Even as Verizon continues attacking AT&T’s comparatively poor network with new ads, and by proxy the iPhone, the latest rumor has Apple developing a “worldmode” iPhone capable of running on any network.

The three holiday-themed ads, “Blue Christmas,” “Elves,” and “Misfit Toys,” each highlight the weakness of AT&T’s 3G wireless coverage, but the latter most directly and hilariously attacks the iPhone. Paying homage to the Rankin/Bass animated classic Rudolph the Red-Nosed Reindeer, a familiar-looking device shows up on the Island of Misfit Toys, the place where defective toys are exiled. When the misfits ask why such a great toy that can download apps and browse the web is there, the familiar lackluster coverage map pops up.

The message of each commercial is the same: bad networks ruin even a great phone. AppleInsider is now reporting that perhaps Apple feels the same way, and is preparing to do something about it.

Based on a report from research firm OTR Global “citing sources in the Taiwan handset supply chain,” the hybrid iPhone will use a new chip from Qualcomm allowing it to function on both CDMA and GSM networks. The hybrid iPhone will be available in the third quarter of 2010, which makes sense, as previous reporting puts the end of AT&T’s exclusivity agreement in 2010. Unfortunately, things stop making sense right there.

The research note also states the new iPhone has a 2.8″ screen, compared to 3.5″ for current iPhones. AppleInsider notes rumors from last year about an iPhone with a smaller screen, which turned out to be false, at least at the time.  However, there is another possibility besides a smaller iPhone, that being a smaller iPhone.

What seems more likely at this stage of iPhone development, a major redesign of the existing model or the addition of an iPhone nano? Looking back at the history of the iPod would suggest the latter. Following Palm’s lead with its second webOS phone, the Pixi, Apple could even leave out Wi-Fi to further differentiate the iPhone nano from the iPhone. Actually, a smartphone without Wi-Fi in 2009 would belong on the Island of Misfit Toys, so scratch that, but a “free” iPhone nano under contract would undoubtedly find its way under many a tree this year.

As an iPhone user held hostage in AT&T’s network by the exclusivity agreement with Apple, the arrival of the AT&T 3G MicroCell felt like being rescued. Four weeks later, I now realize only Verizon can do that, but my updated assessment of the 3G MicroCell is still positive, mostly.

During the first three weeks of operation, the MicroCell was down form some period of time on nine separate days. Periods of outage lasted from 15 minutes to several hours, but were usually less than an hour. There was no discernible pattern, and for every instance but one the fix was: unplug, wait, plug back in.

The single outlier was a little more insidious. While my iPhone reported “five bars,” attempting to make a call would result in immediate failure. That episode required deactivating the MicroCell with AT&T, reinstalling it as if it were new equipment, and about three Zantac.

If this makes the MicroCell sound like a product not ready for sale to the general public, it’s not. Those paying $150 for a MicroCell in eligible cities are participating in a “public trial.” If one didn’t know they were a beta tester, the uncharacteristically helpful technical support gives it away.

Diagnosing my problem, it was suggested that updates to the firmware by AT&T may have been responsible. Of course, the MicroCell is supposed to reboot itself when the firmware is updated, but even a tech support placebo can make you feel better. It was also suggested that I try priority mode configuration, and that appears to actually have worked.

By switching the connection order of the MicroCell and wireless router, the MicroCell supposedly reserves sufficient bandwidth for voice and data at all times. Why it needs to carve out a 3G slice of bandwidth on a Wi-Fi network remains a mystery, but I’m not complaining. The outages stopped after changing the device setup. My initial fears concerning bandwidth throttling proved unrealized, or maybe a firmware update solved that, too. Either way, speed tests with and without the MicroCell connected have the same results.

While it appears that my hardware issues have been resolved, a longer look at call performance is not as positive as my initial assessment. To the MicroCell’s credit, it has yet to drop a call. Further, call quality to and from individuals remains generally very good, but, strangely, there are problems calling some businesses.

Maybe my MicroCell hates talking with people in India, but calls to and from toll-free numbers or businesses are often choppy. My observation is that phone numbers that aren’t point-to-point, one number to one number, are far more likely to break up. It may be anthropomorphic on my part, but it’s like the MicroCell hates being put on hold and transferred, but then who doesn’t?

Finally, I continue to be disappointed with the range of the device. AT&T says 5,000 square feet, but I say 50 squared, or about 50 feet in a straight line. That’s very close to being unacceptable for me, but being as Apple is still playing coy with Verizon, or vice versa, my options are limited. If yours are too, the AT&T 3G MicroCell remains a relatively pleasant cell on AT&T’s prison network.

As we reported just yesterday, Apple didn’t take too kindly to El Gato’s “accidental” inclusion of a workaround to enable 3G streaming of live TV on the iPhone using its EyeTV app. The app, combined with an EyeTV USB Mac TV tuner, allows users to stream that content from their computer. I say allows, not allowed, because it’s now back in the App Store for $4.99.

For those who missed the reason why the app was pulled in the first place, El Gato had “accidentally left in” a feature whereby if you click the warning window that tells you Wi-Fi is required for live TV playback, instead of the “OK” button in the window, the dialog would close and streaming would occur over 3G anyway.

El Gato revealed that it had already resubmitted a fixed version when the problem was discovered, and that version has today been approved by Apple and is available for download. This time around, clicking the dialog box has no effect.

Whether it was an Easter egg, meant to pass undetected through Apple’s censors (which seems unlikely, given how easy it was to activate), or whether it was just an accident, the incident reveals that despite AT&T’s recent announcement that voice calls would now be allowed over 3G, that doesn’t mean it’s a free-for-all with all types of content.

I still think this needs looking into by a regulatory body. Data is data, and if wireless customers are paying not-insignificant fees in order to be able to use data on their cell phones, they should have the right to choose the nature of that traffic. My plan covers 6GB per month. Who’s to say I don’t want to use five of that on streaming video? I can see cutting me off once I exceed my limit, since I might then be causing undue strain on your network, but if you’ve assigned me 6GB, let me use that however I see fit.

At least Apple is being relatively understanding about the whole thing. It could easily have barred EyeTV from the app store for an extended period, or altogether, in order to punish what could easily be seen an a purposeful attempt to side-step App Store requirements. Instead, it acted quickly when a fix was issued and reintroduced in the app with very little delay following its removal. I think this especially points to the fact that AT&T is really still the one to blame in cases like this.

3G may be the current standard in network data communication, but 4G Long Term Evolution (LTE) networks are just around the corner. Verizon is working on building its own LTE network as we speak, and the latest rumors suggest that Apple is working together with Big Red to develop the next generation of iPhone.

LTE means more data carried at higher speeds, which could theoretically work out a lot of the problems AT&T has been having with running the data-hungry iPhone on its 3G network. Video streaming, tethering, etc. should all be tiny drops in the bucket on a properly functioning 4G network.

The sources of the rumor, who aren’t revealed by the Mashable article that started the whisperings, cite bi-monthly trips to Google’s headquarters, which resulted in an announcement of Verizon getting Android devices. They suggest the proximity to the Apple campus (8.5 miles) lends some anecdotal evidence to the possibility that Verizon could be in talks with Apple, too.

While that may not sound like very solid ground for a rumor of this magnitude, the possibility of an iPhone going to Verizon is not at all far-fetched. Big Red does look like it will be the first out the door with a fully functioning 4G LTE network, and it is the biggest wireless company in the U.S. Both of those must appeal to Apple’s sense of business and showmanship, since what could help its market share more than a showy launch of a cutting-edge device to an all-new subscriber base?

Exclusivity deals are falling in Apple’s major markets like leaves in the fall. First, the UK opened things up with Orange and Vodafone announcing their iPhone deals; then Bell and Telus in Canada spoiled the Rogers private party. AT&T is still hanging in there, but everyone besides it, including the Department of Justice, wants to see that relationship come to an end, too. It doesn’t bode well for AT&T’s primary revenue stream.

Here’s what we won’t see: A 4G iPhone in time for the June/July refresh that’s become standard practice for Apple’s mobile hardware release schedule. The tech is too new, and at this stage of testing, there’s little to no chance of seeing it mature enough in eight months’ time to allow a full-fledged launch of one or more devices for the consumer market. We’ll see a new iPhone, but it won’t be a 4G device, and it remains to be seen whether or not Verizon will somehow be involved.

Although El Gato’s EyeTV app has been able to stream content over AT&T’s seemingly fragile 3G network since last month, it wasn’t until this past weekend that people were talking about it. That talk, at Gizmodo, was followed by swift and decisive action by Apple. EyeTV is no more at the App Store.

For those who don’t know, the EyeTV app accesses content from an EyeTV, the company’s television recording device, attached to a Mac, and sends it to an iPhone. As the pictured warning from the app clearly states, a Wi-Fi connection is required. However, tapping the warning text instead of the “OK” button enables streaming over a cellular connection.

Unfortunately, that’s a violation of AT&T’s terms of service in the U.S. and Apple’s policy everywhere else. Just last month, another video streaming app, SlingPlayer, was released in Europe, still shackled to Wi-Fi only. Sad, but those are the rules, which makes you wonder why El Gato broke them. According to Julio Ojeda-Zapata of Your Tech Blog, El Gato says “test code” was “accidentally left in the EyeTV app.” El Gato has already resubmitted a version of the EyeTV app without the offending code.

Personally, I applaud El Gato for its user-friendly sloppiness. The real error here is allowing telecommunication companies to regulate content on any network.

It seems AT&T is on a quest to cause as much damage as possible to the already flaky reputation it has with its iPhone customers. In an oddly confrontational email to 9to5 Mac, a spokesman for the communications company took issue with one of their recent articles that said AT&T would be delivering tethering services to iPhone customers by the end of the year.

The email, as quoted by 9to5 Mac’s Seth Weintraub, says:

Just reading again – where did anyone promise tethering by EOY? Where did you see that? We promised MMS by end of summer and ended up being a few days late for that…

In their defence, 9to5 Mac was channeling reports from TechCrunch and CNET which got them to arrive at the “before end of year” conclusion. You can hardly blame them — CNET’s headline in November 2008 read “AT&T confirms tethering coming to iPhone in 2009.” That’s pretty unequivocal as far as assertions go, right? Yet, I don’t recall anyone from AT&T sending CNET a snippy email in the interim…

Last week I wrote how AT&T told the Wall Street Journal that it needed ‘more time’ to work on tethering functionality. I also mentioned how AT&T’s CEO Ralph De La Vega said, way back in 2008, that tethering would be available “soon.” A year later it’s not unreasonable to wonder just what De La Vega’s definition of “soon” might be.

Add together the history of dropped calls, patchy 3G coverage and recent reports that the company might start throttling data for iPhone users, the snarky email above only adds to the sorry state of affairs at AT&T. However kindly you may choose to interpret that email, there are countless ways it might have been more professionally composed.

For a company still enjoying exclusive distribution and service rights for the iPhone across America, (and the prestige and profits that partnership with Apple entails) its performance in the last two years can only make us hope Apple is considering offering the iPhone to other cell carriers willing (and actually able) to do the job properly.

In any case, while the email doesn’t specifically deny tethering will become a reality this year, it certainly makes the proposition sound unlikely. AT&T announced last month it is working to expand its network, and have invested heavily in the hardware upgrades necessary to do so. That’s welcome news to long suffering customers, but those upgrades aren’t going to be completed until the end of 2011.

Or, as Mr De La Vega might put it, “soon.”

There’s already a few apps for getting a job on the iPhone, but today sees the release of the first one dedicated entirely to one employer. AT&T is taking advantage of the device it remains the sole distributor of in the U.S. to help in its ongoing search for quality staff.

The AT&T Jobs App (iTunes link) is the first app of its kind, one designed by a company to promote only its specific job listings. Job seekers will find updated info on openings, career-related events, and even company information, so you can take it with you to the interview and do a little last minute cramming while you’re waiting to see HR staff.

Scott Smith, AT&T’s Vice President of Staffing, had this to say about the app and the reasoning behind its creation to mobile site Mobiletor.com:

The AT&T Jobs App combines greater accessibility with up-to-date information on career advancement at AT&T on one of the world’s most popular devices. This app provides a mobile and interactive way for applicants to network and identify employment opportunities, while expanding the reach of our AT&T career portal to even more people.

You can also use the app to suggest jobs to qualified people in your network of friends and family, thanks to a job post sharing feature, or forward it to your email address so you can give more detailed attention at home on your primary computer.

Finding jobs is as simple as performing a fully customizable search, or by browsing the available positions via categories like broadband, retail, and wireless. You can also search using criteria like geographic area and qualifications required, which should expedite the process of finding a suitable listing somewhat.

If you’re interested in doing something in person, you can browse a list of all the events AT&T is holding or participating in relating to job seeking. Many are college-based job fairs, but there are also info sessions and teleconferences listed. Finally, the Media section provides potential employees with plenty of information about the company and the industry so that they can study up.

It may not be perfectly executed (job listings load in an in-app web view, for example, instead of as properly integrated components of the app), you can’t apply to any job directly from your device (though would you want to?), and there’s no feature to take advantage of your phone’s location services to find jobs or events in your immediate area.

Still, it’s a step in the right direction for major employers, and others would do well to follow AT&T’s example. If you want to reach as wide an audience as possible, which should theoretically net you the best job candidates, what better way to do so than to offer iPhone accessibility, which most people probably have on them even when there isn’t a computer in reach.

We reported here on Tuesday that AT&T had announced plans to make VoIP services available on its 3G network, great news for iPhone users who previously could only use applications like Skype and Vonage via a Wi-Fi network. So, AT&T sorted out MMS and now it’s sorted out VoIP. That just leaves tethering, right? Now that it’s upgrading its network and fixing everything that was wrong for iPhone customers, tethering has to be just around the corner, yes?

No. According to an article from the Wall Street Journal, an AT&T spokesperson says it needs more time to work on that functionality:

Whenever we offer new features, we want to offer the best possible customer experience. For tethering, we need to do some additional fine tuning to our systems and networks so that we do deliver a great experience.

So I won’t mention how, late last year at the Web 2.0 Summit, AT&T CEO Ralph de la Vega told Michael Arrington that tethering would be available “soon.”

Clearly AT&T is struggling to cope with the data demands made by modern smartphones on its creaky old network. Speaking this week at the annual CTIA Conference in San Diego, and reported by PC World, de la Vega hinted at possible future steps the telecom giant may take to lessen the load. “We have to manage the network to make sure that the few cannot crowd out the many,” he said.

PC World’s Mark Sullivan thinks this can only mean one thing: placing hard limits on the total amount of data iPhone (and other bandwidth-hungry smartphone) owners can consume.

In the face of exploding data service demand and scarce wireless spectrum, does AT&T intend to quietly begin rationing the data usage of bandwidth hogs like the iPhone? Will AT&T begin to quietly “manage” the duration and speed of my 3G connection based on how much data I’ve used in a given day, or on the type of content or services I’m using the bandwidth to access?

AT&T announced in September that it was working on upgrading its network, but the process will take time. Is throttling data a necessary solution in the short term, until the network can more adequately meet the demands of the (growing) smartphone market?

In an article yesterday on All Things Digital, John Paczkowski reported that a staggering 4.1 billion text messages are sent every single day in the U.S. (740 billion in the first half of 2009 alone). That’s double the number in the same period last year.

According to the CTIA, there are more than 246 million wireless data-capable devices at large in the U.S. today. Of these, 40 million are smart phones or PDAs, and more than 10 million are laptops. Little wonder that wireless data service revenue rose 31 percent to more than $19.4 billion in the first six months of 2009.

Chart from CTIA

It’s not hard to see that AT&T is behind the curve when it comes to bolstering its data network to meet the demand of its customers. So far behind the curve, in fact, that its competitors can afford to take legitimate shots at the company in television commercials.

So what’s the solution for long-suffering iPhone customers? Jumping ship and moving to Verizon? Or remaining loyal to AT&T, avoiding the hassle of changing contracts and giving the company time to improve its network and expand its services? It’s already had the better part of three years. How much more patience will customers have?

Rumors were circulating earlier in the day, but now AT&T has made official its plans to allow Internet calling services to be used with its wireless network. That’s great news for iPhone users, at whom the news was mostly targeted, since it means we could shortly see Skype, Vonage, and Google Voice apps appear on the app store with full 3G functionality.

The official line is that AT&T is responding to customer expectation and demand considering the introduction of VOIP-capable devices like the iPhone, but in reality, with the FCC investigation into wireless industry competition hanging over its head, AT&T is probably trying to fend off government-mandated penalties in advance.

According to the Associated Press;

FCC Chairman Julius Genachowski, one of three Democrats on the commission, wants to impose net neutrality rules to ensure that broadband providers don’t abuse their power over Internet access to favor their own services or harm competitors. His plan has alarmed wireless carriers because it would apply these rules across different types of broadband networks, including wireless networks.

AT&T’s move is a calculated one, designed to show that the industry can successfully self-regulate without government interference. It’s kind of equivalent to the kid who wouldn’t share at recess readily giving up a toy once another kid actually leaves to tell the teacher.

Whatever the reason behind the decision to relax its rules for network use, the real winners here are iPhone users. If Skype, Google Voice, and other internet telephony apps make their way into the App Store, iPhone users will be able to avoid artificially high rates for long distance and contract minute overages by taking advantage of their existing data plans. It’s one more step towards flat data rates for all cell features, which is what should be in place anyway.

Of course, it’s still up to Apple to approve any VOIP apps before iPhone users can take advantage of the new rules. I’m willing to bet that Cupertino had a significant hand in convincing AT&T that this was a wise move, considering the negative press the computer company was receiving over the Google Voice debacle. Apple spokeswoman Natalie Kerris had this to say about the announcement:

“We are very happy that AT&T is now supporting VOIP applications. We will be amending our developer agreements to get VOIP apps on the App Store and in customers’ hands as soon as possible.”

The introduction of 3G VOIP will no doubt have an impact on AT&T’s network, which has seen numerous problems in the past due to the increased demand placed upon it by iPhone users. The wireless provider seems to have made improvements, as evidenced by the relatively smooth introduction of MMS earlier this month, but it remains to be seen if they can also cope with this new load.

“There’s a map for that” is the catchphrase for a new ad from Verizon that plays upon the ubiquitous advertising meme for the iPhone and Apple’s App Store. However, the ad has nothing to do with Verizon’s own application store, instead highlighting the disparity of 3G coverage between Verizon and AT&T.

The ad shows some guy playing Rock Band on a Samsung Rogue—ugh—while walking down the street. As a voiceover rhetorically asks if you want to know why 3G coverage works so well on Verizon’s network, the coverage map pops up above his head and we hear that “there’s a map for that.”

When an AT&T customer, presumably using an iPhone and sporting a goatee—where’s his beret and cup of free trade expresso?—shakes his head at his phone, the voice asks about “spotty coverage.” The AT&T coverage map then appears and we again hear that “there’s a map for that.” Ha, ha, I guess, but then I thought about it.

Is it really a good idea for Verizon to highlight its own apparent iPhone envy, not to mention the oblique mention of the wildly successful App Store? It depends on who Verizon is advertising to, exactly. Via Silicon Alley Insider, a research note from Morgan Stanley analyst Kathryn Huberty remarks on the possibility of Apple moving away from the exclusivity agreement with AT&T.

“In the top six iPhone markets that are still exclusive, we believe that Apple’s market share could rise to 10%, on average, in a multiple carrier distribution model from 4% today.

Her analysis is that Apple could double iPhone sales by moving to a multi-carrier business model, the logic being most individuals choose carriers over phones, even if the phone is arguably the greatest telecommunication device in the history of the universe. Sure, Apple will no doubt lose the pound of revenue flesh they got from AT&T for exclusivity, but that could be made up in volume.

In this ad, Verizon could be speaking to iPhone users on AT&T’s network, who then pass along their yearning for Verizon in increasing numbers to Apple. What might come of that could be a new map in 2010 and beyond, the iPhone on Verizon’s next-gen LTE network.

AT&T’s latest solution to improving network coverage, making the customer pay more and leeching off broadband providers, also known as the AT&T 3G MicroCell, is now in public trials.

While the tiny cellular base station, or femtocell, is not yet available in places like New York or San Francisco, where the call drop rate is rumored to be as high as 30 percent for some iPhone users, it can be had in parts of Georgia, South Carolina, and North Carolina. I live in Raleigh. How’s my coverage?

Despite the reassurance of AT&T’s coverage map, I’m lucky to complete a call with my iPhone 3GS from home. After several pained conversations with technical support, an AT&T engineer told me that the coverage map is based upon “mathematical models,” and that it might be the trees around the house interfering with my signal. Seriously.

Faced with clear cutting two acres of woods or chancing $150 on an AT&T 3G MicroCell, the choice seemed simple enough. My wife won’t let me have a chainsaw, so I decided to test the veracity of AT&T’s new slogan: five bar coverage in your home. The experience proved interesting.

The Process

Purchasing a MicroCell currently requires a trip to the local AT&T Store. A representative checked to see that I had a 3G phone with AT&T, any Internet broadband, and an eligible, local address. Lousy coverage is optional, but the experience survey that was not supposed to be sent home with me repeatedly mentioned the issue.

Having met the requirements, I purchased the MicroCell for $150, currently subject to regional rebates. In Raleigh, there are three: $50, $100, and $150, for subscribing to AT&T broadband, unlimited MicroCell calling, or both. For $19.99 per month I was offered the Unlimited MicroCell Calling Plan, allowing me to save my wireless plan minutes. Since I hate talking to people and have about a million rollover minutes, I declined.

I was then educated about how emergency services work—don’t move your MicroCell unless you tell AT&T and stay on the line when calling 911. Also, the MicroCell will only function in authorized regions—don’t eBay your MicroCell. The representative then offered to register it online right there, but where’s the fun in that?

At home, I was pleasantly surprised at how simple setup was. I logged into the MicroCell site with my wireless account info, entered the MicroCell serial number, and was presented with a list of approved users from my wireless plan. You can add more, up to a maximum of 10, but no more than four callers can use the MicroCell simultaneously. Physical setup was easy, too.

1. Connect the included Ethernet cable to the MicroCell and a wireless router, or directly to the computer for those without a router.
2. Power down everything, then power everything up.
3. Anxiously wait approximately 90 minutes with an increasing amount of bile in the throat.

A series of flashing glyphs like something out of StarGate Atlantis indicate progressive success, or lack thereof. GPS lock may take awhile, and AT&T recommends placing the MicroCell within three feet of a window. I got GPS lock pretty quick, but the 3G indicator just kept flashing, then after about 90 minutes I lost GPS. While praying to whatever dark gods that live in the sky to hurl the GPS satellite into my house and end my telecom misery, I suddenly received a text message.

Replacing no bars and no network, there is now a signal indicator for the MicroCell that usually displays five bars and means it.

The Results

After several days of testing, I have yet to drop a call. Call quality ranges from good, a slight echoing the most common issue, to static-free excellence. Most often it’s the latter, and call quality is always better than the overpriced VoIP service from Time Warner Cable. As for data speeds, it’s like being on Verizon’s network, that is very good, but why settle for 3G when you have Wi-Fi at home?

There are a few issues with the MicroCell, though. The range is 40 to 60 feet in a straight line, but you better be living in a tent. So far, I’ve found signal quality degrading through multiple walls, especially when calling from the kitchen, the room farthest from the MicroCell. I’m still experimenting, but turning off Wi-Fi on the iPhone seems to increase both range and reception at extended distances for me. Should I pass beyond the range of the MicroCell, calls seamlessly transition to “No Service,” though most others will find themselves on AT&T’s wireless network. Be advised though, that transitioning works only one way.

There is one other potential performance issue. Should you be using computers for network intensive applications, like backing up online or torrenting. . . Ubuntu distributions, you may have problems during calls. Others said I was cutting out, though I heard them clearly. The MicroCell requires a minimum bandwidth of 1.5Mbps down and 256Kbps up. I have, in theory, 7Mbps and 512Kbps, respectively, but have been forced to do my perfectly legal bandwidth hogging at night. Still, that’s a minor inconvenience.

Overall, I am very pleased with the AT&T 3G MicroCell and give it the highest praise an Apple devotee can: it just works! Sure, there’s a $150 price tag on service AT&T should already provide, but it’s a price that I and many other long-suffering iPhone users will no doubt we willing to pay.

According to the Twittersphere, AT&T has begun flipping the switch on MMS across the U.S. today. Sources say that AT&T will be sending out text messages, beginning at 10 A.M. EST today, to notify customers when MMS service is available for their use.

Customers and industry watchers alike are waiting anxiously to see how AT&T’s network will cope with the increased demand MMS will cause. AT&T spokesman Seth Bloom doesn’t expect any problems, however, noting in an email that:

SMS and MMS messages are carried differently than other network traffic.  This is one of the reasons why when there’s a natural disaster or other large scale emergency situation (e.g., earthquake or something like that) that causes a huge and sudden spike in voice calls, wireless carriers suggest that people send text messages. They’re likely to get through when the voice circuits are busy.

Stacey at GigaOM goes into more detail about how MMS and SMS work compared to regular voice calls. She concludes that the true linchpin factor in today’s launch will be the strength of AT&T’s servers. Clearly, the carrier must be fairly confident in their ability to handle the strain, or we’d likely still be waiting for the company to announce a start date.

Some, like Twitter user Connor Stanton, are hoping that AT&T won’t be equal to the task and that its failure to meet the demand will result in a breakdown of the exclusivity deal between the carrier and Apple. Stanton writes, “Come on AT&T. I want to crash your infrastructure when MMS rolls out so Apple will kill iPhone’s exclusivity in US. Kthnxbye.” In theory, if Apple thinks AT&T network woes are having a significant impact on its iPhone sales, we could see it take its business elsewhere.

There’s even a plan circulating on social media networks for AT&T iPhone users to simultaneously send out MMS messages at 5 P.M. EST to attempt to crash the network on purpose. I wonder if AT&T accounted for organized attempts to destabilize its network in preparation for today’s launch.

To activate MMS on your iPhone, plug your device into your computer. Click on it in the source list in iTunes, and then click the “Check for Update” button. You should see a dialog that says, “An update to the carrier settings for your iPhone is available. Would you like to download it now?” Click “Download and Update” and wait for the process to finish. Carrier settings updates are normally very fast. Once it’s finished, the camera icon should appear in your text messaging dialog, and new menu options should open up in your other native apps for sending various types of media.

Once activated, you’ll be able to send photos, video, audio, map locations, and contact information via MMS to other enabled devices. Very handy for making sure the sofa color you’re looking at is OK with your significant other before making a purchase, for example.

For iPhone users like myself chained to the shoddy service of AT&T by Apple’s seemingly interminable exclusivity contract with the carrier, hope for better reception springs eternal, at least if you live in North Carolina.

The AT&T 3G MicroCell that looks more like a video game console is actually a tiny cellular base station, or femtocell. For those with more bars in more places, except where they live, the 3G MicroCell will access AT&T’s network via broadband, DSL or cable.

Initially, it appears AT&T is only taking orders for parts of Charlotte, NC, the service agreement stating the “device may not function except in specific counties in the Raleigh, NC, Charlotte, NC, Columbia, SC, and Atlanta, GA metropolitan areas in a phased network roll-out.” In other words, it’s not ready for those languishing in areas that could really use a 3G MicroCell, like San Francisco or New York. No doubt, the 3G MicroCell will get there eventually, but if you want one now you need to live in the southern U.S.

If you do, and you have a 3G phone — original iPhone users need not apply — the 3G MicroCell will support up to four users simultaneously in a coverage area of up to 5,000 square feet. Of course, you need to be an AT&T wireless customer, and you’ll need to pay outrageously, but if you’re an AT&T customer you already know that.

While Sprint charges as little as $4.99 per month for its competing service and Verizon requires only a purchase of the device, AT&T users can look forward to paying as much as $20 a month to make up for the carrier’s poor coverage. That’s the price if you only have AT&T wireless. If you have AT&T wireless and DSL, it’s $10 a month. Those who have a landline, too, can use the service for free, but what’s the point if you have a landline?

Finally, you will be burning cell plan minutes using an 3G MicroCell that may not even be piggybacking on AT&T’s broadband, though there may also be unlimited call plans in association with the service. If this sounds like a lousy deal to you, it does to me too. Unfortunately, until the exclusivity contract between Apple and AT&T ends — if it ends — options aside from jailbreaking are limited.

AT&T: More Bars in More Places — for a price.

iPhone users in the U.S. are eagerly anticipating AT&T’s Sept. 25 MMS activation date, but for some at least, the wait is already over. Many are already seeing the switch thrown that enables MMS on their devices, according to a thread over at HowardForums, a mobile phone message board.

AT&T is taking a staggered approach to the activation of this long-awaited iPhone OS 3.0 feature, probably in an effort to minimize the effects of the rollout. If my own experience is any indication, the vast majority of network strain resulting from MMS will occur when users first activate it, after which most will probably only touch it sporadically.

Judging by this staggered introduction, AT&T’s primary concern with the MMS rollout is to minimize the impact to its network, which is already suffering under the strain of so many iPhone users, and which has already caused some to jump ship in search of better quality and consistency.

If you’re one of the lucky people to benefit from early activation, you should see a new “Cellular Data Network” menu item in the General > Network settings page, and a small camera icon will appear in the lower left-hand corner of your Messages app, which will allow you direct access to either the device’s camera or your pictures folders.

Oddly, the reports seem to indicate no correlation at all between carrier bundle or software version installed on their device, or their physical location, and the activation of MMS. When Apple originally introduced MMS in iPhone 3.0, here in Canada a carrier settings update was required before the service would work or the icon would even appear. AT&T’s activation suggests that no change on the user’s end of things is actually required to get things up and running, which isn’t what AT&T spokesman Brad Mays originally seemed to suggest:

The service will be enabled with a software update on the launch date. Customers can obtain the update from iTunes, just like all other iPhone updates.

Once activated, iPhone 3.0 users will be able to send photos, videos, audio, address book contact info and Maps locations via the Messaging app on their devices. By default, an MMS opt out is attached to all AT&T iPhone owners’ accounts, which must be removed prior to MMS functioning. If you’re experiencing problems, contact AT&T to make sure this has been lifted on your account.

Let us know if you’ve received MMS activation yet, where you are, and how you find the service so far (any noticeable network effects, for example).

AT&T customers can finally get their multimedia messaging on come the end of September, according to a company spokesman speaking to TUAW’s Mel Martin today. The official go-live date is Sept. 25, which falls only a tad short of the company’s original late summer prediction for the service.

Spokesman Brad Mays ascribes the lateness of MMS’ arrival to the unmatched size of AT&T’s iPhone user base. The U.S. provider does have far more subscribers than any other carrier globally, and its network has shown signs of strain already. No doubt significant infrastructure build or reconfiguration was required to enable MMS support.

MMS will be enabled via a carrier settings software update on Sept. 25, which users will be able to download by connecting their iPhone to iTunes and approving the update when prompted. No actual iPhone firmware update should be required at that time.

Mays also comments briefly on tethering, but sadly, only to dash your hopes, my American friends:

As for tethering, by its nature, this function could exponentially increase traffic on the network, and we need to ensure that some of our current upgrades are in place before we can deliver the expanded functionality with the excellent performance that customers expect. We expect to offer tethering in the future.

Well, maybe not dash exactly, but definitely forestall indefinitely. The activation of MMS will likely act as a test for AT&T to see just how much pressure its network can sustain at this point, so it would be unwise for it to make any solid predictions about when it’ll be able to offer tethering until those results are in.

Check out TUAW’s post for the full-length press release from Mays.

Friday the 21st was the day Apple, Google, and AT&T had to hand in their long form essay responses to a series of questions from the FCC. Surprisingly, Apple published its entire response here, and Engadget has both AT&T’s and Google’s.

I found the answers to the questions surprising on several levels. Let’s be honest here, who among us expected that Apple would be the one to publish its response in its entirety, while Google would be the party to claim confidentiality on why the app was rejected?

Was it, or Was it Not Rejected?

According to Apple, the app wasn’t rejected; it simply wasn’t approved. Which sounds very similar to a line Bill Clinton once delivered. Apple seems very sincere about their reasons for rejecting not approving Google Voice. After all, if an application, upon install, instantly reroutes all incoming calls, SMS messages, etc., and sends all your contacts to Google, it does sound a tad nefarious. Evil, even. Like the app should have fricken’ laser beams attached to its head.

Now, I could make a strong argument that I know more about rocket science (rockets go boom, right?) than I do about iPhone development. However, I do recall there being mention of certain APIs that were sacrosanct. Call me naive, but I don’t think Apple would publish an API that would allow Google Voice to behave it supposedly did. Google response, however, makes it seem like the worst Google Voice does is read your iPhone’s contact list from within its own app. Either way, it goes beyond Apple’s official APIs.

User Confusion

Having never used Google Voice, I have no first-hand experience with how it actually works. As near as I can tell, you give Google Voice a list of phone numbers it should call when someone calls your Google Voice number. If you don’t pick up, I’m assuming Google Voice’s back-end terminates the call and sends the caller to its voicemail network. You’d then show a missed call in the iPhone’s phone app and likely get a notification (push or otherwise) to the Google Voice app about the waiting voicemail.

Based on this assumption, do I think the Google Voice app introduces “user confusion?” No, I don’t. Now, I’ve worked in IT support for 15 years, and have run into my share of users who are confused by simple things about computers.

That said, if you go to Google’s site, sign up for their voice service, tell said service to call your iPhone, download an iPhone app to better manage that experience, and then tell me that you’re confused about why your GV voice mails aren’t handled by Visual Voicemail, I’m going to bean you in the head with a shovel. Repeatedly.

User confusion doesn’t fly for other Google Voice apps, either. None were nearly as invasive as Apple claims Google’s to be.

AT&T’s Role

AT&T has claimed they had no role in the Google Voice non-approval, and that the only apps it requests not appear in the App Store are ones that cause network congestion. Given Apple has also admitted this is the case, I believe AT&T had no role in this.

Seriously, Google?

I’m flabbergasted that the only company to claim confidentiality on why the app was refused was Google. As the aggrieved party, I expected Google to take a gigantic broadside shot at Apple. Google has also requested notification if someone seeks the redacted information under the Freedom of Information Act so “Google may have an opportunity to oppose grant of the disclosure request.”

Good gravy, when Apple is more outgoing with information than the party that had an app refused, I really start to wonder what was in there! I’m thinking its possible Google just wants to downplay their own mistakes at this point.

Tin Hat Theories and Occam’s Razor

When this whole issue blew up, the Internet was rife with theories pulled out of people’s posteriors. AT&T killed the app because it competes with the SMS cash cow that lets the carrier overcharge for simple services. Apple was fearful of Chrome OS and wanted to kneecap Google.

I don’t buy any of that. Occam’s Razor suggests that the simple answer is usually the correct one. In this case, Apple saw something about the app they were nervous or unsure about and didn’t approve it. Apple’s history with rejections seem to show that they err on the side of caution. I’m not being an Apple apologist here. The Google Voice rejection still doesn’t sit well with me. I thought Apple was wrong in the past, and I think it may be wrong here. As reported by developers, the App Store process needs to be improved, and it’s taking too long to get it fixed.

Apple and AT&T are today expected to go to the Headmaster’s Study (in this case, the Federal Communications Commission) and, eyes down, shuffling feet and mumbling awkwardly, explain their recent behaviour regarding the much-publicized rejection of Google’s Voice app in the iTunes store.

If, perhaps, you’ve not yet heard about Google Voicegate, here’s a breakdown:

In late July, developer Sean Kovacs blogged that his app, a Google Voice client called GV Mobile, was being pulled from the app store for “duplicating features” that were bundled by default with the iPhone. He said he received the news in a phone call from an Apple rep who refused to email confirmation because, Kovacs suspected, they were “…too scared [he] would post it.”

Kovacs wasn’t alone. Several other third party Google Voice apps were pulled from the iTunes store and, finally, even Google’s own official app was turned down. Again, the reported reason was a “duplication” of existing, baked-in iPhone functionality.

Rumors almost immediately appeared on blogs everywhere, alleging the removals were at the behest of AT&T. The indomitable John Gruber of Daring Fireball fame first doubted AT&T was pulling the strings in their relationship with Apple, but later updated his commentary with;

“…so much for my speculation. A reliable little birdie has informed me that it was indeed AT&T that objected to Google Voice apps for the iPhone. It’s that simple.”

After a few days of intense wailing and gnashing of teeth around the blogosphere, it emerged that the mighty FCC was asking pointed questions of both Apple and AT&T, including;

• Why did apple reject the Google Voice application and pull related apps from their store?
• Did Apple act alone, or did they consult with AT&T before acting?
• What role does AT&T have in app approval?

In fact, there are lots more pertinent questions for Apple and AT&T. Om Malik has the full set in an article he published earlier this month analyzing the entire sordid affair.

It will be deeply interesting to hear the answers to those questions not only because they should explain what really happened in the lead-up to Google Voicegate, but also shed light on Apple’s internal app store management policies (assuming, of course, they even have any they care to enforce — judging from the hit-and-miss nature of app store approvals, we’d be forgiven for thinking Apple has been making it up as they go).

Back to today. While Apple and AT&T wriggle and squirm under the FCC’s disapproving glare, Google will also be filing comments. But as Leslie Cauley reports in USA Today, Google may soon find themselves in the hot seat, and for very much the same bad behavior;

“Consumers who use Android, the Google-developed operating system for wireless devices, can’t use Skype… Android users get Skype Lite, a watered-down version of the original that routes calls over traditional phone networks — not the Internet. As a result, long-distance calls are still cheap or free, but cellphone minutes are gobbled up every time a Skype Lite call is made.”

Cauley quotes Ben Scott, of consumer advocacy group Free Press;

“[Google] is in an awkward spot. On the one hand, their application is being blocked on the Apple App Store. But on the other hand, they engaged in similar behavior [with Skype]”

Cauley says the FCC has asked Google to describe its process for “considering and approving” applications, a question it also asked of Apple.

So that’s the latest. And, really, how can this end well for Apple? There are two possibilities; it will emerge they were not influenced (coerced?) by AT&T, or it will emerge they were.

If it’s the former, Apple will be admitting they have completely mismanaged the App Store service, applying approval criteria inconsistently and treating software developers with little or no uniformity and absolutely no respect.

If it’s the latter, Apple will be admitting they selectively pulled apps from their store in order to placate a business partner that, let’s face it, has provided less-than-stellar service to Apple’s iPhones customers for the last two years. If that’s the case, Apple have demonstrated little-to-no respect for developers and end users.

Unless Google is raked over the coals by the FCC, they’ll come out of this looking like innocent victims of shady dealings, a political tug-of-war between Apple and AT&T that has hurt the search giant and its poor, unsuspecting customers.

What will the outcome of all this be? Hefty fines for Apple and AT&T? An overhaul of the App Store review and approval processes? Perhaps even a more transparent, community-led approval process? Whatever the outcome, surely this will be one more nail in the coffin for Apple’s exclusive partnership with AT&T.

Lately, Google Voice is perhaps one of the most widely discussed products in the Apple blogosphere besides Apple’s own native devices. With its rejection from the App Store and people pointing fingers at Apple, AT&T, Steve Jobs and just about everyone and everything else in between, new evidence put forth by Andy Kessler and The Wall Street Journal (WSJ) directs blame squarely at AT&T. Rightfully so.

Is anyone really surprised?

We know that AT&T and every other cell phone carrier overcharges for service, taking into account the sheer volume of users and how long cell phone technology has been around. Considering how much providing basic cell phone service costs, and how relatively inexpensive it is to add text messages and data support, it’s clear that companies like AT&T stand to make a pretty penny.

I mean, honestly; it costs an extra $20 a month for unlimited texting in addition to $30 a month for “unlimited” iPhone data usage. Really? Text messaging costs two-thirds the price of always-on, feature rich email? Emails that support video, audio and images; something iPhone users still aren’t getting because of a lack of MMS support. There’s just no way the pricing structure is based on the product.

Looking at the Big Picture

The WSJ report reveals that AT&T’s profit margin for its wireless services are considered high at 25%. It makes sense, considering many people likely pay extra for hefty plans (data, text, video, etc.), when the actual impact on AT&T’s network is marginal. Granted, sometimes coverage is spotty and “crowded” but the fact is, that’s not because we’re causing too much strain on the network, it’s because AT&T should be investing in making these networks more interoperable with others and capable of carrying more users, but is instead price gouging customers for increasingly horrible service.

Are they taking advantage of us? Yes. We know that. (Even David Pogue agrees with his “Take Back The Beep Campaign”) So why on earth would AT&T quietly stand aside and allow Google Voice, since it represents such a dramatic shift from the norm? Google knows that voice calls and text messages are very easy on bandwidth. AT&T knows that allowing Google to steal its profits marks the end of an era. Landlines gave and continue to give ground to cell phones, and customers are switching to VoIP services or other mediums like Twitter or Google Voice for communication. Cell service might be next on the chopping block, if something like Google Voice is allowed to take root and grow.

The Future

Can AT&T reinvent itsefl and survive? The economy is tough, so now is the perfect time to be daring and really focus on your customers. Or will AT&T continue to overcharge and stifle innovation like Google Voice and other services? I personally hope that we will move towards a better future where carriers will play nicer with each other, with other services, and with other emerging technologies. For example, wouldn’t it be great if when I was at home, my iPhone routed calls over my Wi-Fi connection instead of over the “crowded” network? It might alleviate some of AT&T’s service outages. Things like this are possible, but only in consumers wield their power and demand that carriers provide them.

First it was just apps that gave users access to Google Voice features, but now it seems as though even an official app from Google, who have traditionally been very close with Apple, will not (for now) see the light of day. GV Mobile and Voice Central, two apps that allowed Google Voice users to access the service on their iPhone have been pulled from the App Store for duplicating functionality, and an official Google Voice app won’t see release at all for the same reason.

According to a Google spokesperson speaking to TechCrunch, Apple received the app submission from the internet search giant six weeks ago, and “did not approve the Google Voice application.” Apple has bandied about the feature duplication defense before, when they rejected Podcaster prior to releasing their own integrated podcast direct search and download section to the iPhone’s iTunes store.

Unless Apple somehow plans to introduce their own built-in Google Voice support in the near future, a scenario which I find highly unlikely, then this particular use of the feature duplication line is completely ridiculous. Google Voice isn’t actually duplicating anything, it’s only reducing AT&T’s ability to make money, which suggests that the wireless provider has much more control over Apple and their approval process than I previously suspected.

Through Google Voice, people can have one number for all of their phones, free long distance calling, and free text messaging. Two of these would obviously cut into AT&T’s bottom line, since users would no longer have to pay AT&T’s exorbitant service charges for messaging and cellular long distance. In fact, Google Voice customers could probably pare down to a bare minimum data plan and still retain all the functionality of their iPhone.

What makes Apple look particularly bad in this instance is that both BlackBerry and Android already have Google Voice apps available in their own app marketplaces, which, if Voice continues to grow, and expands beyond the U.S., could begin to have a serious effect on which device consumers invest in.

GV Mobile apparently received Phil Schiller’s personal seal of approval, so you know someone else is pulling the strings at Apple HQ to get these apps pulled. My question is, what threat does AT&T have that could force Apple to comply? An end to AT&T exclusivity would seem only to harm the company, not benefit it. There’s something to be said for not making your friends angry, sure, but there’s also no way you should let your friends direct internal policy. Maybe Apple should become an MVNO?

It must be nice to be Verizon right now. Free from the intense scrutiny AT&T receives by having the hottest and “smartest” smartphone, it can appear to rise above it all. It can have TV ads to claim the best network on the planet, and it’s done. It can have legions of people claiming they’d drop AT&T in a heartbeat, or snap up an iPhone tomorrow, if only it could be on its network.

Even setting aside that the iPhone on Verizon would not likely be the iPhone we recognize, this is ridiculous.

Before we get into it, let me first say that if you live where there’s little or no AT&T coverage, then obviously Verizon or another carrier is what you need. But every carrier has holes in its coverage. Every. One. This article isn’t about that.

No, what this article is about are those places (and there are many) where either carrier is an option. In that case, there are general perceptions where Verizon seems to either have people fooled, or it’s no different than AT&T but it isn’t noticed.

• It must be nice to sell phones with less usability than the iPhone so your customers don’t hammer your network, and then sit back and let people assume you could handle the load under which AT&T is straining.
• It must be nice to utilize the same pricing and subsidy strategies as AT&T, but get to remain above the fray while AT&T takes the heat for what the whole industry is doing.
• It must be nice to charge for carrier cash cows like SMS and tethering, but have everybody only complain about AT&T doing it.
• It must be nice to brag about having visual voice mail on some phones, while quietly hiding that it’s an extra $3 a month.
• It must be nice to not allow convenient syncing of data, media, bookmarks, etc., via the excellent iTunes environment, instead using clumsier tools if anything is allowed at all, and have your customers just take it in stride.
• It must be nice to disable hardware features on many phones, such as Bluetooth, GPS, and Wi-Fi, with little complaint from the masses.
• It must be nice to avoid GSM, still using CDMA-based technology that the rest of the world (and AT&T) has abandoned. Its rollout to a 4G network could come with headaches as a result.
• It must be nice to brag about 3G speeds, and have no one point out that your CDMA 3G technology (EV-DO) can handle voice or data, but not both simultaneously. Browsing the web when a call comes in? You can have the call or the web, not both. Oops.

If Verizon received even half the scrutiny AT&T does, it’d be buried with criticism. If AT&T is getting a lot of bad press, Verizon would be ripped to shreds. But since it doesn’t offer a phone that’s particularly compelling, one that taxes its network, one that people actually want to use, few have bothered to look beyond the geek with the glasses it puts on TV. It must be nice.

Finally, this in not intended as a defense of AT&T, and in no way excuses it from legitimate complaints. I’ve certainly grown tired of all that company’s talk, but no action. However, the idea that Verizon would somehow be free from all these complaints — even assuming it allowed the iPhone as is — is not supported by its own actions. As a U.S. carrier it has far more in common with AT&T than people seem to realize.

I was a Verizon customer for years prior to switching for an iPhone over two years ago. The “Verizon envy” many AT&T customers possess is akin to the grass always being greener on the other side. Problem is, most of you would find out it’s crabgrass.