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  • Should Apple Abandon AT&T?

    October 7th, 2009

    Let’s be clear about this: AT&T may have been the best wireless carrier partner for the iPhone from a business standpoint, but any customer who has encountered a spate of dropped calls will tell you there ought to be a better way.

    Now the story goes that Apple first brought the concept of the iPhone to Verizon Wireless. Typical of Apple, they wanted a higher level of control than any other cell phone maker would ever be granted, and Verizon said absolutely not. So they took their proposal to AT&T which, busy putting together the pieces after a big merger, was willing to compromise.

    In retrospect, the deal was certainly positive for AT&T, since it gave them the sort of prestige that was previously lacking, but it also created a host of side-effects. Whether or not the problems were predictable is anyone’s guess, but I doubt even Apple was surprised to see the iPhone and the App Store take off so quickly.

    The biggest problem for AT&T is very much part and parcel of the iPhone’s ultra-simple Internet capability. Surveys have demonstrated that a much higher percentage of iPhones and iPod touches are surfing the Web compared to any mobile competitor, smartphone or otherwise. What this means is that AT&T’s network is heavily saturated, causing slower performance and, worse, dropped calls. This problem is particularly prevalent in larger cities.

    Despite AT&T’s ad campaign boasting it has the best 3G network, they have also begun to admit that they have lots of work to do. Whether expected or otherwise, they claim to be spending billions of dollars to expand networks, install new cell towers and so on and so forth.

    But improvements of the sort required to smooth out the iPhone’s connection difficulties won’t come overnight. Even if they have all the ingredients in place for a shovel-ready cell phone tower construction project, local governments may cause them grief. The other day, in fact, I got a letter from AT&T explaining that they’d encountered opposition to building extra cell towers in my area, and wondered if customers would express their point of view to local officials.

    Now I won’t get into the issues of zoning, complaints about unsightly obstructions and other objections to building a cell tower in a given neighborhood. I understand all that, but it seems that the existing towers around here are reasonably well concealed so as not to call attention to themselves. What’s more, the local populace needs to realize that, if they want better cell phone reception, they’ve got to allow the wireless carriers to expand their networks. You can’t have one without the other.

    Before you think I’m just siding with AT&T, bear in mind that I don’t encounter the sort of connection issues customers in New York and California routinely face. Yes, there are neighborhoods in the Phoenix metro area where dropped calls might occur, but the same is true for all cell phone systems. Looking back over my experience with Verizon Wireless, I’ve driven through neighborhoods where their service had serious issues.

    Yes, I wish AT&T was quicker to bat with MMS texting and I hope they will offer a tethering feature sooner rather than later. The latter, by the way, simply means being able to use your iPhone as a broadband modem with, say your Mac or PC. The delays may indeed have been the result of poor planning.

    However, the grass isn’t always greener on other wireless networks. Even if Apple decided to expand their carrier lineup when the exclusive with AT&T expires — which is expected next year — that doesn’t mean they can build a Verizon version overnight. The technology is different; AT&T uses GSM and Verizon uses CDMA. Yes, other handset makers do offer different versions of their products to accommodate the various network protocols. Indeed, I’d really be surprised if Apple didn’t have a CDMA version of the iPhone in is development labs. But since both AT&T and Verizon are going to be migrating to a new system, LTE evolution, in the next few years, is it worth it for Apple to build products supporting a standard that’s being phased out?

    Actually, I think it is, even if a CDMA iPhone is available for just a year or two. In that timeframe, Apple may be able to sell several million copies, which ought to be enough to cover the development costs of an alternate version.

    On the long haul, I happen to believe that Apple will simply do in the U.S. what is already being done overseas, and that’s to sell the iPhone to multiple carriers. Let those companies compete with each other to move as much product as they can, while Apple laughs all the way to the bank.

    Besides, if will also give you a choice, if you find your existing wireless carrier doesn’t deliver the customer service or network experience that you expect.



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