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June 11, 2009

Is AT&T going to charge extra for new iPhone services?

AT&T's strange delay on iPhone tethering and MMS may be an early warning that the new services will pack a hefty price tag. It's time to say no

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Apple's new iPhone 3G S and iPhone 3.0 are loaded with important new features and upgrades, including more speed and probably more memory. But AT&T can't keep up. The latest example: delays and confusion over the future of tethering and MMS. If there was any doubt that the exclusive arrangement between the companies is an ugly roadblock on the way to true handheld computing, it's now gone.

Fortunately, there's a lot of motion at the federal level, including both houses of Congress and the FCC, to do something about the sad state of competition in the wireless world.

[ Take InfoWorld's visual tour of the iPhone 3.0 OS | Read about the new iPhone's new features. ]

A hearing by the antitrust subcommittee of the Senate Judiciary Committee next week will focus on text messaging rates and broader competitive issues. Given the workload of a committee occupied with hearings on a Supreme Court nominee, that's a signal of significant interest in those issues, says Chris Riley, policy council for Free Press, a nonpartisan public interest group working to reform the media.

I've beat on this issue before, and some readers have said, "No one has a right to an iPhone. If you don't like it don't buy it." Fair enough. Or is it? "No has the right to an iPhone," agrees Riley. "But this is about the right to consumer choice. Exclusive deals are impediments to innovation and competition."

Exactly. Just as the old AT&T stifled landline innovation in the 20th century, the new AT&T is stifling wireless innovation in the 21st.

High price for tethering?
At Tuesday's launch of the new iPhone at the World Wide Developers Conference, AT&T was very conspicuous in its absence from the list of providers who will support tethering and MMS. Not surprisingly, the audience noticed it immediately and their jeers were quickly echoed around the Web in blogs and news stories. By Wednesday, AT&T was backpedaling furiously, saying it will offer both services -- later in the year.

I don't like to be overly suspicious or conspiratorial, but something nasty is going on. As Apple's exclusive U.S. partner, Ma Bell has plenty of insight into upcoming iPhone features and revenue opportunities. Yet AT&T said nothing about two widely anticipated features until the next day. The company couldn't have been surprised or suddenly discovered the billing and network issues it cited as reasons for the delay.

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DaveLindhout 11-Jun-09 4:29am
Apple and AT&T have been pretty buddy buddy so far. Apple even added a year to the exclusivity deal. At WWDC, not only did the developers jeer, but Apple spokesmen seemed less than happy with AT&T. One can only hope that something happens when the current contract is up. Some in the tech media were hoping for a Verizon deal to be announced, but that didn't happen. Technical issues with CDMA are a bit of a barrier, but LTE could level the playing field in the US. AT&T better be careful, but to answer the question posed by the title of this article, of course they are.
Bill Snyder 11-Jun-09 10:58am
1 reply
A reader in Tennessee made this observation: Hi Bill. I am a longtime user of AT&T wireless. I have had 3G capable phones, but not an iPhone, from 3G’s inception. Here are my observations: · AT&T did the deal with Apple for the iPhone to keep Verizon from doing it. AT&T knew its network was not ready for the additional traffic but did the deal anyway. AT&Ts data and voice network was more or less adequate (based on my observations in many places nationwide) until the iPhone came along. AT&T grossly underestimated the effect of this new traffic on its network (or maybe underestimated iPhone sales volume). · AT&T is working furiously behind the scenes to shore up its network. However it’s silent about how badly it missed capacity requirements, hoping to fix the problem before too many people bolt (and hoping the iPhone will be the glue that keeps them around). During this time (the iPhone era), I have been in many public places in which it was absolutely impossible to make a phone call using my AT&T phone. College football games are one example. I never had this problem before the iPhone.
JimmySF 13-Jun-09 8:05am
1 reply
This, to me, seems far more plausible a reason than indicated within the above article. I remember when the internet took off and how difficult it was to access your ISP because of the explosive growth – too many people all trying to connect at the same time. It took a good year for the infrastructure to be built out in order to remedy this. Placing limits on what we can do with our phones during this rapid expansion may be the best thing for everyone. Bandwidth isn’t limitless. While I’m responding, why is it that when we don’t get what we want, its either an evil corporate conspiracy or incompetence? The above comment represents one such likely alternative and I would propose that other exists as well. What if, for example, ATT was using these missing features as a lever to extend their exclusivity of the iPhone? Perhaps ATT is offering up free MMS and tethering in exchange for an extension in exclusivity in the iPhone? Unlikely, but possible given the limited facts currently available. The point is, we have no idea as to why ATT isn’t supporting this functionality. Before inciting readers with anger, perhaps we should take a step back and wait for the facts. If those facts ultimately point to something nefarious, then by all means, get angry and take action. But in the meantime, relax and enjoy your iPhone.
fushigi 16-Jun-09 7:58am
I vote for corporate incompetence. The iPhone has been out for 2 years so AT&T has had plenty of time to upgrade their infrastructure. Not to mention they've had time to reap some nice profits from iPhone users, so maybe it should be a combination of greed and incompetence.

A few years ago, Sprint coverage around Chicago was fair but there were a number of black holes and areas of poor reception. Without adding fees, Sprint invested something like $80 million in the area and since then coverage problems have gone away for the most part. AT&T could do the same but it appears they're content to ride things out until pressure from their users forces a change.

duly 11-Jun-09 12:10pm
AT&T is too restrictive and their price points are too high for customers. They seem to hold the agenda on the IPhone and that needs to change. Apple should be looking at another wireless carrier that would allow the IPhone to use every feature available. I believe Sprint is developing a reputation now for a data network that is fast and reliable. Sprint's data plan are not that expensive compared to AT&T, Verizon, and T-Mobile. Sprint's Simply Everything Plan is the ideal plan for the IPhone. There is one problem though, the IPhone is GSM and not CDMA. Do you think Apple and Sprint can accommodate a major design change on the IPhone, if it means making money? I think so. AT&T is becoming what Sprint used to be, their service overall is becoming worst and they're "nickel and diming" on the data features. It's time for Apple to change its wireless partner.
ovanee 11-Jun-09 1:36pm
Why does this feel like a MONOPOLY?
MobileAdmin 11-Jun-09 4:06pm
Do people actually think Verizon will be any better? VZW is notorious for charging for everything .. people put up with it due to verizon has outstanding voice quality and good speed for data. As much as you all want LTE it's at least 2 years away to have adequate coverage so Apple needs to either suck it up and make a short term CDMA based iPhone or wait and make a LTE based with CDMA backband so you have coverage anywhere outside of major metro areas. Not to mention you think carriers are going to roll out faster networks and reduce data prices? Bandwidth and buildout cost money - where does this mindset that this should all be as lost cost as possible? Another thread I read on this (as there are hundreds at this point) is you have a group of people that think and react to this from the point of being a computer user and not a cellphone user. To the pc users this pricing is just not something they feel is fair, while the cellphone crowd has been used to it. I'm in the middle - seeing I don't pay a dime for mobile devices or service being a mobile professional I would never pay upwards to $100 a month. My iPhone is sim free and I only use WiFi. My Bold is on at&t and tethering is $10-12 a month last I checked for a user so they are not about to give services other devices charge for free to iPhone users. Apple should just cut ties with everyone - sell the iPhone for cost and force carriers to offer attractive plans to a growing iPhone user base - I doubt it would work or see the sales volume with $500+ devices but then it's a set price and users are free to change devices everytime Apple trots out a new model yearly.
Bill Snyder 12-Jun-09 3:37pm
A Blackjack user send us this comment: Another great article on InfoWorld. As a follow-up can you document the current tethering and MMS that AT&T provides to the "Non-iPhone" community. I have been a happy Samsung Blackjack user for the pasttwo years, and my rate plan is $49 unlimited internet with $10 month for tethering. (using it to post this email) I am curious to see if AT&T can manage the process when I upgrade my two iPhones in the house to 3.0. I don't know if the FCC and local Utilities Commission will look too warmly on a tariff plan that varies by device manufacturer using a standard carrier.

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