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Apple Should Cut Ties with AT&T

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By Ron Miller on Jun 21st, 2010 1:25 am

How many people enjoy their service with AT&T? Not many, not many. And AT&T just seems to keep getting more unfriendly all the time. Recently they announced data caps just before the release of iPhone 4 (see New AT&T Data Plans Make No Sense ), then there have been rumors of micro cell activity (explained here ) counting against your data limit. People complain about bad reception in certain major cities, especially New York (which I've experienced myself). So it begs the question, as aggravation with AT&T grows, why does Apple continue its exclusive relationship?

Hasn't Hurt 'Em Yet

If reports last week are to be believed, Apple has already pre-sold more than 600,000 iPhone 4s. AppleInsider reports that one analyst predicts Apple will have 100 million iphone subscribers by the end of 2011.

Earnings reports from the last couple of years show that iPhone sales are driving big profits for Apple. Of course that's US and worldwide, but a big piece of the pie has to be the US market. So whatever warts AT&T may have and however much users complain, Apple is still making big money and selling beaucoup phones. What's their motivation to leave AT&T behind?

I'm Thinking About It

As much as I love my iPhone 3G (and I do) and as much as I want a new iPhone 4 this summer as my contract comes up for renewal, I'm reluctant to stick with AT&T as a provider at this point. I haven't enjoyed my relationship with them over these years. In fact, the only reason I chose them back in the day (we're probably talking late 90s here) is because the phone worked in my house. Over time, I've added my kids to my plan and with rolling contract renewals, it's increasingly difficult to get out from under them. Things have changed since the days I chose my first cell phone. New towers have been built, but for now I'm stuck with AT&T because it would be too expensive to leave.

Nice Alternatives

I have to admit I'm a gadget guy, so as much as I enjoy the iPhone, I wouldn't mind giving one of the Android phones a shot. I've had a look at the Droid (as I wrote in Droid Could Bring Motorola Back From the Dead ) and two new phones from HTC, the Magic and the Droid Incredible, both look like serious contenders. I'm not sure Sprint, T-Mobile or Verizon would be any better. Meet the new provider, same as the old provider, but it would be nice to be able to make a real choice.

That I'm even thinking about it should tell you my level of frustration with AT&T. I don't have to have an iPhone, but if I'm with AT&T, I'm getting a smart phone and that's the best one they offer at the moment (in my view). I wish Apple would finally offer the iPhone to other providers, but if people keep buying them from AT&T, why should Apple care who's controlling the pipes?

Photo by bschmove on Flickr. Used under Creative Commons License.

Hi Ron,

Do not get disappointed. iphone is a very cool gadget to have. The problem does not lie with iphone or android. The problem will be with any of the Data Provider. Even if yopu go with Cingular or Sprint or Verizon the problem will be the same.

Due to iphone the Data Usage of AT&T has multiplied. Earlier with only 2G phones the data transfer was less. But with iphone, Blackberries , android etc. coming to market the data usage has suddenly increased. Criticizing AT&T is very easy on our part but on their part they have to deal with huge spikes in data usage due to the cool features of iphone. They will also be thinking for a solution as the people in at&t also know that they have competition in the market.

vaibhav1983
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Hi Ron,

Do not get disappointed. iphone is a very cool gadget to have. The problem does not lie with iphone or android. The problem will be with any of the Data Provider. Even if yopu go with Cingular or Sprint or Verizon the problem will be the same.

Due to iphone the Data Usage of AT&T has multiplied. Earlier with only 2G phones the data transfer was less. But with iphone, Blackberries , android etc. coming to market the data usage has suddenly increased. Criticizing AT&T is very easy on our part but on their part they have to deal with huge spikes in data usage due to the cool features of iphone. They will also be thinking for a solution as the people in at&t also know that they have competition in the market.

Thanks for the comment, but I can't sympathize with AT&T. They have profited handsomely from the iPhone and they should take some of that money and invest it in their networks to keep up with growing demand. The reaction of a networking company to increased demand should not be to cut access, but to add capacity. They can't cry poverty when you look at how much they have gained from the relationship with Apple.

Thanks again for your comment.
Ron

Techwriter10
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Here in Arizona, AT&T's performance has become much better. I get reliable 3G connections in more places, and the signal strength in the places to which I routinely travel in this state are better. You really think the billions they've spent on upgrades haven't amounted to anything?

More to the point, Apple cannot just shove AT&T aside. There is such a thing as a contract. Even when that exclusive expires, AT&T will still sell iPhones, even if you can also get from from Verizon Wireless and other carriers.

Despite claiming to be a gadget guy, you don't seem to have much of a grasp on the subject. Too bad.

Peace,
Gene Steinberg
www.technightowl.com

Gene Steinberg
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Gene,
I think you misunderstood what I wrote. First of all, just because you have better performance in a single state, doesn't mean it's better for everyone. There are places where it's still bad, but that was only a small part of my point. In my experience AT&T has not been customer oriented most of the time. They have chosen to limit network access at a time where their phones require more, not less access. I'm sure the contract with Apple is not endless. Most do have an end point and I'm surprised it hasn't happened yet. I see little advantage to Apple to maintain the exclusive agreement, especially when they want to sell more Apps and that requires bandwidth that AT&T is getting stingier with.

I don't think you need to get nasty because you disagree with me. If you read my posts regularly you would know I cover the space regularly and didn't just write this out of the blue.

Thanks for your comment.

Ron

Techwriter10
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Unfortunately it's still clear you're in over your head.

Here are the facts:

1. Apple's agreement with AT&T, depending on whether the original provisions have been changed, may expire between now and 2012.

2. After that, there's nothing to prevent Apple from seeking other providers in the USA, and no indication they'd maintain the exclusive.

3. It's clear that AT&T is also overwhelmed with the iPhone, since it uses more network resources than other smartphones. In saying that, there's no evidence Verizon Wireless would fare any better. I've had severe problems with Verizon's customer service and won't return to them, even if they can offer a superior network.

4. At present, Verizon cannot offer the same features on the iPhone with their CDMA network, such as being able to take a phone call and check your email or surf the net at the same time. This may require changes to Verizon's network architecture, or you'll have to wait for LTE to be deployed.

5. Other providers are apt to also put caps on bandwidth as demands increase. According to AT&T, only 2% of their customers have problems with the current maximum of 2GB.

It's not a question of disagreement here, my friend. It's a matter of one's grasp of the facts, and you seem to have a few problems there.

Have a nice day.

Peace,
Gene Steinberg

Gene Steinberg
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Gene,
You're obviously convinced that you're the only one who understands how this works. When one is convinced as you, there is little point in arguing further. I suggest you read me regularly before you judge me so harshly, rather than waltzing in here with your first post in the community trying to show off how smart you think you are. You make a great AT&T spokesperson. I suggest you go work for them or perhaps you do already.

Ron

Techwriter10
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They say when someone loses an argument, they either change the subject or make personal attacks.

No, I never said AT&T is perfect; I don't believe that for a minute. I also never said I'm the only one who understands how this process works.

So your effort to change the subject is a failure.

I made five points that you cannot respond to. Therefore, you aren't worth any further time or effort, because, as I said, you're in way over your head and your answers (make that non-answers) demonstrate that clearly.

Have a great life.

And don't bother trying to respond.

Gene Steinberg

Gene Steinberg
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Gene,

I can actually respond because it's *my* blog. You are welcome to make comments. I just would appreciate it if you would lose the holier than thou tone.

I'm not going to respond to each of your points when I've already made my point about that in this post, in my response or in *other* posts you haven't bothered to read because you are so so convinced of your own position.

Ron

Techwriter10
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That's called the "I am unable to handle your responses because I don't have a good argument" answer. Figures.

Gene Steinberg

Gene Steinberg
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Ron, you're article was SPOT-ON!

I've been with AT&T/iPhone for 2 years now here in the Chicago market. I have major problems with my connection dropping dead and then coming back to life (while not even moving!!). I have had numerous problems with my billing both here, and while traveling abroad.

I paid an enormous amount of money to use my iPhone in Europe/Africa for a month last year and apparently, some locations were not covered under the plan for the discounted rates. I had to argue with a manager at AT%T and even then, they just matched the rates that I was supposed to get in the first place which were outlined on the global map they provide online.

At my parents place, where they have Verizon... they have ZERO connection problems. My iPhone freezes up as it randomly swaps between Edge/3G coverage or just dead. Verizon, perfect. AT&T, dead.

What baffles me is how Apple stays in a contract with ANY single provider. Why limit your market to just AT&T subscribers? Why on earth would you do that? If you're phone could be used on any network... why would you pick only ONE?

Lectricblue
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A couple more things.

You should do an article on how mobile technology is shifting to data > Voice. At some point we will no longer buy those overpriced minutes packages and will move into pure data packages. The truth is, voice is essentially data right? Why do we pay for both? Mobile to Mobile calls don't even go through an automated switch-board anymore. If I could freely use Skype on my iPhone, I would ditch my minutes plan all together and go pure data.

The other thing I wanted to point out is that Gene Stinkberg is a blog-troll. The best thing you can do is ignore it, and stop feeding it. Once they go hungry, they move on to another blog. Gene, that's called the "GTFO response". Figures.

David

Lectricblue
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It's called an exclusive contract. You can't just break it, even if there's reason to do so. But it's not a forever contract. No doubt Apple will expand to other providers when it's done.

Remember that, when the iPhone was first being developed, there was no reason to take Apple seriously or agree to their demands for an extraordinary amount of control over the platform. AT&T was actually taking one huge chance here, considering that the iPhone might have been a non-starter, despite Apple's previous record for success.

Peace,
Gene Steinberg

Gene Steinberg
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No, Gene Steinberg is actually someone with over 20 years of experience in the personal technology field, author of over 30 books, and host of two popular online radio shows, both of which will soon be nationally syndicated.

David, whoever he really is, is not telling the truth. Another excuse for being unable to respond to my five original points. Sounds to me as if David is the troll here, by making this gratuitous remark.

Gene Steinberg

Gene Steinberg
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David,
Thanks for your comments and for sharing your experience. I appreciate the support.

Even though I don't agree with Gene I really ask that we keep all of conversations civil without name calling or attitude as much as possible.

I welcome comments from everyone, whether they agree with me or not.

Thanks again for taking the time to comment.

Ron

Techwriter10
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OK, at least you are being civil about the whole thing.

Now care to respond to my five points on page one?

Peace,
Gene

Gene Steinberg
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OK, at least you are being civil about the whole thing.

Now care to respond to my five points on page one?

Peace, Gene

I'll take on your 5 points.1. Apple's agreement with AT&T, depending on whether the original provisions have been changed, may expire between now and 2012.

Based on court documents the contract is 5 years long. (As of 2007) Unless, like you said, the contract has been altered/extended and given that both parties meet the requirements outlined in the contract. The truth is, nobody REALLY knows the current/true length of the contract. Your guess is as good as any other. Though my guess would be, AFTER January 1, 2012.. not between now and 2012.

2. After that, there's nothing to prevent Apple from seeking other providers in the USA, and no indication they'd maintain the exclusive.

Again, you are taking a guess here and I'd agree with you. Why would they want to remain exclusive to a single provider? AT&T could make an offer Apple can't refuse, but I'm doubtful at this point.

3. It's clear that AT&T is also overwhelmed with the iPhone, since it uses more network resources than other smart phones. In saying that, there's no evidence Verizon Wireless would fare any better. I've had severe problems with Verizon's customer service and won't return to them, even if they can offer a superior network.

AT&T has had 3 years to upgrade it's network to take on the new challenges stemming from the increase in smart phones. Instead of resolving the problem and growing with the trend, they've decided to cap it and charge MORE for using it. Verizon's solution is the upgrade of it's already superior 3G network.

Now, to address your "...there's no evidence Verizon Wireless would fare any better." statement. The evidence is VERY clear whom could handle it's customers better.

I. Verizon's 3G coverage is 5x higher than AT&T's.

(Source: http://revolver360.files.wordpress.com/2009/11/mapforthat.jpg )

II. AT&T Holds the #1 spot for MOST complaints filed with the FCC amongst wireless carriers. Verizon is #7.

(Source: http://www.fcc.gov/ )

III. In 2010, J.D. Power ranked AT&T as the lowest in a Wireless Customer Care Performance Study. Verizon was #1.

(Source: http://www.jdpower.com/Telecom/ratings/wireless-customer-care-ratings-%28volume-1%29 )

IV. In a 2010 study, J.D. Power ranks AT&T as the lowest in wireless call quality across ALL of the USA. Verizon ranked #1 in almost all the areas of the USA.

(Source: http://www.jdpower.com/Telecom/ratings/wireless-call-quality-ratings-%28volume-1%29 )

V. A 2009 study by Consumer Reports finds that AT&T ranks lowest in Overall Cell-Phone Service. Again, Verizon is #1.

(Source: http://digitaldaily.allthingsd.com/files/2009/12/crBIG.jpg )

I could go on but I'll stop here. It's conclusive which network is best at handling the upsurge in data usage/network resources. Which, by the way is a 2-part problem. It's not just data usage causing the problem, but the way smart phones interact with the networks.

4. At present, Verizon cannot offer the same features on the iPhone with their CDMA network, such as being able to take a phone call and check your email or surf the net at the same time. This may require changes to Verizon's network architecture, or you'll have to wait for LTE to be deployed.

You are correct here. The CDMA network is.. ehhh. I don't know where they stand on the LTE deployment. It was supposed to have been completed by the end of 2010. Who knows?

5. Other providers are apt to also put caps on bandwidth as demands increase. According to AT&T, only 2% of their customers have problems with the current maximum of 2GB.

Please provide a source for "Other providers are apt to also put caps on bandwidth..". My findings are to the contrary as other networks are upgrading.. not charging more and capping. I still get unlimited for $30/month myself. I'm happy that I never have to worry about going over. After we all start using the iPhone 4.. with it's HD Video recording and 5MP camera.. let's just see how "happy" customers are when they go over that 2gb limit.

Lectricblue
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Hi David:
Thanks for taking that on. I can't tell you how much I appreciate it.

I agree with your take here (and I've pretty much said this already, which was my point).

Thanks again.

Ron

Techwriter10
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Hi David: Thanks for taking that on. I can't tell you how much I appreciate it.

I agree with your take here (and I've pretty much said this already, which was my point).

Thanks again.

Ron

Thanks. All I did was elaborate on what you've already summarized in your blog. I'll be keeping an eye out for your next post.

Best Regards,

David

Lectricblue
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Thank, David.

Ron

Techwriter10
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This article has been dead for over three months

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