers in the USA. You act as if subsidizing a phone was invented with the iPhone. Subsidizing a phone is still the standard operating procedure for wireless carriers. AT&T will get their money back and then some even if the monthly service price was lower. You know why I know this, its because Sprint, Verizon, T-mobile, etc. are already doing it and have no problem. Think about it. Quit apologizing for AT&T, it doesn’t work.
Geek on June 10th, 2009 at 12:12 pm
Might I add that my comment was in support of lowering monthly rates and the argument that AT&T can’t lower the rates because they subsidized the iPhone.
As far as all of those who are upset that they can’t get a new iPhone every year and AT&T pay for 1/2 of it are just coming to grasps with reality. What AT&T is doing is no different than what Verizon would do if you wanted to get a new blackberry every year.
Staff Comment Kevin C. Tofel, TheAppleBlog on June 10th, 2009 at 1:17 pm
Great analysis, Tom. As a first-gen iPhone owner, one point though. The original data rate plan (which I still have) is $20 per month for EDGE data *and* 200 text messages. The current data plan of $30 doesn’t include any text messages. For me to have added them on an upgrade would have cost an additional $5, so it’s a $15 bump, not a $10 bump.
Nathan C on June 10th, 2009 at 1:47 pm
I too have the OG iPhone and am not switching because of the over priced data plans on the new iPhone. To charge extra for text messaging after a $30 data charge is highway robbery and just plain bad business practices.
I feel sorry for AT&T when their deal with apple expires…they’re building this network for nothing, once iPhone is on Verizon they won’t have any customers left on their network…
Staff Comment Tom Reestman, TheAppleBlog on June 10th, 2009 at 2:26 pm
Kevin,
True enough.
By the way, SMS is why I mentioned the rumored “low rate” plan could save $10-15 a month. It seemed to me $10 less for capped data, and maybe save another $5 by tossing in 200 SMS texts.
As it is, AT&T is being as tight-lipped about their future plans for iPhone as Microsoft is about Windows 7 pricing. The fact that they haven’t made up their minds yet on this stuff just boggles the mind.
craig on June 10th, 2009 at 3:04 pm
Let’s see – where do I start? First off, the complaint over the cost to upgrade is a little off base. If AT&T were to allow you to dump your previous 3G iPhone, then they would be eating the subsidy. I’m amazed they are even giving an out at all. You could just pay the termination fee and upgrade to a new 3GS, but that would probably be more for most consumers.
If I bought a BMW this year, and next year they changed the design, would they let me out of the lease without a fee? They would roll the fee into the new car, but I’d still pay it.
As for MMS and tethering, I’ve heard these are being released in OS 3.0 which is due to be released in the US on June 17. I don’t think AT&T or Apple went on the record as to why these features weren’t available before, but everyone is firmly committed to blaming AT&T. Apple has a very strong hand in the decisions with this phone.
The network. Unfortunately, Verizon has the lead in this category. It isn’t by magic or by money; it is because they have had several years CDMA experience over AT&T. AT&T has nearly 2 years now with the launch of UMTS and they are gaining ground rapidly. AT&T also receive a lot of negative publicity merging the Cingular and AT&T (old) networks. Both of these events are in their rear-view mirror and they are catching up quickly. If you read the techy blogs, you’ll see the UMTS version of CDMA is superior to the EVDO version of CDMA. This is also represented in Verizon’s desire to launch LTE quicker.
Finally, for those of you who want an iPhone and blast AT&T’s customer service, you must be blind-folded. Verizon was offered the iPhone first and turned it down. For that, they turned their back on their customers and for that, I’m an iPhone user and an AT&T customer. I’m not going to sit around and wait for Verizon to get one.
craig on June 10th, 2009 at 3:07 pm
One more comment: If you live in a market where Alltel and Verizon both serve, then you too will be going through a network merger. Good luck! With this type of merger there will be winners, and there will be losers.
They won’t keep all of the cell sites from both companies. Some have to go. This is the only way to justify the cost of the acquisition in the first place to the shareholders.
Staff Comment Tom Reestman, TheAppleBlog on June 10th, 2009 at 3:24 pm
Craig,
“As for MMS and tethering, I’ve heard these are being released in OS 3.0 which is due to be released in the US on June 17.”
Yes, in the iPhone OS. But they’re useless until a carrier supports them. 20-plus carriers worldwide will do so at release, but AT&T is not one of them. AT&T has already stated that MMS will not be available to iPhone users until late Summer, and for tethering they will not even provide a date.
Your other points are fairly noted. AT&T’s slower 2G EDGE, for example, is hampered by the fact that it cannot do voice and data simultaneously, yet Verizon’s 3G suffers that same limitation while AT&T’s 3G does not. I can’t help but think Verizon will hit more snags/growing pains in their LTE rollout than AT&T will.
Davy on June 10th, 2009 at 6:01 pm
Well said!
Paul Johnson on June 10th, 2009 at 7:47 pm
The other thing that hasn’t been said about Verizon is the reason why they turned down the iPhone — their pricing model. Verizon’s phones are awful because Verizon demands control over the interface and the right to control the browser and music downloads so that they can charge separately for them. Even the Blackberry Storm has Verizon’s interface on it. I don’t see how either the Pre or the iPhone will end up on Verizon’s system unless the company changes its pricing model, which seems VERY unlikely!
Johnny on June 10th, 2009 at 11:37 pm
Still no Wi-Fi phones on Verizon? Really? Newsflash. There are quite a few Verizon phones with Wi-Fi (e.g. Omnia, Saga, Touch Pro, etc.). In addition, the Storm 2 will have Wi-Fi. That took about two minutes to look up. Try harder next time.
Oh, and there is an Apple phone coming to Verizon soon. Trust me.
Paul Johnson on June 11th, 2009 at 5:55 am
“There is an Apple phone coming to Verizon soon.” Soon as in 2012, after LTE?
Dan on June 11th, 2009 at 8:44 am
I’m an old dude who doesn’t get out much. My issue is the contract prices and what I can justify. I don’t use many cell phone minutes and I have WiFi in my house where most web use would occur. Given my limited need, it is an expensive toy that is difficult to justify to myself much less my wife.
The senior rate for 200 minutes without rollover isn’t offered. I’d have to buy 450 minutes with rollover. But, even if they offered it the price goes from $39 to $29 for dropping 250 minutes and eliminating roll over. Doesn’t really help much. The price should go down more than $10 and/or with rollover. ATT’s rollover option does seem very nice to me!
On the data side, $30 for unlimited seems a bit more fair. Limited programs should include a fair amount of data. My inclination is that it should be in the GB range. Adding a rollover feature would be a big plus because it could then be used occasionally on vacation or such when away from home.
Everyone knows that text prices are a joke given the small amount of bandwidth used but MMS would probably jack that up a bit. I might buy the 200 messages for $5 but not sure if I’d keep it.
The question from their standpoint is – would I return a profit for them. Business is after all optimal when it is a win – win situation. On a $50 per month rate, I’d return $1,200 in two years and probably cost them little other than billing. Hard to believe that I’d cost them $600 in real $’s other than some load on the network.
I’ve been on Sprint’s network using under a 100 minutes a month and 0 data. My phone is 3.5 years old and see no reason to buy a new one with a new contract. So, they’ve doubled their return on my phone purchase. I’ve been a very good deal for Sprint even though they keep trying to get me locked in again even if it’d cost them money.
How about it ATT, make it easier for me. You might even get my wife’s phone – then we’re talking about minutes.
bob on June 17th, 2009 at 9:15 am
iPhone 3Gs is nice but I am going to wait until the rate plan drops by $10 as mentioned.