I've been warning AT&T for some time that it's monopoly on the iPhone was not something to take lightly and here's one reason why:
In reality, iPhones always work better with a wi-fi connection and what Sprint is offering here is not huge breaking news. But it's very bad press for AT&T and very good press for Sprint. It takes what AT&T relies on as a strength, it's exclusive deal with Apple, and turns it into a weakness. Sprint gets to bask in a little Apple glow, and makes AT&T look like the dumpy "I'm a PC" guy in the "I'm a Mac" commercials.
But the real message here is even more troubling for AT&T. What Sprint is doing is setting the stage for it to be the 4G wireless carrier for the iPad, something AT&T should be having night-sweats about. Stupidly, AT&T exec's have tried to downplay AT&T's wireless service for the iPad, apparently because they do fear competition. They have actually gone on the record saying iPads will work better wi-fi connections. (Like Sprint's 4g wireless modem?) AT&T prefers it's iPhone customers who are tied to long term expensive monthly deals. They seem unhappy with their own announced low cost no contract iPad deal. But how many die hard Apple nuts are going to wonder if they can live without an iPhone and simply Skype phone calls on their iPad with a 4G Sprint wireless modem? Enough to make a difference in AT&T's profits? But surely those people are still going to need a iPhone, right? Well, why not an iPad and a cheap throw away cell phone? Why carry around an iPhone and an iPad? Which one are you going to pull out when you need to access the internet or check a map? And what more do you need from a phone than phone service if you have an iPad and a Sprint 4g modem in your backpack?
AT&T made a calculated bet not to invest in a 4G network (until at least 2011), and it is already looking like that it going to be a huge mistake. While it is true that improvements to it's existing 3G networks are more important than starting up a 4G network, who doesn't think 4G sounds better than 3G? It's a strong marketing tool Sprint will have to club AT&T with in television commercials. AT&T should have fixed it's 3G network long ago, and been ready to complete for faster speeds needed by customers.
And where does AT&T's desire for tiered pricing fit into all this? Hmm? They keep saying it must be coming soon, but how exactly is it going to explain that customers need to pay tiered pricing for a "second grade network"?
Finally, tying this into my other pet peeve, by not allowing iPhone users the option of tethering their iPhone, they also play into Sprint's 4G hand. Since you can't save money by using your iPhone wireless connection on your laptop, why not get a Sprint 4G modem? It not only helps your laptop, but also speeds up your iPhone. Oh, and now I have an iPad with Skype… why do I need that $100 monthly AT&T bill again? So I can surf the internet on that tiny iPhone screen? Hmm…