AT&T looks beyond the iPhone
![]() |
| AT&T has reaped benefits from its exclusive deal to carry Apple’s iPhone. But what happens when the deal expires? Image: Apple |
It’s the catch in every Cinderella story: Eventually the clock strikes midnight, and that opulent carriage turns into a pumpkin.
For AT&T’s (T) iPhone sales, the witching hour could be two or three years away – executives won’t say exactly when their exclusive contract with Apple (AAPL) runs out. But when it does, they know they will lose a valuable competitive advantage. Even now, AT&T executives and engineers are working on new technology initiatives to help the company thrive with or without its not-so-secret weapon.
Certainly the iPhone has turned the carrier into the belle of the ball. In the year-plus since AT&T took a risk and gave Apple unprecedented leeway to craft and release a phone with minimal carrier input, the iPhone has helped the telecommunications company to burnish its brand, weaken its rivals and position itself as a leader in the digital age. The iPhone is so valuable to AT&T that the company willingly took a $900 million hit to its profits last quarter to subsidize new iPhone 3G subscribers.
This move wasn’t charity; iPhone owners spend more on voice and data plans, and are also more likely to line AT&T’s pockets by adopting other services like high-speed Internet access and digital TV. That gives AT&T execs confidence that they’ll make the subsidy money back from iPhone customers (and then some), after just a few months. Roughly 4 in 10 of last quarter’s iPhone users were new to AT&T, which means they probably defected from Sprint (S), T-Mobile (DT) or Verizon Wireless (VZ). Also, those new subscribers helped boost data revenues by more than 50%. If you can help yourself and hurt your competition at the same time, well, that’s a good thing.
But back to the matter of that witching hour: What’s AT&T gonna do when every other U.S. carrier can sell the iPhone too? During a visit to San Francisco earlier this month, AT&T Mobility CEO Ralph de la Vega offered some insights.
Yes, he knows he can’t afford to just sit back and sell iPhones, rub his hands together and wait for the money to roll in. And he knows that if AT&T wants to maintain its budding reputation as a technology leader, his team needs to get moving. One example of how he hopes to do it: A project in AT&T’s labs that lets iPhone users send video to their flat-screen TVs by swiping their fingers across the iPhone’s screen, as if to flick the video across the room.
Sounds great. When can we see it? As soon as engineers get the software good enough to work on a large scale. “I realize this is something we need to get done,” he said. “I can’t get the stuff out of the labs fast enough.”
Meanwhile, AT&T is also working on improving its customers’ mobile Internet experience, to give them a reason not to switch to a competitor. To speed up Web browsing and take pressure off of its network, for instance, AT&T announced this month that it will buy Wi-Fi provider Wayport for $275 million. De la Vega said that once AT&T links its systems up with Wayport’s, high-end, Wi-Fi-enabled smartphones like the iPhone and BlackBerry (RIMM) will automatically jump onto the network when a person is in range for fast, free access in places like hotels, airports and McDonald’s restaurants. And there are other software projects in the works that should challenge the world’s assumptions about what AT&T can do. “I think within a year you’ll see something,” he said.
All of which sounds good — but remember, carriers like AT&T aren’t known for succeeding at this sort of thing. Before the iPhone came along, Silicon Valley companies like Handspring (PALM) had a hard time convincing the major U.S. carriers to let them try anything too bold. Can AT&T change the carrier world’s reputation from laggard to leader?
Perhaps that’s what a Cinderella story is all about. We’ll see if AT&T can write itself a happy ending. (GOOG) (MSFT) (MOT) (NOK)
AT&T is by far the worst phone company I have ever had, I had verizon and sprint before, I had no complaints about Sprint cause all I had was a normal boring phone with them and it worked fine. But since getting the iPhone 3G I have multiple dropped calls EVERY SINGLE DAY, and lately I’m not even getting my calls at all! I will randomly get a voicemail notice without the phone ever ringing, even when I have been sitting still watching TV next to a window for the last hour! HORRIBLE HORRIBLE HORRIBLE service!!!!
UPDATE YOUR VERSION OF THE iPHONE TO VERSION 8.2 AND MOST OF THE PROBLEMS YOU WROTE ABOUT ON THIS BLOG WIL BE OVER. I bought my iPhone 2 weeks ago, live in Northern VA and see none of these probems.
Why is it that people that comment on technology, particularly mobile phones, are so petty, insecure and odd? I’m sorry but your cell phone carrier doesn’t have anything to do with your moral character.
But today I came upon quite the best one ever from “Steve” of Chicago, IL on this page. He, like many insecure, inadequate geeks just has to pretend he is so sophisticated, so intelligent, laments, “ah, ignorance.” Then ends it with, “no wonder Obama was elected”! How awesome is this tool. Yes all those intelligent people that voted for John McCain and that genius Sarah Palin. Those are the thinking folks! It is terrible thing to have a president that can speak in complete sentences!
Ah, the inability to understand reality.
What a load of Apple licking rubbish.
“Oh my god oh my god, his Appleness spread his magic upon us and without his magic device we are not worthy, finished, nada, kaput!”
ATT had not “willingly took a $900 million hit to its profits” to subsidize iPhone, if it did so “happily”, how come its profits have not been lifted by significantly more than that? In fact, all I can remember from that time is the cries of anger and shame for ATT being such a dupe. No wonder that Vodafone and others rejected His Flatulentness’ arrogant approach. They, not ATT, are now smiling. It’s just the for Apple worshippers in the media, the story of invincibility must be promoted, lest somebody (like Hulu) dares not to suck the blessed fruit.
AT&T is known for bad coverage in the NY/NJ and most of the east coast. DC, Maryland, Virginia has better coverage. I do a lot of business traveling and I am on the AT&T network. What AT&T should do is to improve their network in the NY/NJ area.
I live in Washington state and never had a drop call or anything. I get service everywhere I go while in the west coast and mid west.
I read all of the complaints and they’re mostly from the east coast area. Why don’t you all go to the website and submit your complaints and see what the company does about it.
I’m very happy with AT&T customer service ( I switched from verizon 5 months ago). Verizon customer service is the worst, I guess their engineers are busy running after the customers in the commercials.
“Nice and high tech gadgets they sell but they should focus in maintaining their network properly since their new implemented surveillance center and trouble dispatch system located in Atlanta GA is a total failure. Ask any AT&T technician about it.”
This is sadly true. AT&T has neutered the way local markets operate from a wireless company to the non-performing behemouth it is today. The dispatch in Atlanta is a group of non-technical folks who were once administrative assistants and now are directing technicians on a daily basis. People in Atlanta have more say over technicians than the tech’s local manager does.
To make it worse, the company has prohibited their vendors from allowing EXPERIENCED techs from calling them for support. Any difficult issue has to go through a second tier group which then makes the determination whether or not they can fix the issue, and then contact the vendor if necessary. By this time hours or days have passed…that’s if it’s an outage. Forget fixing small but potentially precarious issues in a timely manner.
Unfortunately, AT&T insists on making its wireless cash-cow an impotent, non-performing wing of its company by forcing it to work (or not work) like a wireline company.
Where a WIRELESS C.O. tech once performed all aspects of C.O. work: testing transport, building transport and facilities, troubleshooting equipment and functionallity issues, special projects such as new software implementation, multi-vendor problem troubleshooting, their daily activity is now comprised of redundant checking for alarms, and repetitively checking to see if backups are complete. Morons who’ve never laid eyes, let alone hands on the machines, hundreds or thousands of miles away are more responsible for repair than techs who have 10 years plus in the business, and are onsite with the actual equipment.
Sorry AT&T, you’re on the wrong road. Let the wireless folks do what they do best and stop trying to “borg” them into an ineffective, bloated, beaureaucratic, washed up and has-been POS wireline company.
There’s no such thing as “ATT service is bad”.
100s of parts of the country have GREAT service. 100s have poor service. And 1 million in between.
Get what works for *YOU*… in *YOUR* area… and stop worry about what does/doesn’t work for me.
I have not had even *ONE* problem with my iPhone (or ATT) since the v2.1 (soon to be 2.2) OS update.
The Phone is great, the technology apple has built into that phone is fantastic. The Coverage by AT&T is horrible. Part of it is Apple has focused on all the features and forgot that this is a phone and the reception needs to be good. Part of it, AT&T should have realized and understood all the dropped calls and should have worked closely with Apple to fix these problems when the 3G phones rolled out. I have a 3G phone and while I am really satisfied with all the features, I am really really disappointed with all the dropped calls and the poor coverage that I get from my Iphone. Luckily I have another phone which I used to make some of the calls and if I didn’t have another phone I would have probably gotten one already because 3G phones are not so reliable in communication area.
Update your phone people…. There is a reason updates are available for iPhones. Apple actually fixes those problems you are talking about. Update your phone and you wouldn’t hhave that problem. Ahhh ignorance, Maybe thats why obama was elected….
at&t has to many hidden costs ,dropped calls ,and slow network (there not cindarella ,BUT THE STEP-MOTHER!)
Obviously a lot of people here don’t realize that the iPhone drops more calls than other AT&T phones because the chipset in it sucks. Go check it out, the iPhone uses a 3G chip from Infineon.
Yes some carriers have more problems than other in certain areas, but that doesn’t change the fact that the iPhone has more dropped calls than other AT&T phones.
Oh, and to the guy that wrote the carriers are on the same frequency, what are you talking about? Each carrier has purchased their own frequency allocation.
This is why i am happy i am a Verizon Wireless customer and getting the new Blackberry Storm…IPhone is yesterdays news….
I just left AT&T for Verizon and Verizon has much faster 3G and better coverage in my area. I know this is not true for all areas but I do think AT&T needs to heavily invest in their network or it will cost them dearly…it did once (AT&T Wireless)
I love my iphone and hate hate hate AT&T’s phone service. Dropped calls everywhere. I can’t wait for their contract to end so that I can get some decent phone service
Ever since AT&T bought Cingular. Network went down the hill!!!!!
P.S. Any iPhone can be easily hacked with minimal hardware and knowledge required allowing it to be used on any network.
Every carrier has random dropped calls because all cell providers broadcast from the same frequency pool.
If you’re one of those people who live in the midwest, your Sprint service sucks. AT&T seems to broadcast the strongest here.
Anyway, as long as companies use cell towers, your service will be good or bad in different areas. Maybe Sprint is the way to go on the East, but in the midwest it’s AT&T. FCC is to blame.
Inserted my SIM in to a unlocked G1 and haven’t looked back yet..
I have had a iPhone 3G for two months now and I cant believe how much I enjoy everything about it including the network coverage. I use Pandora and listen to uninterrupted music on the highway between Raleigh and Wilmington each way. All via 3G. Dropped calls are very rare in the Raleigh area and I spend a lot of time on the road. I dont understand how so many people “claim” their service is so bad. Maybe I got the only good phone ??
AT&T service is the absolute worst!! Who cares what type of gadgets they have available if they don’t work. I want an iphone so bad but won’t waste my time switching VZ for it. I’ll just get the itouch and have the best of both worlds. I think the service icons (Bars) is just for show, it’s probably a basic laugh app.
Actually, I don’t know where to go anymore. I have Sprint right now and I’m trying to get rid of them. The service sucks. I thought in going to ATT but now, I shall see.
[quote]
I’d spend more of their time worrying about dropped calls in the NY/NJ area. Its embarrassing, as an AT&T customer to get cut off so many times in one day.
[/quote]
If you are an iPhone 3G user, try updating your firmware.
AT&T should improve their coverage. I am tired off dropped calls!!!!
My plan is to stay with AT&T if their coverage reaches to locations that Verizon services. If they don’t achieve that I’ll switch back to Verizon when they sell the iPhone. Too many places in Northern VA that I can’t even get a single bar with AT&T.
CNN must have some heavy Apple stock options as they find a way to run some iPhone related story every other day. In 2 – 3 years the iPhone will be a part of wireless history and pretty much every smartphone will have the same functionality so your back to the network.
Instead of adding all these new bells and wistles..how about making the basic phone service work better. In Phoenix, AT&T service is awful…get the basics right and than work on new features…duhhh..
Nice and high tech gadgets they sell but they should focus in maintaining their network properly since their new implemented surveillance center and trouble dispatch system located in Atlanta GA is a total failure. Ask any AT&T technician about it.
They should focus on reducing dropped calls and deadzone areas in Raleigh / Durham.Should have never left Version when I moved down here.
Besised the iPhone which probadly saved their butts, they offer horrible coverage, terrible customer service, and little value in my opinion.
The “cinderella story” should already have run out. AT&T 3G network as it works the the I-phone is a complete failure. The 3G I-Phone drops calls all the time, the 3G coverage and data coverage don’t seem to penetrate buildings as well or even at all when Sprint/Nextel and Verizons seem to be fine. I own both a Nextel blackberry and and an I-Phone 3G and I actually get better coverage and service with my Nextel Blackberry than I do with my I-Phone 3G. The phone is great…the 3G network that AT&T has assembled is less than great and not even good…I am not sure how they can make the claim they have the “fastest 3G network” they by far have the WORST 3G network. AT&T needs to improve their 3G network or watch out they are going to begin to experience customers switching to a better network similar to what was going on with Sprint. For the price we are paying AT&T for network service we better be getting the fastest 3G network and atleast as good as service and Verizon or Sprint.
“…carriers like AT&T aren’t known for succeeding at this sort of thing”, meaning software development.
Well, once upon a time, there was a part of AT&T called Bell Labs, and Bell Labs developed the operating system called unix and a computer language called “c”. Today, descendants of those products are integral parts of the iPhone and the Macs upon which iPhone apps are written.
Take that, Lily Tomlin!
I’d spend more of their time worrying about dropped calls in the NY/NJ area. Its embarrassing, as an AT&T customer to get cut off so many times in one day.
- Microsoft Office to go online — for free
- Google Chrome OS vs. Microsoft Windows [video]
- iPhone app store turns 1: Anyone making real money?
- Techmate: HP thin laptops, legal gambling, and Android [video]
- Techmate: Twitter could get hurt by its own hype [video]
- Techmate: Apple with or without Steve Jobs [video]
- Apple with and without Steve Jobs [video]
- With the iPhone, Apple must now try harder
- Palm Pre review: Finally, a worthy iPhone rival [video]
- SanDisk says the iPod won
- I can't even count how many versions ... More
- Luke: Hopefully, a true professional ... More
- Regarding my comment on Microsoft Acc... More
- Well, I guess its a calculated risk t... More
- MS is always late to the game! They w... More
- Great news, I wonder how it will impa... More
- I'll just use the same old Open Offic... More
- Okay. So, I said that I was done com... More
- All this for what microsoft mac and l... More
- Over the years, the PCs have become e... More





For Everyone that is complaining about SPRINT. You can get out of your contract until March 15th without having to pay the ETF. All you have to do is mention the .25 charge that they added to your bill and your golden to go wherever you want. However if you do wish to keep your cell number do not cancel your service before you make the switch. They can port your number for you at AT&T, VERIZON or whatever carrier you go to.