AT&T Critic

AT&T Throttles Its Most Loyal Customers

2012-02-06T22:58:00.000-08:00

AT&T's almost pathological hatred of its own customers continues. Its desire to force customers into a pay-per-bit plans, whether they like it or not, exposes them once again very publicly as liars and incredibly short sided business people.

If you recall, the justification for tiered pricing was that "data hogs" we're ruining it for everyone by sucking up too much data, and should be forced to pay more than "ordinary" customers who were reasonable about their data use. Of course, the whole data hog thing was a myth, but you'd think AT&T would at least try to have their policies somewhat consistent with their made up bullshit.

But this is AT&T, and consistent PR strategy isn't their strong suit. They instituted tiered pricing, but only for new customers. Existing customers were grandfathered in with "unlimited" plans (which really weren't unlimited, but that's another story). This didn't make a lot of sense if there really was a data hog problem, but the truth was AT&T simply wanted to charge more, and even more importantly, create billing confusion so they could occasionally gouge customers and make it hard to compare plans between services. (This is a company which adored hated practices like daytime/nighttime minutes and ever changing fees for long distance calling.) So the mission was accomplished by screwing new customers into tiered pricing, without having to take a chance on angering old customers. Hopefully, old customers would die or fall into new plans.

This of course created a huge opportunity for Sprint to steal customers away by offering unlimited plans, but apparently AT&T's leadership is willing to take that hit in order to force new customers into something they don't want.

Now would be a good time to lay low on the whole data hog thing and see how much self inflicted damage AT&T was doing to itself, but no, why not inflict more damage? So remember those customers who have grandfathered in "unlimited" plans? AT&T has gone to war with them. And not just the "data hogs," basically anyone who actually uses their phones:

AT&T Throttles It's Customers

AT&T has started to throttle usage speeds on "unlimited" customers using as little as 2 Gigs of monthly data. There are a lot of problems with this.

First, it once again exposes how big a lie the "data hog" thing was. AT&T has always had the ability to throttle speeds, which they could have easily done on anyone using excessive data, but instead they forced non-data hogs into tiered plans.

Secondly, by targeting customers who don't use that much data, AT&T is making it clear this was always about finding ways to overcharge customers and take away transparent "one price per month" billing.

Thirdly, AT&T is attacking customers who were grandfathered in on the existing plan, that is, long term AT&T customers. These are people who have suffered with AT&T's lousy service for some time, and didn't run to switch to Verizon or Sprint. To attack them so soon after adopting tiered pricing is frankly, dumbfounding. Would have been better to have just forced them to tiered plans to begin with.

AT&T's profits recently took a massive slide, mostly because of their disastrous bid for T-Mobile. After that billion dollar mistake, a change in thinking might have been in order. AT&T's plan for some time has been to treat customers badly, charge them too much, and use the money to buy up competing companies so they can't escape. You'd think once the second half of that plan fell apart, and customers do have real choices for the near future, AT&T wouldn't be so quick to want to kick their long time customer base between the legs. But I guess tiered pricing is more important than happy customers.

As for me, I switched to Sprint some time ago. And I'm very happy with my unlimited plan.

AT&T Suffers Major Setback in Quest for World Domination

2011-09-04T21:10:00.000-07:00

So AT&T got smacked hard on the ass this week. The Department of Justice filed a suit to stop its merger with T-Mobile. It's almost enough to make one believe in America again. Of course, we can't completely assume AT&T won't eventually get away with this obviously anti-competitive absorption of one of its few true competitors. I'm sure AT&T has lobbyists rushing into smoke filled rooms with suitcases full of cash to try to buy off politicians and regulators. Heck, it's worked for them well in the past.

Or has it? Let's enjoy the moment and assume that the lawsuit prevails, as it should under any logical reading of the law. That means the merger doesn't go through, and the first problem for AT&T's greedy overreach is a huge 6 billion dollar penalty.

This is almost twice what it would have cost AT&T to simply build out its regional service, one of the supposed reasons for the ridiculous $39 billion dollar merger. For some reason, AT&T decided that it was a great strategy to provide poor national service, with the assumption that politicians and regulators would cave in on anything they asked for in "hopes" that service would improve in the heartland.

The problem is, years of crappy AT&T service, despite tons of approved mergers, extra spectrum and even out and out payments by the US government has put to lie that idea. No one believes AT&T anymore when it says it will improve service.

And that's why it's so dangerous that AT&T doesn't have a backup plan. Their plan, since changing their name to AT&T, was to use cash generated by local monopolies to buy national monopolies. To do this, they ripped off grandma's in local markets that were afraid to turn off their land lines, provided them with outrageously expensive, but crappy service, and then used the cash to, first: enrich their executives, two: buy up politicians, and three: buy up competitors. Then repeat.

Never, during the entire process, did service improve. And in fact, the entire shell game probably would have failed if it wasn't for the lucky accident of them having a monopoly on the biggest tech toy of the last decade, the iPhone. Now that they've lost that, and the momentum of the inevitability of a national duopoly on cell service (between them and Verizon), where do they stand?

On very shaky ground. Because they have become so hated even the politicians that once backed them are getting nervous about supporting them. And the politicians that want to smack them on the asses will have proof they can do it. Proof they can use to get money from other corporations that don't want to see America with an expensive third world communications system. Investors will also start to take seriously that there could be real competition in the wireless sector, and that's very bad for AT&T.

Meanwhile, I'm just waiting to activate my Sprint iPhone.

UPDATE: Here's and interesting piece that goes into some detail about how clueless AT&T CEO Randall Stephenson is:

AT&T MISREAD JUSTICE

AT&T Accidentally Leaks Damning Letter

2011-08-14T18:47:00.000-07:00

We all know the only reason AT&T is buying T-Mobile is to kill competition and screw over its own customers with higher prices for poor service. But if you need more proof…

Leaked AT&T Letter Proves T-Mobile Buyout is Wrong

The big problem here is not that AT&T is evil, it's that they're stupid evil. Amazingly, no matter how many leaked letters come out, no matter how obvious it is that they're lying, odds are the corrupt politicians in Washington will let them have their way and approve the merger.

Oh, well… hopefully the iPhone 5 will save Sprint. Seems to be our only hope.

Great Video About AT&T Merger

2011-07-24T07:17:00.000-07:00

Be sure to click on the link at the end of the video and join the campaign to fight the AT&T/T-Mobile merger. It's bad for you (if you care about good phone service at a low price), and bad for America.

AT&T Buys Up Competition to Control Market

2011-03-21T20:06:00.000-07:00

It's a depressing day for competition in the cell phone business. Evil empire AT&T is going to swallow up its only serious competitor, T-Mobile. T-Mobile has been the only big carrier lowering prices in recent years, as AT&T and Verizon have been raising them. It's unthinkable this can pass by the FCC, but unfortunately, it will. As pointed out in this article, even if AT&T isn't allowed to kill its lower priced competitor, this move will effectively hobble T-Mobile for years.

AT&T to Buy T-Mobile

Tim Wu Talks AT&T

2011-03-18T22:53:00.000-07:00

Here is an excellent piece on Tim Wu who wrote "The Master Switch" which I mention frequently on this site. It's required reading for anyone interested in AT&T's dark history.

Tim Wu Talks About Saving the Internet From Big Corporations

Yes, AT&T is Evil

2011-03-16T03:01:00.000-07:00

There are times I worry that I go a little too far attacking AT&T on this blog. Sure, it's a greedy corporation that doesn't care about its customers and resists innovation. Sure, its service sucks and it buys influence in Washington to make sure it has no competition. Sure, it has a terrible history of suppressing technology and ethically questionable business practices. But it isn't "evil." I mean, a corporation can't be evil.

But just when I think I've gone too far, AT&T goes out of its way to prove that it is in fact: evil. Here's the latest news:

AT&T Puts Data Caps on High Speed Access

So, after sucking up every internet provider they could, after lobbying to expand their monopoly on American internet traffic, AT&T now feels it is ready to do what it has longed to do for a long time. Kill the internet as we know it. This is no longer speculation. It's very clear that AT&T's long term plans are to meter (thus control) all internet traffic, both cell and land based. This is exactly what people like me have long been saying was going to happen, and now AT&T is announcing it.

I'll be writing more extensively about this for some time, but let's just be clear on the main points:

1. Putting a data cap on land lines is just the first step in creating a "pay per bit" model for the internet.

2. "Pay per bit" completely would change the internet.

3. The only way AT&T can get away with a "pay per bit" model is to have an de-facto monopoly (by concluding with other big American telecoms).

4. Moving to a "pay per bit" model will hurt America's competitiveness in the world, and is radically dangerous to free speech.

There can be no illusions anymore about AT&T's big plan. They've been hinting at it by fighting net neutrality. They've been preparing for it by buying competitors and taking over markets. And now they are implementing it. Anyone who is aware of AT&T's history can see what it's coming, and should be scared. This is our worst nightmare come true. If we don't actively fight this, AT&T (and its business partners in collusion) will completely dictate what we can access on the internet and for how much.

Collusion Between AT&T and Verizon on Tiered Pricing Invites Class Action Lawsuits

2011-03-09T00:34:00.000-08:00

If you live in Hong Kong, you can have superfast gig-a-second broadband for just $26 a month. If you live in the United States, you're screwed. America’s leading internet provider, Verizon, doesn't offer anything that fast. Its fastest service one twentieth as quick and costs a whopping $144.99 a month. Why nothing faster (let alone cheaper)? According to The New York Times, Verizon says its customers simply don't need it, they're already in "satisfying demand" with their current slow, expensive service.

But the truth is Verizon doesn't want you to have true high speed internet. At any price. It's working in collusion with American cable companies and AT&T to make sure you don't get it. One of the reasons is an unwillingness to invest in the infrastructure necessary to provide great service. The other is a desire to use the unfulfilled promise of broadband to push U.S. Government regulators to give them concessions (and corporate bailouts) to further strengthen their monopolies on American telecom.

But even those aren't the main reason. Verizon and other companies could easily offer super high speed internet as a high priced option (as if $149.99 a month isn't high enough) and pay for whatever infrastructure they need. By keeping it expensive, they could still claim to regulators they need "help" to bring down the price. The problem is, even at a high price, there is probably enough demand for true broadband that any offered service might take off quickly, and that would create real problems for Verizon's bigger plans for the internet.

So why are the big telecoms holding back on true broadband? Because they are obsessed with tiered pricing, aka "pay per bit." They already lost the war on pay per bit for regular internet access. They are currently fighting like crazy to force it down the throats of customers on cell service, and they refuse to offer true broadband until customers "accept" the a new pricing policy that would fundamentally change the way people use the internet. And not for the better.

There is no logical reason to charge people per bit for information, it's bad business and bad technology. Yet Verizon and AT&T both sprung from the split head of old Ma Bell. And old Ma Bell was built on the idea of gaining monopoly control, suppressing technology, and charging customers outrageous rates for things that cost almost nothing (like long distance calling). This hatred for customers seems to be engrained in the DNA of both of these former baby bells, who are determined to cram much hated tiered pricing down the throats of unwilling cell users even if it ends up hurting their own business.

Case in point, Verizon announced that this summer, unlimited data plans for its iPhone will be going away. New iPhone customers will be forced into various "pay per bit" offerings.

Verizon Unlimited iPhone Plans Ending

How does Verizon justify changing its policy? Because the current policy is not a "long term solution." Why isn't it a long term solution? More customers mean more money for infrastructure and should make it even easier to offer unlimited service to everyone. Moving bits around gets cheaper and cheaper every day, thanks to advances in technology, but for some reason Verizon (like AT&T) wants to charge more and more for what costs them less and less. It's a shame they can't blame the datahogs anymore. They can't even manage to come up with a good lie for why they want to gouge customers.

Meanwhile, it seems some smoky room meetings between Verizon and AT&T have settled on a basic price for data access.

$10 Per Gig Is What the Internet Should Cost

It just so happens that both of these telecoms want to charge on average $10 a gig for iPad 2 data access. Now, isn't that convenient? The only two providers of wireless service for the iPad happen to charge almost exactly the same amount, and neither offer unlimited data. Anyone want to start a class action lawsuit into telecom collusion? This seems like a good place to start. I'm sure it would quickly prove that it costs more to keep track of how much data the iPad is using than it does to provide it with the data in the first place.

Which is why Verizon doesn’t want people to have 1 gig per second data access. How can you charge $10 for something that you get in less than a second? But a better question should be, how is it that Verizon and AT&T think you should pay $10 a gig for something you can get an unlimited amount of in Hong Kong for a low monthly rate? Or for free at your local McDonald’s? Or free for the life of your Kindle (offered by AT&T)? It simply makes no sense and the public is not going to buy it.

Which is why AT&T is offering to grandfather in unlimited data for old iPad subscribers. But, again, how does it justify charging $10 per gig for one customer, and then an unlimited amount for another? Both AT&T and Verizon are playing a ridiculous game of offering unlimited data the second they need to keep a hold of customers, but assuming they can push it new customers.

Long term, it’s a losing battle. Competitors won't sit around on their hands while AT&T and Verizon get away with charging $10 per gig. It's exactly how they destroyed their long distance phone business, charging too much for something that cost almost nothing, until they created so many competitors they virtually lost the business. It’s also how they destroyed their basic cell service model, by gouging customers and forcing everyone to switch to pay as you go phones. Until the iPhone saved them. Now they’re determined to kill the golden goose.

But even short term, it's bad business. There is no reason every iPad shouldn’t be purchased with 3G at a reasonable low price. By gouging a few customers, they’re going to encourage a lot of people to stick to wi-fi and that’s a huge lost opportunity. Likewise, a lot of people simply can't afford smart phones, but would love to have them. If prices went down on monthly fees, every cell phone would become a smart phone. Forcing pay per bit on customers simply suppresses sales growth.

If these companies were smart, they would understand that in a wireless future, every car, printer, computer, toy, etc, could benefit from wireless access, if the rates were low enough. Rather than trying to squeeze $100 a month out of a customer by making his life miserable charging per bit, it would be better for that customer to pay $100 to have wireless access on many devices. Rather than getting rid of an old iPhone as soon as you can, because it simply costs too much a month to have more than one, it would be better in the long run for AT&T if someone kept it as a spare and tucked in their car. Likewise, when a teenager replaces their iPad with an iPad 2, if the price was right, they would keep both connected to AT&T, rather than cutting off the monthly bill as quickly as possible. The amount of money AT&T and Verizon could make by customers keeping subscriptions for devices they only occasionally use would be far greater than what can be make by simply inflating bills and creating wary customers reluctant to be ripped off.

While hating customers might be a short sighted business model for Verizon and AT&T, it’s a really horrible business model for Apple, Google, Facebook, and a lot of other really huge companies. There is no upside to those big players in return to Ma Bell style “master switch” technology suppression. They aren’t likely to sit by as people become frustrated with unpredictable bills for accessing the internet. The last thing anyone, but the telcoms, want is for internet users to start going “those stupid advertisements just cost me 10 cents to watch.” Or, updating my photos on Facebook will cost 50 cents. It’s not going to happen. Those big companies have the money and technology to quickly step in and provide innovate technological alternatives rather than sit by and watch Verizon and AT&T tax every internet interaction.

Americans haven’t quite clued into the fact that they have the slowest and most expense internet service in the civilized world simply because the big telecoms want it that way, but eventually they will catch on. Someone will send them a high def video from Hong Kong. It will take a second to upload from Hong Kong (for free) and ten minutes and $10 to watch in America.

AT&T's "Data Hog" Lies Exposed

2011-02-15T12:45:00.000-08:00

Remember the “data hog?” No? It was a huge crisis less than a year ago, supposedly threatening the entire cell phone industry. Data hogs were the mythical creatures that “forced” AT&T to adopt a tiered pricing structure charging iPhone users per bit. AT&T claimed its tiered pricing would save money for everyone, except for greedy data hogs. And who cared about them?

The data hog myth was widely reported in the mainstream press as if it was a fact. The Los Angeles Times said that if something wasn't done about data hogs poor AT&T would be "forced to its knees." The New York Times breathlessly painted a picture of evil data hogs downloading long into the night. Of course, it was all total bullshit, transparently a lie from the beginning. It was corporate spin to sell a much hated and unnecessary pricing structure. The main stream press happily regurgitated the lies for their masters in telecom industry. (Is anyone disappointed big city newspapers are going away? Not me.)

The data hog myth never made any sense, as I pointed out in many of my posts. But after a year or so of silly PR spin trying to sell a fake crisis, AT&T took the lead in showing their contempt for customers by instituting tiered pricing, pointing the finger of blame at “data hogs.” Never mind that the way AT&T implemented tiered pricing, by grandfathering in all the data hogs, made even less sense if there had been a real crisis. AT&T got what it wanted with its lies, and set about with big plans to screw new customers, and anyone trying to upgrade their service.

Naturally, the supposed benefits of tiered pricing, lower bills, better service because "data hogs" are reined in, didn’t materialize at AT&T. Service was just as crappy as it ever was, because the problem was never that iPhone customers hogged data. It was that AT&T simply didn't build enough cell towers to service phones properly (regardless of data requests).

We don't hear much about data hogs these days. Not because tiered pricing controlled them, but simply because high data use customers are exactly who the cell companies want. Verizon is offering its new iPhone customers unlimited data (for a limited time). They apparently want the very kind of data hogs that were going to destroy AT&T.

Moreover, AT&T doesn't want to lose any potential data hogs. A recent article shows that if a customer gets angry enough about tiered pricing to threaten to leave, AT&T will grandfather them back onto an unlimited data plan:

AT&T's Unlimited Loophole

So if it wasn't already obvious there was no data hog problem, it's crystal clear now. Then why is Verizon only offering unlimited data for "a limited time?" Well, because, like AT&T, it dreams of being able to gouge customers with tiered pricing, it just isn't sure when it will be able to do it. You see, there is still a little competition in the cell phone business, and until AT&T and Verizon are finally in control of the internet, they don’t have the leverage to completely force customers into tired pricing.

Meanwhile, the real motivations for AT&T switching to metered data use are becoming painfully clear to customers. A new lawsuit claims, no big surprise, that AT&T is actually systematically over charging customers for imaginary data:

AT&T Charging for Imaginary Bits of Information

Yep, you guessed it. Once AT&T got meters on your data for billing, it started billing you for data you didn't even use, figuring you couldn't figure out your real usage. The purpose was never to rein in high data use customers, who are the most likely to switch and shop around (and who AT&T and Verizon will happily cut unlimited data deals with). The goal, of course, was to rip off little old ladies who don't use much data, and don't understand why their bill is so high, but figure a big corporation wouldn't lie.

That is, a return to the good old days of Ma Bell. The problem for AT&T is this ripping off grandma strategy, that worked nicely back with a legal monopoly on long distance rates, doesn't fly so well in today's high tech information age where it can't control the flow of information and get people to think that black is white. More lawsuits are likely to flow unless AT&T changes its stripes. By trying to meter data, they are simply creating incentives for people to figure out a way around their service. Just like how they lost control of long distance calling.

Once again, AT&T, why don’t you consider offering quality, price and innovation instead of greed, lying and overcharging? You know, run your company like a business. Seems to be working for Apple.

Why the Verizon iPhone is a Huge Blow to AT&T

2011-01-17T15:46:00.000-08:00

There's finally going to be a Verizon iPhone and Apple fans will have a choice of carriers to choose from in the foreseeable future. And maybe, finally, iPhones will work for making phone calls. So this is great news for anyone who has suffered with AT&T's terrible service, and high prices, for many years.

In a lot of ways, it seemed inevitable. Why should the iPhone, unlike virtually every other popular phone, not be offered on every carrier? Surely the blame falls on Apple, which made an exclusive deal with AT&T, and renewed it at least once. Besides, the Android pretty much does everything the iPhone does, and it's already offered on multiple carriers. So iPhone is just catching up with the Android. Other than a few years of needless suffering by iPhone users under AT&T's thumb, it's no big deal? Right?

No, it's a huge deal. Because the iPhone wasn't just any phone. Behind the scenes, the iPhone represented a huge war between Apple and the major cellular companies. Apple won. And AT&T lost. So did Verizon, ironically, by having to cave in an beg for the iPhone. But the biggest loser is undoubtedly AT&T which comes out of this battle very bruised, beaten, and unlikely to fully recover.

To understand why, you have to understand AT&T's historic business model and why the iPhone was such a threat, and why an unleashed iPhone is even a bigger threat.

First, AT&T's business model is making sure customers have no choice but to use AT&T, regardless of service or prices. This is deeply ingrained in their tradition, and despite anti-trust laws, court orders demanding common carriage and being unable to keep up with changes in technology, this is still their primary (and perhaps only) business strategy. A wonderful book called "The Master Switch," which I have mentioned before, neatly outlines AT&T's history of monopoly practices. These include buying up competition, suppressing technology, defying court orders, and dirt tricks against both customers and business rivals. But even more importantly, AT&T used its connections with the Federal government to lobby for anti-competitive policy. And for a time, from the 1920's to the 1980's, "Ma Bell" even had a legal government approved monopoly. It certainly didn't hurt that AT&T assisted the government in whatever wiretapping and spying on citizens was deemed necessary.

It was argued at that time (which was just after and then in the middle of world wars and then a cold war) that competition in such a critical service wasn't a good thing. It was also argued, that by giving AT&T a monopoly, America ended up with the best phone service in the world. But in fact, there was no reason America, a rising economic giant, shouldn't have great phone service regardless. And as "The Master Switch" points out, the price that was paid in lack of innovation (AT&T suppressed magnetic tape recording technology back in the 1940's and cellular phone service in the 60's) was not worth the price. America probably threw away at least a twenty year technological lead on the world thanks to AT&T's paranoia of losing control over its customers. Not to mention, decades of needlessly high long distance rates.

But even with a legal monopoly, AT&T's position as the gate keeper for all American communications became increasingly threatened by not only changes in technology, which allowed numerous ways to get around their control, but also by their own heavy handed (i.e. illegal) business practices. There is no such thing as a benevolent dictatorship, because new and stronger enemies will always surface that must be crushed. Satellites and microwave transmissions provided ways around AT&T's control of land lines, and the rise of the computer created powerful technology rivals. By the 1960's AT&T's illegal business practices in maintaining it's monopoly control were so egregious that it was just a question of time before it had to be reined in. Though it took another twenty years of court action, the Federal government finally forced it to break up into pieces in 1984. Such an ironic date.

But it didn't take long for a diehard AT&T exec named Edward Whitacre to try to reconstruct this monster, nor did it take him long to do it. Before any real competition was created, Whitacre quickly reversed the forced breakup by simply buying back up the pieces. He returned to the standard business model of suppressing competition through dirty tricks, and more importantly, Federal lobbying. By the time the last Bush administration took office, with more interest in spying on citizens than encouraging communication competition, Whitacre had reversed almost all the anti-monopoly restrictions placed on AT&T and had almost completely resembled the original monolith. Just to make sure there was no confusion, he even bought back the much tarnished name. He then retired with a $200 million dollar bonus.

Which brings us to today. AT&T's current executives obviously want to follow in the footsteps of this effective, if questionably legal, tradition of making sure customers have no choice but to buy AT&T service and pay what AT&T wants. (They also want to follow in Whitacre's non-traditional emphasis on huge executive bonuses.) Yes, there is technically some competition. While AT&T owns all the phone land lines for much of the country, there is Verizon (also made up of former Ma Bell pieces) and a couple minor competitors for cell service. There are also cable companies, which have a separate line into many people's homes.

But this "competition" isn't meant to be real competition. Instead of Ma Bell's original monarchy over telephone service, the new telecoms would jointly rule in an Oligarchy over a larger kingdom that included not only phone service, but also once forbidden data services, cellular and cable television access. Smaller rivals would be tolerated until they could be bought out, or crushed the old fashion way by anti-competitive practices, or if that didn't work, Federal regulation. At the end of the day, two, or maybe three, victors would remain, with AT&T being the leader, and collusion between them to fix prices and stifle future competitors.

Where does the iPhone fit into all this? Well, it's a game changer, and a serious challenger to AT&T's desire to be the gate keeper of information and communication. The iPhone interface imposes itself between the customer and AT&T. It provides services (like iTunes) that AT&T does not profit from. It can even be used without AT&T (through wi-fi or simply as a pocket computer). In other words, it turns AT&T into a "dumb pipe." Or worse. It is, in fact, everything rolled into one that AT&T fought against throughout its long history of monopoly control. It was a technological baby that needed to be strangled in the cradle. Now, it's too big to stop.

So why did AT&T allow it to happen? Well, it didn't. The original Apple deal was made with Cingular, which at the time was an independent company which hadn't been completely sucked up by Whitacre. If it had been, it was unlikely AT&T would have made the original deal and opened the door to its own potential demise. Verizon, for example, originally refused to make an iPhone deal unless Apple allowed it to impose itself on customers through the interface.

Once the deal had been made, though, it quickly became clear the iPhone was a smash success, and, if there had been any doubt, clearly a serious threat. AT&T had two choices at that point, to try to destroy it, or to embrace it and keep monopoly control.

The problem with destroying it was that Apple is a big, profitable company with plenty of lawyers to protect it. AT&T's normal strong arm tactics, which served it well in the past, wouldn't have worked. Moreover, if AT&T stopped providing service, Apple could easily jump to one of the smaller services or even theoretically build its own service

Since the genie was already out of the bottle, the only other alternative was to work closely with Apple, and make sure the device never got offered on any other service. This could have been done simply by providing great service, at a low enough cost that there would be no need for alternatives. Apple has never been one to shy against exclusive arrangements as long as it gets what it wants out of them. And it was pretty clear Apple had no interest in becoming a telecom. Unfortunately, it would require AT&T to embrace the idea of being a dumb pipe, something they were adamant against.

Presented with only two logical alternatives, AT&T's current executives decided instead to do neither and take the worst possible path. They didn't stand in the way of the iPhone, but also didn't embrace it. Instead, they milked it for all the short term profit they could, essentially selling way their future. They failed to invest in the infrastructure necessary to service such a popular device, over charged for its service, and pissed off Apple enough that it ended its exclusive relationship. But heck, in the meantime, they took home huge executive bonuses. For all of her faults, the old Ma Bell at least understood that short term profits had to be sacrificed to build infrastructure so as to control the future. The iPhone represented the future, and AT&T apparently had no plan to deal with it.

It's important to understand that this is the first time in AT&T history that it has lost monopoly of control over a piece of important technology or an important service without the Federal government forcing it to. Once AT&T took control of local service in an area, it never lost it. Once it took control of long distance service, it never lost it. Likewise with the manufacture of phones, etc. It was only when the Federal government stepped in and said, "you've gone too far" has AT&T ever lost control. And even then, it usually regrouped and found a way around the regulations or court orders.

But in the case of the iPhone, AT&T has now lost a significant monopoly simply because it was poorly managed. And it was not a monopoly it could not afford to lose unless it is willing to be simply a common carrier, which its executives have frequently said they will not be.

Verizon too, is the loser. AT&T allowed the iPhone to become so big that Verizon was forced to agree to the terms Apple original insisted upon. It now is only left with one option, to embrace the iPhone and try to compete simply by providing the best "dumb pipe" service.

The success of the iPhone has also opened the door to the less threatening, but still threatening Android phone. Unlike the iPhone, the Android allows carriers to impose themselves between Google and the customer by "customizing" the operating system, but it also opens up a world of choices and services that the telecoms originally hoped customers would not have.

Theoretically, the 1984 Federal court order broke up AT&T and ended its monopoly control over American phone users. But in the long run, Steve Jobs famous 1984 release of the Macintosh, which introduced a new way of computers interacting with people, was equally important. Interface advances in the Macintosh paved the way for the iPhone.

Because the truth is: AT&T's monopoly didn't really end until the iPhone shattered it.

FREEDOM AT LAST!

2011-01-12T13:16:00.001-08:00

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Ready for Tomorrow's Verizon iPhone Announcement

2011-01-10T18:08:00.000-08:00

Just finished reading Tim Wu's "The Master Switch." It really shows the evil that is AT&T, with tons of historical perspective. It is a must read for anyone interested in Telecom issues.

Tomorrow is predicted to be the announcement of the iPhone's arrival on Verizon. In keeping with "The Master Switch" subject, if it finally happens, and it looks like it will, this is a huge blow to AT&T. It will represent the first time in history that AT&T has lost a monopoly without a court order forcing them to do so. It isn't quite the beginning of the end for AT&T, but it is a huge set back for them.

What the heck, yeah, it is the beginning of the end for AT&T.

I'll be commenting more once I find out the particulars tomorrow. In the meantime, be sure to check out this book:

AT&T Loses the Future: And That's a Good Thing

2010-12-04T22:58:00.000-08:00

A security analyst says that it's not all bad news for AT&T once Verizon gets the iPhone. After all, there might be a short term gain (because AT&T won't have to subsidize iPhone purchases). Of course, long term, it would be really bad.

Would a Verizon iPhone Help AT&T?

That's par for the course at AT&T where they always think about short term profits rather than long term viability. The analyst also predicts there won't be a massive loss in current iPhone subscribers. Something I believe will quickly prove to be completely wrong.

Is Cell Phone Data Really Like Water?

2010-11-16T01:49:00.000-08:00

Dick Lynch, Verizon's chief technology officer, was one of the first to try to say that cell phone customers should be billed according to usage, "just like water and power companies." AT&T quickly took up the message and ran with it, and now currently charges for data "like water." Meanwhile, Verizon sits on the sidelines letting AT&T try this new experiment in pissing customers off. As I've said before, data is not like water, and it's stupid and misleading to try to charge for it in that way. Which is why no other major companies have followed AT&T off this cliff so far. (They're offering a low budget tier, but so far none are charging like AT&T per gigabyte.)

But here's an interesting article that talks about cell phone uses, and how big companies can rip people off by supposedly "providing water" service:

What if Cell Phone Data Was Like Water?

AT&T's Good News / Bad News

2010-10-23T17:34:00.000-07:00

When is good news for AT&T also bad news? When they finally start to catch up to Verizon, but it's all because of Apple's iPhone:

Verizon Draws Even With AT&T

AT&T should be jumping with joy; they are finally catching up to Verizon in the number of cell phone subscribers. The problem is, almost all of AT&T's sales growth for the last few years has been thanks to Apple's iPhone. And AT&T is about to lose iPhone exclusivity, after spending years doing everything it can to piss off iPhone users.

Verizon's less that thrilling summer shows that the Droid has been almost a total bust as a competitor for the iPhone. And that's not good news for AT&T, because it means they are more dependent than ever on Apple. Moreover, it means it's clearly critical that Verizon makes a deal with Apple to get the iPhone, and Apple will be able to demand the best terms. Not good news for either company.

AT&T iPhone Customers Want Verizon

2010-09-21T08:17:00.000-07:00

Almost one in four AT&T iPhone customers would switch to Verizon, sight unseen, if they had the chance according to a new survey.

A Million AT&T Subscribers Want to Switch

I wonder how many people driving Fords would say they will switch to Chevy when they buy their next car? Or how many people watching a Sony TV would say they want a Panasonic instead? People are generally resistant to change unless necessary, and also instinctively loyal to whatever they already have even if there are better things in the world. So AT&T has to be actively pissing off people for them to want to switch.

Just saying…

The End of Phone Service?

2010-09-12T10:47:00.000-07:00

The far reaching implications of Apple's FaceTime are just starting to become clear. Fortune writes about how many FaceTime capable devices Apple will release in the next two quarters:

50 Million FaceTime Devices

That number could double instantly if Apple makes FaceTime available through iChat on all it's camera equipped computers and laptops. Being an open platform, that could then expand to hundreds of millions if Windows versions come out. No reason they shouldn't. And why shouldn't an Android app follow?

So basically, what we're talking about is the end of traditional phone service. Hmm… AT&T, time to rethink tiered pricing?

Will FaceTime Destroy AT&T?

2010-09-03T14:56:00.000-07:00

Here's an excellent piece by Mark Reschke on Steve Jobs' recent presentation and what it could mean for Apple's relationship with AT&T:

iPod Touch is an iPhone Without a Contract

I think Reschke is right that AT&T's move to tiered pricing pissed Steve Jobs off enough that he is now actively plotting against it. FaceTime could be the ultimate weapon to break teleco's hold on American communication services.

Others have dismissed FaceTime as little more than a new way to Sext. But sex is a big motivator, especially with young people. If they start using FaceTime initially to hook up, they might give up traditional phone calls for good.

Virgin Mobile Explodes Death Star (That is, AT&T's Tiered Pricing)

2010-08-24T21:04:00.000-07:00

It's been a while since I've posted. Partially because I've been busy with my book, but mostly, frankly, because news in the mobile world has been pretty grim. AT&T switched to tiered pricing, kicking already beaten dogs (its iPhone customers). Meanwhile, Apple shows no signs of kicking AT&T to the pavement and opening up the iPhone. And finally, Google completely turned traitor and joined with Verizon to try to get rid of the internet and replace it with the paynet. Frankly, I got a little depressed.

But here's some very good news:

Virgin Mobile Offers Unlimited Broadband Data

Now, I don't use Virgin's service and am not sure I will (at least right now), but it's great to see that one teleco (thanks Sprint) cares more about servicing customers than plotting against them. And for a lot of people (iPad users?) this deal might make a hell of a lot of sense.

What's even more great about it is that it proves AT&T's PR doublespeak for ripping off customers is totally false. Telcoms don't have to go to tiered pricing because of greedy "data" hogs. If that's the case, Virgin couldn't offer this deal. The facts are that most people buy data plans for more data than they regularly use, but like having steady, dependable fixed billing. So most of the people that buy into this Virgin deal will probably use no more data than they would have under a tiered pricing deal. And they'll probably end up paying a little more per-month on average for no contract, but they don't have worry about suddenly being presented with a huge bill they can't pay, just because they had a good month. And they don't have to worry about being locked into a two year deal. Freedom has a price, and it's almost always worth paying it.

This wasn't the way things were supposed to go for AT&T. All the other telcoms were supposed to jump on tiered pricing so customers wouldn't have a choice. Thanks Virgin/Sprint for showing that there is still some real business competition in America for mobile customers! Maybe the evil empire won't win.

AT&T's Bet Against the Future

2010-07-19T16:43:00.000-07:00

Fred Vogelstein has an interesting piece in Wired about AT&T's uncomfortable relationship with Apple and the origins of the now widely used shorthand "#attfail":

Wired: Inside the iPhone Network Meltdown

It's got some interesting insights, particularly how pissed off Steve Jobs was about idiot boy Ralph de la Vega promising tethering was coming "soon" before a deal had been worked out with Apple on pricing.

But it misses a big point. It buys into the idea that AT&T was "shocked, shocked, shocked" that customers actually consumed a lot of data on their iPhones and simply couldn't keep up with demand. It details that AT&T wanted to ramp down certain iPhone features, like tethering and video, in order to help it keep up with data needs.

But this is bullshit. Vogelstein, probably trying to be balanced, buys into AT&T's lies about it's data problems. Any idiot could have seen the iPhone was going to use a lot of data. The biggest problem for AT&T is not handling data (though it clearly doesn't want to pay for the infrastructure necessary for quality service), but that it wanted to suppress features so customers continued to buy wi-fi and also to give it time to force in a tiered pricing system.

As Vogelstein points out, AT&T made record profits from it's wireless division thanks to the iPhone. The proper response to data needs would be to seriously invest in infrastructure, something AT&T only reluctantly did. And if that isn't enough, a modest raise in iPhone rates could have been justified.

iPhone customers biggest complaints are about dropped calls, which are not due to data demand, and lack of signal, which also has nothing to do with the amount of data being consumed. Speed, which is also not that great on AT&T, is the real victim of data demands, but most customers are willing to wait longer to get what they want. You loose a call, you get pissed off. You can't make a call, you get pissed off. You have to wait a little longer to download your Google map, not as big a deal. Data demand has NEVER been the real issue with the iPhone. Being able to make phone calls, THAT'S an issue. If you buy a cell phone in a major city, like New York, you expect to be able to make calls on it. No one has been yelling because they can't download pirated movies fast enough.

Meanwhile, AT&T had more important goals than servicing iPhone customers desire to simply make phone calls on their $100 a month two year minimum plans. They used iPhone profits to build out their cable and wi-fi business (which the wireless business competed against). iPhone customers ended up subsidizing all those McDonalds that offer free wi-fi. (And those $19.95 initial monthly cable service deals.) If people started using their iPhones for tethering (unless there was tiered pricing or it was cost prohibitive) and for video (therefore not needing AT&T's cable offerings) the wireless business might cut into AT&T's other, less profitable enterprises.

In short, AT&T was betting from the beginning against the iPhone and a wireless all you can eat network. They want a wired network (that they can control better) and a tiered wireless network that is too expense to really use for all their customer's needs. They want people to pay two bills.

AT&T's justification for tiered pricing is that most people DON'T use much data (which of course is a lie). The problem is not that AT&T didn't realize that it needed to build a much better wireless network to service customers, the problem is that AT&T doesn't want customers to have access to a really great wireless network. They want customers money, but they don't want to provide a service good enough to cut into their other business, which is wired. Also, they don't want customers to have a lot of options, which was what the lobbying against net neutrality was all about. AT&T spend it's early iPhone years hoping it could get Google to pay it extra money for simply providing access to it's internet sites. After buying out all those little regional companies, they wanted a deal to lock up the internet forever.

AT&T (and the other US telecoms) realize that wireless is dangerous. For all the bitching about finding places for towers, and needing spectrum, the real problem is that as technology improves, it will become easier and easier for competing companies to offer competing wireless services, and easier for products like the iPhone to switch carriers. If people abandon wired networks, AT&T will not only have wasted billions in buying up old wired networks, but will have real competition.

So the problem is not that AT&T didn't anticipate the future. AT&T doesn't want the future to happen. They are like feudal Japan when it decided they didn't like guns and preferred swords. That didn't work out very well in the long run and AT&T's giant bet against wireless will turn out to be a bad move too.

More Rumors of a Verizon iPhone

2010-06-30T15:46:00.000-07:00

Here's an interesting piece by Bob Faulker discussing the most recent Verizon iPhone rumors:

Why iPhone on Verizon May No Longer Be a Rumor

Unfortunately, Faulker makes a powerful argument we may have to wait until next year for a LTE iPhone so that Apple can skip over CDMA all together. While this makes some sense in the "Apple doesn't go backwards" argument, it's hard to see why Apple can't make a lot of money off the existing CDMA market in the US (and in Korea). Why give that up, especially when Apple seems to expect it's own customers to buy new phones every couple years? (And they happily do.) For the sake of suffering AT&T customers, I hope other rumors of a Verizon iPhone in the fall come true.

Could Class Action Lawsuit Against AT&T Over Data Limits be Just the Beginning?

2010-06-24T23:14:00.000-07:00

This just in: a class action lawsuit is brewing over AT&T's decision to put sudden data caps on already sold iPads. As class action lawsuits go, this one is a no brainer. AT&T is bound to settle or lose:

Class Action Lawsuit Against AT&T and Apple Over Data Limits on iPad

This is just the beginning of problems for AT&T over it's greedy and irrational desire to force tiered pricing on unwilling customers. The specifics here, that customers were promised unlimited data for iPads, and then suddenly found out they can't have it as promised, are pretty straight forward. Customers bought iPad's based on those promises, and then AT&T decided to change the rules with little notice (or reason) and rip them off. End of lawsuit, AT&T pays.

The problem for AT&T is once a class action lawsuit gets started, there is no telling where it will go. Hopefully, where this one will go is to question the entire economic logic behind tiered pricing. I suspect, once we see the e-mails between AT&T execs over their real reasons for capping data, and find out the real stats on iPhone and iPad usage, we'll quickly find out AT&T has been lying through it's teeth about wanting to "lower" prices for customers. We'll find out that the whole tiered pricing scheme was, as everyone knows, simply an effort to gouge customers who have no choice to switch carriers.

Maybe the settlement will also force Apple to dump it's exclusivity deal with AT&T. We can only hope.

Sick of AT&T on You iPhone? Now is the Time to Jailbreak.

2010-06-24T01:51:00.000-07:00

So Apple announced the iPhone 4.0 to much acclaim, except for the big disappointment, we're still stuck with AT&T. Rumors, and all logic, say that at least Verizon will be added as a carrier in the fall, but what can an AT&T hater do in the meantime? Well, now is probably a good time to seriously consider jailbreaking your 3.0 iPhone and switching to T-Mobile in protest.

JAILBREAK YOUR 3G IPHONE AND SWITCH TO T-MOBILE

The logic works like this. You hate AT&T. You've put up with their crap for years. You almost are considering abandoning Apple and switching to Android. But don't give up yet. Surely the iPhone 4.0 will come to other carriers, eventually…

But if you buy a new iPhone 4.0, in order to use it, you'll be stuck with a new two year contract with AT&T. Don't do it! Better to jailbreak your old phone and have some fun with a new carrier (and get free tethering!). Then when the iPhone 4.0 is finally available for other carriers, you'll have some real choice at last without having to pay to get out of your AT&T contract.

EXCLUSIVE: Interview With a Mythical AT&T "Data Hog"

2010-06-06T22:15:00.001-07:00

According to the mainstream press, evil "data hogs" have been ruining AT&T's iPhone service for everyone. Because of them, AT&T claims it was forced to initiate a tiered pricing plan that supposedly will make everyone happy except those evil data hogs.

For example, the New York Times states: "The trouble for AT&T was that a fraction of users-fewer than 2 percent-made such heavy use of the network that they slowed it down for everyone else." The Times doesn't state where it came up with that number, presumably AT&T. In the same piece, telecommunications industry analyst, Roger Entner, says: "The free lunch for the ultra-heavy data user has been taken off the menu." In the Los Angeles Times, Jack Plunkett, another analyst states: "There are a handful of subscribers that are using a ton of bandwidth…" No facts or figures are independently confirmed or researched by either paper, which seems odd since there would seem to be some big logic holes in this "data hog" story. (For example, all of AT&T's iPhone contracts have a data cap of 5 gigs which isn't a lot for supposedly "unlimited" plans.) Thanks for keeping your readers informed, leaders of the fourth estate!

While AT&T Critic doesn't have access to the same crack reporting staffs that are able to reword AT&T press releases, repeat corporate dogma without question and quote paid industry analysts without any fact checking, we do have this EXCLUSIVE interview with one of those elusive DATA HOGS.

AT&T Critic: "Hello, so you are a real life iPhone data hog?"

Data Hog: "Yes. I'm a data hog. Oink. Oink."

AT&T Critic: "I have to say, I didn't really believe you existed. I thought you were just a mythical corporate scapegoat invented to justify a complicated tiered pricing scheme aimed at ripping off all customers."

Data Hog: "No, no, I really exist, I suck up lots and lots of data and ruin things for everyone."

AT&T Critic: "But AT&T widely advertised that it was offering "unlimited" data access for iPhone customers. Why are you such a bad person because you take full advantage of a service they promoted that you paid for under a minimum two year contract?"

Data Hog: "Because I hog so much data."

AT&T Critic: "AT&T says that 98% of smart phone customers use less that 2 gigs of data and even claims that 65% use less that 200 megs. These are very low amounts of supposedly unlimited data. So isn't the real story that most smart phone customers aren't using their phones that much and AT&T has been racking in profits on people who are paying for services they barely use?"

Data Hog: "No, no, that's not the story, the story is that data hogs are ruining things."

AT&T Critic: "But how could AT&T not assume in advance that some small percentage of people might use data more than others? Where is the surprise in that? After all, it actually seems pretty amazing that only 2 percent of people are using more than 2 gigs. How could AT&T have not planned on some tiny percentage of people taking them up on their widely advertised offer of unlimited data? Why should that be such a problem?"

Data Hog: "Because I'm such a hog. I'm ruining it for everyone else."

AT&T Critic: "That makes absolutely no sense. Cable companies don't get upset when people watch more TV. 24 hour fitness centers don't get upset when people work out a lot. It would seem that you're one of AT&T's best customers. Why should you be vilified?"

Data Hog: "Because… I'm evil? Oink?"

AT&T Critic: "In addition to paying $30 a month for the right to use "unlimited" data, you also have to pay above average fees for having an iPhone. I still don't understand what you've done wrong. I assume if you're such a heavy data user, you probably do a lot of texting, which AT&T has the highest rates for, and therefore they get extra money from that. Not to mention you probably use your phone a lot and pay for unlimited minutes. If you use so much data, perhaps you're a customer of AT&T's internet service, second lines and land lines. AT&T offers mapping and family tracking services for extra fees… surely you're a customer with above average phone bills all around. AT&T must be making a ton of money off you already."

Data Hog: "No, no, I don't do any of that. I don't text, use the phone, or anything. I just hog data."

AT&T Critic: "Even if you personally are not using a lot of AT&T's expensive services, a large percentage of other supposed "data hogs" probably represent AT&T's most valuable business customers. So, what exactly are you doing with all this data you're hogging?"

Data Hog: "Oh, I'm just hogging it. Lots of it. Lot's of data. I'm a data hog."

AT&T Critic: "But what EXACTLY is the data? What is it you're down loading all the time?"

Data Hog: (Long pause.) "Umm… porn."

AT&T Critic: "Porn? Why are you downloading porn on your iPhone? But why not use your computer if you want that much porn? I mean, wouldn't it be faster? In fact, if you're doing a lot of data hogging, why not use faster services like wi-fi, many that are free? Why would you use your iPhone to download lots of data? It doesn't make any sense."

Data Hog: "Because… I'm evil?"

AT&T Critic: "Well, okay, but exactly how much data are you hogging?"

Data Hog: "Oh, tons and tons. All porn."

AT&T Critic: "AT&T already has a 5 gig per month limit on iPhones. So if you went over that, why didn't AT&T cut off your service or bill you extra?"

Data Hog: "I don't know…"

AT&T Critic: "I mean, if data hogs are a problem, isn't it AT&T's fault for not enforcing it's contractual 5 gig limit? If congestion was really all because 2 percent of customers who were violating their contracts, why didn't AT&T cut them off or charge them extra? Why change the rates for everyone because AT&T didn't follow it's own rules? Are you saying that AT&T's service problems were all AT&T's fault for not enforcing their own limits in the first place?"

Data Hog: "Umm… maybe I was just under 5 gigs."

AT&T Critic: "So data hogs are really a tiny 2 percent of iPhone customers who went over 2 gigs (which is about two feature films a month) and less than 5 gigs using a service advertised as "unlimited?" Anyone watching You Tube on a two hour daily train commute could use 5 gigs a month easily. Why should these people be condemned as data hogs and have their rates doubled? And why should everyone else have to worry about their phone bills suddenly spiking, when they had been using well under the iPhone's contractual capacity? Isn't the real story here that people have not been using much data on their iPhones, so AT&T is lowering it's data limits to bill everyone more? Wouldn't a better justification of raising rates be that everyone was using lots of data, not just a few data hogs? Wouldn't the real way of solving this imaginary "data hog" problem just be to enforce the original contracts 5 gig limit or lower it to 4 gigs if necessary? That is, unless AT&T is lying about data hogs being a problem, and simply wants to raise rates on everyone."

Data Hog: "Oink… oink, did I mention I hog data?"

AT&T Critic: "Isn't the truth that you are not a mythical data hog at all. You're just Randall Stephenson wearing a fake pig nose?"

Data Hog: "No comment."

AT&T's War on the Internet

2010-06-05T04:23:00.001-07:00

There's lot of commentary out there about AT&T's latest move to punish people for using the internet. Jeff Jarvis at BuzzMachine correctly points out in this post that what AT&T is doing is just plain evil:

BuzzMachine Gets It Right

John Gruber at Daring Fireball takes a good news/bad news approach. He's right about all the bad news, but wrong about the supposed "good."

Daring Fireball Gets it Wrong

On the bad side, as Gruber points out, yes, the tethering deal sucks, the overage charges for the lower priced tier are criminal, and changing the pricing structure on the iPad so quickly after it was released shows AT&T's contempt for its customers.

On the "good" side, Gruber is flat out wrong. First off, $25 for 2 gigabytes is not a price cut. AT&T is offering less for less. A lot less for a little less. iPhone customers originally were paying $30 for "unlimited" access (which was actually capped at 5 gigabytes so it never was unlimited). In order to get 5 gigabytes in the future, AT&T customers will now have to pay $55 almost double the previous rate. Like most iPhone customers, John may not have been using over 2 gigabytes, but it doesn't take much imagination to realize that the more people come to depend on their iPhones, and the more cool apps that come out, the more data they will need. How many people used the internet for much more than e-mail for the first few years it was around? The iPhone is still in it's infancy and this move by AT&T is an attempt to strangle it, and the iPad.

Charging $10 per gig isn't a good deal just because Verizon charges more. I can buy a new hard drive for less than $1 a gig. A real, physical hard drive. AT&T is charging for electrons passing through an existing network. John says, "If you use more, you pay more. Why is this hard to understand?"

Well, what if your cable company suddenly decided to charge you for how many hours of television you watched? It's not hard to understand that that would take a lot of the fun out of watching television. That that would represent a serious cut in service, regardless of whether you watched a lot of television. It's not hard to understand that providing 24 hour unlimited access to the service you paid for doesn't cost more than pennies, and that charging by the hour (or by the gigabyte) is simply a method of ripping people off. It also isn't hard to understand that once such a rate structure is crammed down the throat of customers with no other options, rates will likely increase.

What's hard to understand is why AT&T should be allowed to use the public airways to change the basic business model of the internet to the detriment of everyone but AT&T. Flat rates for service has been enormously successful in encouraging innovation and free content creation on the internet. For AT&T to use it's market share (gained by providing flat rates for unlimited service for 4 years) to unilaterally change the rules on what is now a critical communication and educational service is not acceptable. For AT&T to expect to be paid per bit for content created by others and services provided by others is wrong.

One of the great things about the internet is, up till now, if a child asks where Madagascar is, it can be looked up on the internet without any concern as to whether it will cost more. AT&T wants to change that equation. It wants people to be worried about how much they data they consume, not because it actually costs more, but simply to make additional profits. "Okay, dear, you can google Madagascar, but don't watch any videos about it! We can't afford it."

Gruber also seems to think that $14.95 for 200 megs is a "great" starting price buying into AT&T's bullshit that most smart phone customers use less than that. He correctly guesses that AT&T is deliberately trying to confuse things by saying "smart phone" rather than "iPhone." But Gruber still thinks a lot of iPhone users will find this a deal. Well, they won't. The average iPhone users uses 270 megs, and the average person's usage grows every year. So the entry level price won't work for all but a few iPhone users, and odds even they will bump over the limit and into AT&T's excessive overage fees.

Gruber also fails to note that AT&T is lowering the starting rate from 250 megs to 200 megs on the iPhone. Where's the discount there? By cutting one fifth of customers monthly allowance, it's clear AT&T is not serious about providing a low cost option. The $25 deal is really the only option for anyone who actually plans to use an iPhone. $14.95 simply functions as a misleading price point. (And if we are to assume that these electrical bits have some actual cost associated with them, why does it cost over half as much money for a tenth as many bits? Why not simply a 1gig $14.95 option and a 2gig $25 option?)

The bottom line is: AT&T has been profiting enormously by providing unlimited (5gigs) data service on iPhones for $30. Now everyone will be paying $25 for half of what they were getting before, just as new iPhones and iPad are coming out that will likely consume a great deal more data.

Gruber may not be concerned about his iPhone usage because he also pays for an home internet connection. That's great if you're making enough money to have the option of paying for two separate ways to access the same service. One of AT&T's goals is clearly to keep customers viewing smart phones as a secondary way to access the internet, and thus protect it's land line business. While that may be nice for AT&T, to charge extra for one service to force you to buy another, it's not good for customers or frankly… America.

It's a huge rip off, and one that people need to actively fight. Customers should refuse to patronize AT&T, and Congress and the FCC should demand AT&T change it's policies. America has the worst, most expensive, and slowest internet service of any modern nation. AT&T's new plans encourage it to continue to provide lousy service at high prices. And that is too high a price to pay.

Further Proof AT&T Hates Its Customers

2010-06-04T22:08:00.000-07:00

It doesn't take a psychology degree to figure out that AT&T CEO Randall Stephenson is a jerk. The way he runs his company is enough of a clue. But you'd think someone, somewhere in the company might gently encourage him into not going out of his way to look like an asshole. But I guess not:

AT&T Threatens Customer Who Dares to E-Mail CEO

AT&T Tries to Sell Tiered Pricing But Nobody Buys It

2010-06-03T21:25:00.000-07:00

I don't really know a lot about the web-news site Business Insider, but I'm pretty sure it's just a corporate love doll. I could be wrong but I think it's just something corporations jump on and fill with their… well, you get the idea. Here's their recent post about AT&T's new tiered pricing strategy. No surprise, but the plastic human likes it.

AT&T Doesn't Hate It's Customers, It Loves Them Real Good

AT&T flacks are working overtime to sell their bosses incredibly bad move to the public, but it ain't working, love dolls aside. Here's a better take with some actual reporting:

AT&T Backlash

My favorite quote is:

"AT&T makes billions of dollars and instead of bettering their network so it can keep up with demand they'd rather screw the consumer."

Yep.

PS: Note to AT&T execs. Love dolls aside, guys, this ain't going to fly.

EXCLUSIVE: Interview With a Mythical AT&T "Data Hog"

2010-06-03T04:03:00.001-07:00

For example, the New York Times states: "The trouble for AT&T was that a fraction of users-fewer than 2 percent-made such heavy use of the network that they slowed it down for everyone else." The Times doesn't state where it came up with that number, presumably AT&T. In the same piece, telecommunications industry analyst, Roger Entner, says: "The free lunch for the ultra-heavy data user has been taken off the menu." In the Los Angeles Times, Jack Plunkett, another analyst states: "There are a handful of subscribers that are using a ton of bandwidth…" No facts or figures are independently confirmed or researched by either paper, which seems odd since there would seem to be some big logic holes in this "data hog" story. (For example, the fact that all of AT&T's iPhone contracts have a data cap of 5gigs, which is not a heck of a lot for an advertised "unlimited" service.) Thanks for keeping your readers informed, leaders of the fourth estate!

AT&T Critic: "Hello, so you are a real life iPhone data hog?"

Data Hog: "Yes. I'm a data hog. Oink. Oink."

Data Hog: "No, no, I really exist, I suck up lots and lots of data and ruin things for everyone."

Data Hog: "Because I hog so much data."

AT&T Critic: "AT&T says that 98% of smart phone customers use less that 2gigs of data and even claims that 65% use less that 200 megs. These are very low amounts of supposedly unlimited data. So isn't the real story that most smart phone customers aren't using their phones that much and AT&T has been racking in profits on people who are paying for services they barely use?"

Data Hog: "No, no, that's not the story, the story is that data hogs are ruining things."

AT&T Critic: "But how could AT&T not assume in advance that some small percentage of people might use data more than others? Where is the surprise in that? After all, it actually seems pretty amazing that only 2 percent of people are using more than 2gigs. How could AT&T have not planned on some tiny percentage of people taking them up on their widely advertised offer of unlimited data? Why should that be such a problem?"

Data Hog: "Because I'm such a hog, I'm ruining it for everyone else."

Data Hog: "Because… I'm evil? Oink?"

AT&T Critic: "In addition to paying $30 a month for the right to use "unlimited" data, you also have to pay above average fees for having an iPhone. I still don't understand what you've done wrong. I assume if you're such a heavy data user, you probably do a lot of texting, which AT&T has the highest rates for, and therefore they get extra money from that. Not to mention you probably use your phone a lot and pay for unlimited minutes, and if you use so much data, perhaps your a customer of AT&T's internet service, second lines and business services. AT&T offers mapping and family tracking services for extra fees… surely you're a customer with above average phone bill all around. A customer that should be valued, not attacked."

Data Hog: "No, no, I don't do any of that. I don't text, use the phone, or anything. I just hog data."

AT&T Critic: "So, what exactly are you doing with all this data you're hogging?"

Data Hog: "Oh, I'm just hogging it. Lots of it. Lot's of data. I'm a data hog."

AT&T Critic: "But what EXACTLY is the data? What is it you're down loading that is so bad?"

Data Hog: (Long pause.) "Umm… porn."

Data Hog: "Because… I'm evil?"

AT&T Critic: "Well, okay, but exactly how much data are you hogging?"

Data Hog: "Oh, tons and tons. All porn."

AT&T Critic: "AT&T already has a 5 gig per month limit on iPhones. So if you went over that, why didn't AT&T cut off your service or bill you?"

Data Hog: "I don't know…"

AT&T Critic: "I mean, if data hogs are a problem, isn't it AT&T's fault for not enforcing it's contractual 5 gig limit? If congestion was really all because 2 percent of customers who were violating their contracts, why didn't AT&T cut them off or charge them extra? Why change the rules for everyone because AT&T didn't follow it's own rules? Are you saying that AT&T's service problems where all AT&T's fault for not enforcing their own limits in the first place?"

Data Hog: "Umm… maybe I was just under 5gigs."

AT&T Critic: "So data hogs are really a tiny 2 percent of iPhone customers who went over 2gigs (which is about two feature films a month) and less than 5gigs using a service advertised at "unlimited?" Anyone watching You Tube on a two hour daily train commute could use 5 gigs easily. Why should these people be condemned as data hogs and have their rates doubled? And why should everyone else have to worry about their phone bills suddenly spiking, when they had been using well under the iPhone's contractual capacity? Isn't the real story here that people have not been using that much data on their iPhones, so AT&T is lowering it's data limits to bill everyone more? Wouldn't a better justification of raising rates be that everyone was using lots of data, not just a few data hogs? Wouldn't the real way of solving this imaginary "data hog" problem just be to enforce the original contracts 5 gig limit or slightly lower it to 4gigs? That is, unless AT&T is lying about data hogs being a problem, and simply wants to raise rates on everyone."

Data Hog: "Oink… oink, did I mention I hog data?"

AT&T Critic: "Isn't the truth that you are not a mythical data hog at all. You're simply Randall Stephenson wearing a fake pig nose?"

Data Hog: "No comment."

AT&T's Latest F**k You to iPhone Customers

2010-06-02T22:13:00.001-07:00

So, with a Sprint iPhone almost surely on the way, the dunderheads running AT&T decided to double down on stupidity. In a pre-"we lost out exclusivity on the iPhone" emotional outburst, they decided to finally enact customer despised tiered pricing for cell phone data. Here's a few major news reports (all with helpful AT&T spin).

NY Times

LA Times

San Francisco Chronicle

Mercury News

Detroit Free Press

AT&T execs have been saying for some time that tiered pricing was inevitable despite any logical reason for it. My imaginary source at Apple tells me that Apple's original exclusive deal with AT&T required fixed pricing but with the Sprint iPhone (supposedly) on the way, AT&T is free to go off on a drunken binge and beat on its best customers.

All of this press, filled with quotes from paid AT&T "industry analysts" is about selling an unpopular war. A war by AT&T against the American public. For this to work, the other telecoms will have to get on board and collude with AT&T on a pricing scheme that makes no sense. I don't think it's going to work, but the short term greed and stupidity of the people running AT&T means they had to try it. They just had too much invested in their own lies about why this is such a good idea. Like any unpopular war, AT&T had spent years dreaming about it, preparing for it, and even though now is probably the worst time for it, they push ahead despite the suffering it will cause all involved.

The final insult in all this is that they finally gave iPhone customers tethering for $20 (something many companies offer for free). It's clear now the lies to iPhone customers about tethering "coming soon" for two years were all about stalling until AT&T could roll out tiered pricing. If AT&T had simply offered iPhone tethering for $20 two years ago, everyone would have happily accepted it and AT&T would have made a good profit on it. But the best interests of it's customers are AT&T's last consideration. How to rip off as much money as possible is foremost in it's mind. And if that means denying customers needed services until AT&T figures out how to charge them excessively, then so be it. It's almost as if AT&T can't stand making an honest buck, they have to figure out how to fuck their customers or they aren't happy.

Here's a more accurate take on what tiered pricing is really all about:

Tiered Pricing is Anti-Consumer

Why Did AT&T Execs Lie About iPad Data Consumption?

2010-05-28T12:22:00.000-07:00

I've mentioned before how weird it was that AT&T execs dismissed the strain the iPad was going to put on their cellular system. Well, what should they have said? Kind of like what these European telecom executives say in anticipation of the UK iPad release:

iPad Will Consume Tons of Data

Now, we could credit this to a better educational system in the old country, or maybe that they hire smarter executives over there. But the real issue is not the lack of intelligence of AT&T's leadership, we already know it is subpar, but why it is they are so quick to simply lie when confronted with facts they don't like.

Even clueless AT&T exec's knew the iPad would put a strain on their system, and consume tons of data, but for various reasons they wanted to downplay it. I can understand that, but what I can't understand is how executives of a major telecom in this day and age think they can get away with lying to the public over matters they will quickly be proven to be wrong on. There's something very dysfunctional in that thinking and it seems to be a pattern in AT&T's entire operation. Lying to people that they are getting a rate cut, when in fact it's a rate increase, lying that a service contract is a good deal, when it's a bad one. Saying dropped calls are a design flaw in the iPhone. Saying they're going to come out with tethering when they have no intention to. This feels like an institutional problem, and they are going to be stunned at how quickly iPhone customer's flee for another carrier the moment they have a chance. Habitual liars are the last to know when people are fed up with their lies.

Now, of course, the European execs quoted aren't beyond distorting the truth. They say increased iPad traffic will speed up the switch to tiered pricing, something that they say is inevitable (it isn't). But at least they are consistent, AT&T execs desperately hunger for the scam of tiered pricing (the better to confuse and rip off it's customers) but they fumbled with the iPad like a liar who has told so many untruths they can't figure out what to say when confronted with the fact that nothing they are saying makes sense.

If tiered pricing is necessary for the "survival" of telecoms, the iPad is a device that absolutely would require it. AT&T execs should have said exactly what the European ones did. The iPad is going to demand a lot of data, and to "survive" we'll have to charge extra for it.

But tiered pricing is not enviable, and in fact makes no technological or business sense except as a way to inflate customer bills for short term profits. (Long term, it's better for customers to have access to limitedness data. The internet has already proven that time and time again.) Ironically, the fumbling of AT&T execs over the launch of the iPad may have killed any chance AT&T has of pushing through tiered pricing. It may be too late to put that horse back in the barn. And we can thank AT&T's knee jerk dishonesty for exposing that.

More on Sprint iPhone Rumors

2010-05-26T00:44:00.000-07:00

The rumors of a Sprint iPhone continue despite the lack of any real confirmation:

Welcome Sprint iPhone

Barron's Apple/Sprint Deal?

Mobile Sprint Rumored

There is no "news" here, and no new here either. We simply have the repetition of a rumor which happens a lot about anything involving new Apple products. These things come and go quickly in the Apple gossip world. But something about this particular rumor is keeping it alive despite any new facts.

The thing is, it just makes a hell of a lot of sense. We've been waiting for some time to see what Apple's move is going to be in regard to dumping it's exclusive deal with AT&T. If it isn't true, then, boy, there was a missed opportunity. One thing that I don't think anyone considered until now was the huge value of free publicity Sprint would get (and which it needs) if it was the first carrier to have a non-AT&T iPhone. The publicity is worth millions already.

In fact, the publicity is so good, it's possible someone involved in Sprint might be behind the leak. Got no proof of that either, but it's interesting to think about. I'm still digging an I'll keep you posted.

Sprint iPhone: Why Apple Picked Sprint Over Verizon and Why AT&T is Crying

2010-05-25T14:23:00.001-07:00

The internet is still buzzing about the news of a possible Sprint iPhone. Of course, the "news" is simply a completely untraceable and unverifiable rumor. So it's pretty irresponsible journalism to even treat this like a real story, let alone to devote any print to commenting on something that could turn out to be nothing.

But I'm not a responsible journalist, so fuck it. This is too juicy and fun to think about.

So lets just pretend that it's true. Let's say there really is a Sprint iPhone and it's going to be released next week. Better yet, let's say that not only did Apple make a deal with Sprint to provide service for the iPhone, but that it DIDN'T make a deal with Verizon, yet. Wow, that is news! (Or it would be, if it turns out to be true.)

So let's jump to the post (possibly imaginary) Sprint iPhone announcement commentary and analysis.

What a fuck you to Verizon! What a bitch slap to AT&T! Apple really is showing the telecom world who's it's daddy.

Everyone (especially anyone with an iPhone) knows that AT&T service seriously sucks, so it was just a question of time before Apple opened the iPhone up to other carriers. Remember, to a large extent, Apple originally made it's deal with AT&T exactly because they were bunglers. It was a second tier company that desperately needed a hot product. Verizon was the top company, and it was luke warm about the iPhone, and unwilling to make a deal on Apple's terms. Now, of course, the iPhone's enormous success lined the pockets of AT&T and gave it huge profits for several years and made it a strong number two.

Verizon is still the number one cell carrier in terms of market share, but it's profits have been in the toilet and not having the iPhone is the main reason. Clearly, Verizon needs to make a deal. At this point Apple can demand and get better terms. But how much better? Also, if Apple does make a deal with Verizon, it's possible that once Verizon sucks in some of that iPhone cash, it could look for ways to stab Apple in the back. Clearly these companies don't have a lot of love for each other and neither Verizon or AT&T are happy about how much they need Apple.

Enter Sprint. Sprint is the number three company and in serious trouble. It desperately needs to make a big move. And Sprint made it. It bet the farm on a 4g network and rolled it out well ahead of Verizon and AT&T. But what to put on that network? Is it possible Sprint made this bet knowing that it would get the iPhone once the network was ready?

Well, I don't have any inside information or sources. So let's just pretend I do. My inside source at Apple says that Sprint and Apple have been in deep secret discussions about this all along, and Apple knew it would come out with a Sprint enabled CDMA iPhone in June. Apple threw AT&T a bone by giving it an exclusive window on the iPad. (According to my imaginary source, a CDMA iPad will come out in time for Christmas.)

Which brings us back to Verizon. One of the key reasons Apple hasn't had a Verizon iPhone is that the iPhone chipset is GSM rather than CDMA. Since most of the world is GSM, it made a lot of sense for Apple to focus on that market first. It was a brilliant move. But if Apple comes out with a CDMA iPhone for the US market why not give it to BOTH Verizon and Sprint?

That's were the fuck you to Verizon comes in. My imaginary sources at Apple say Steve Jobs is still pissed off that Verizon has tried to play hardball in negotiations for so long, and, he's still pissed off at AT&T for just sucking up iPhone profits and not reinvesting in a better network (Which the iPad in particular needs). So making deal that allows Sprint first crack at the new iPhone is great revenge. Moreover, propping up the third place telecom makes sure there will be plenty of competition in carriers in the foreseeable future which is very good for Apple.

This is bad news for both Verizon and AT&T. Those companies would prefer if the cell phone business was an Oligarchy with only two top bosses. A resurgent Sprint is not in either of their best interests. If Apple had come out with only a Verizon iPhone, or even let Sprint and Verizon have them at the same time, Verizon could continue to use it's size to take away market share and hopefully Sprint would fade away.

But the publicity of being the first non-AT&T iPhone is worth millions in advertising for Sprint, much more than for Verizon. It really makes Sprint a major player again. And what can Verizon do if Apple says it can't have the iPhone until months later? Nothing. Absolutely nothing.

Talk about playing hardball. But that's the way Apple rolls. Let's be realistic, these telecoms have been ripping off customers for a long time, fighting technology and fighting the future. Well, the future just landed on top of them.

We'll find out next week if any of this is real, but boy, I sure hope so! I'm looking forward to my Sprint iPhone and put a Sprint iPad on my Christmas list!

UPDATE: Here's a piece predicting a Verizon iPhone won't come in June, but saying nothing about a Sprint iPhone.

No Verizon iPhone at WWDC

Best Buy to Sell Sprint iPhone? Goodbye AT&T!

2010-05-24T18:52:00.000-07:00

So this is just a rumor, but it's one I really believe. An anonymous Best Buy employee says that Sprint will be offering an iPhone for it's service this June:

Best Buy to Sell Sprint iPhone?

This is just weeks away! Now, why do I believe this, since there isn't really any proof? Well, first off, Apple absolutely needs to open the iPhone up to other carriers, and soon. The Android is finally getting some traction, and the hatred of AT&T by iPhone users has gotten to a point where Apple is starting to look bad by sticking with them.

Also, Sprint has been running ads already touting how iPhone users (and iPad users) can use their wireless hotspot to connect to the internet faster than AT&T's 3g network.

Finally, Sprint has the only up and running 4g network (AT&T decided to wait on upgrading, the better to line the pockets of it's executives in short term bonuses). Sprint actually makes a better choice for Apple than Verizon. Verizon, because it's the biggest carrier, has been more demanding of terms for any deal with Apple. And Apple is a company that doesn't like to get pushed around.

Finally, Sprint really needs the iPhone. The company bet the farm on 4g, and it had to be working hard behind the scenes to get the iPhone. It didn't run those iPhone ads without checking in with Steve, I'm sure.

So how long will it take Uncle Bell to dump AT&T once Sprint offers up a 4g iPhone?

Faster than you can said: buh-bye!

AT&T's Doesn't Get it: Part 2,871

2010-05-21T17:50:00.000-07:00

AT&T's shortsightedness and greed reached a new height… scratch that…

AT&T's shortsightedness and greed unpredictably… scratch that…

As usual, AT&T's shortsightedness and greed are evidence in it's latest attempt to piss of it's most important customers to make a quick buck:

In Advance of New iPhone, AT&T Raises Rates to Buy One

So you're a loyal AT&T iPhone customer. Want to buy the new one? Pay extra. Want to buy a crappy non-smart phone no one wants, play a little less.

Unbelievable. No… scratch that.

Typical.

AT&T Finally Learns to Stop Hating and Love the iPad. Or Does It?

2010-05-19T15:08:00.001-07:00

AT&T executives are finally backpedaling (a little) from damning the iPad with faint praise. Today, at the JPMorgan tech conference, Ralph de la Vega, CEO of AT&T Wireless, gushed about the iPad. He said that it had "changed the way he worked."

So is AT&T finally on the iPad bandwagon? Do they realize they have a once in a lifetime opportunity to be a leader in providing service to a ground breaking cloud computer? Well, no. Ralph went on to say that he personally uses his iPad on wi-fi but that "if customers want 3g, we'll give them 3g." He told a story about using the wi-fi on his flight to empty out his e-mail box with the iPad. Nothing, zilch, about him using his own AT&T wireless service, even in an emergency. (Did he buy the iPad without 3g?) Let's repeat, the guy in charge of AT&T wireless talks about how he doesn't use his own service on the most important new wireless enabled product of the year and probably decade. One that AT&T is the EXCLUSIVE service provider for. (But he is a great advertisement for wi-fi services on airplanes, which, to my knowledge, AT&T doesn't provide.)

Ah, yes, the idiocy at AT&T never ends.

I'll admit his comment is an improvement over his boss AT&T CEO Randall Stephenson's incredibly moronic prediction that the iPad was a "wi-fi" device. At least Mr. de la Vega acknowledges that "some" people might want 3g, which AT&T sells.

But it's kind of like the head of Exxon talking about how much he loves his new BMW. He prefers to sit in it in the driveway, but if "customers want to drive one around, I guess we can sell them gas." Yep, nice that car thing uses gas and it just so happens Exxon sells gas, but it sure looks good parked the driveway. Or perhaps the president of the peanut butter division of a food company saying, "I like my bread plain. But if people want to put peanut butter between two slices, well that's okay too."

The crazy thing is, that in the past AT&T execs have talked about how they want sell people data per bit (with tiered pricing) like "water." Well, the iPad needs data like a fish needs water. So why aren't AT&T execs more excited about offering service for it? Oh, right, it's one price for all the data you want. And what about those evil "data hogs" that we're ruining AT&T's iPhone service for everyone? No iPad "data hogs" on the map yet?

I've mentioned before the reasons why AT&T hates the iPad and Mr. Stephenson would have been perfectly happy if it had turned out to be a failure. But the game is up. The iPad is a massive success, and, yes, the 3g version is selling out like crazy. Time for AT&T to wake up and embrace it.

Now, I suppose when your boss says something incredibly stupid, you can't just turn around a couple months later and completely contradict him. So maybe this was just Mr. de la Vega gently back pedaling for the entire company. "Did we say no one will use 3g? What we meant was, it's okay if people want to." But would it really be so difficult to say something like: "I used mine at the airport on the 3g AT&T service, then seamlessly switched to wi-fi on the plane." Even if it isn't true, can't you be a little better of a salesman? Can't you at least throw a bone to Apple fans who can't stand that your company has exclusive rights to our technologies connections and yet acts clueless or worse? Even if your 3g service sucks, can't you say something like, "in a pinch, 3g is better than no connection."

More importantly, doesn't anyone at AT&T get what an important new tool this is? Is AT&T the ONLY company in the world that isn't working on exciting products for it? Isn't it time for AT&T to have something more to offer for it's iPad customers than 3g (if for some crazy reason they want it). Like apps, additional services, checking iPhone messages, VoIP? Or at least an announcement of them "coming soon"?

Why don't you think about that, Ralph, next time you find your e-mail box empty?

Where is AT&T's iPad Strategy? Maybe It's Time to Come Up With One

2010-05-06T20:01:00.001-07:00

So it's no surprise to Uncle Bell that the iPad is a huge success, and even less of a surprise that the 3G version is also a best seller. This despite AT&T CEO Randall Stephenson's prediction that the iPad was a "wi-fi" device. Nope. The 3G version is selling great:

3G iPad's Sell Out Fast

What's particularly interesting in the above article is that it references a survey saying that customers are particularly interested in the lowest priced 3G version, the 16g. What this says is that it's more important to customers to have connectivity than storage. So yep, the whole cloud computing thing is happening fast, and people get that the iPad is a cloud computer (unlike the iPod). It also says that the people who are standing in line and getting on waiting lists for the 3g version aren't just a bunch of rich Apple fans who are buying the most tricked out version they can. These people don't want to throw their money away, they just understand that a 3g iPad is more useful than a wi-fi version. So budget minded people are not only willing to pay $130 extra to be connected, they are willing to pay that for the chance to spend an extra $29.95 a month in service.

It's still a little early to fully eviscerate Mr. Stephenson for his incredibly moronic iPad prediction… well, no. I guess now it is time.

The announcement that the 3G version is selling out should be great news for AT&T, but it isn't, and not just because it makes Mr. Stephenson look like a boob for saying stupid things. The iPad is very bad news for AT&T as I pointed out in an earlier post, Five Reasons AT&T Fears and Hates the iPad. It could be the beginning of the end for AT&T's hold on Apple iPhone customers. As I also predicted, many people are considering the iPad to be an iPhone alternative, mostly due to their hatred of AT&T service pricing and contracts.

Of course, it doesn't have to be that way. The iPad could be a huge opportunity for AT&T to expand it's customer base and influence. The problem is it would require a major change in AT&T strategy to take advantage of what should be a competitive lead. First, AT&T would have to FIX IT'S SERVICE. Something it doesn't seem to be willing or able to do. So instead of giving AT&T a change to bring in a new range of customers, the iPad is likely to introduce a growing number of people to the cult of hating AT&T service and desperately lobbying Apple for an alternative. It would also require AT&T to give up dreams of tiered pricing, addiction to abusive long term service contracts and locked down devices. It would also require AT&T to invest in innovative services for the iPad, to lure customers to spend more than $29.95 a month. None of which AT&T's clueless leadership seems to be willing to do. After all, they think it's a "wi-fi device."

So this is what I'm predicting, AT&T will continue to have no iPad strategy, will continue to downplay it's importance because it can't understand what to do about it, and will force Apple to unlock the iPhone and give competitors a shot at the iPad. Short term, AT&T profits will be great, boosted by the success of the iPad, but the company will be suffer enormously once it has real competition for Apple customers. AT&T might not even survive once the iPhone is unlocked, since it's so dependent on iPhone profits. At minimum, what should be a huge opportunity to be a leader in servicing cloud computers will be thrown away.

So, Mr. Stephenson, time to admit you were wrong. The iPad is a mobile cloud computer that needs good 3G service. If your company doesn't provide it, another will. And meanwhile, thousands of companies are rushing to create great products to take advantage of the iPad, while you company is silent about the issue. Maybe it's time to Rethink Possible.

iPad Sucks on AT&T Service (No Surprise)

2010-05-02T05:11:00.000-07:00

Well, the 3G iPad just started shipping and, predictably, we already have our first AT&T service sucks blog story:

AT&T Blocks Video on iPad

Too early for Uncle Bell to tell if this really is an AT&T problem or a glitch or possibly Apple being overly cautious, but AT&T should have prepared for what is going to be a coming storm of criticism of it's iPad service. The comments section on the post features a lively discussion about who is to blame. Recommended reading, but I couldn't come to a firm conclusion.

I do have to reprint this one comment on the post by Jfrank:

"i worked for AT&T, all entities, as a consultant for years. They still have a utility mentality, and their decision makers are too old and too anti-deluvian to make smart consumer decisions.

As one poster said here, at least Rogers opens their pipes. Hell, in Japan, you can get 200 MBPS over your phone for $29/mo. The USA is soooooo behind-the-eight-ball when it comes to networks that it’s laughable."

Yep, couldn't have said it better myself.

iPhone 4.0 - Still Stuck with AT&T?

2010-04-20T23:24:00.000-07:00

Gizmodo's capture of a iPhone 4.0 prototype offers a lot of hints about where Apple is going with the new iPhone. Here's a quick piece from Business Week about what some of the possible new features might mean for AT&T customers:

iPhone 4.0 Features Pose Questions

The biggest news would seem to be that the new iPhone's micro-sim slot will lock Americans into AT&T for another iPhone cycle. (Since AT&T is the only carrier offering micro-SIMs at this time.) But Uncle Bell's guess is Apple has some tricks up their sleeve and the new iPhone will be offered unlocked. And there will be support from other carriers for the micro-SIM, both on the new iPhone and the iPad.

AT&T's Depends on iPhone for It's Profits and Share Price

2010-04-16T22:48:00.001-07:00

Seeking Alpha reports that 25% of AT&T's mobile revenue and 43% of it's stock value comes from it's exclusive deal on the iPhone:

It's All About the iPhone

So why does AT&T still treat iPhone customers like an abusive boyfriend? Lying to them (about tethering) stealing their money (double charging for texting) and ditching them whenever they can (spotty service)?

Meanwhile, if you live in New York City, are a cable customer, and thinking about getting an iPhone but don't want to pay AT&T a fortune for lousy service, you just got a new option:

Free Wi-Fi for New York

Get yourself and iPod Touch or iPad and some VoIP software and you're in business.

AT&T's Rethinks Possible. Possibly.

2010-04-15T00:19:00.000-07:00

So AT&T announced that it's completely revamping its ad campaign to emphasize innovation. What innovations are unclear. But the campaign, details of which are sketchy so far, is called:

Rethink Possible!

Rethink Possible. Hmm… seems like Uncle Bell is going to have a lot to make fun of and ridicule in the months ahead as this new campaign rolls out.

The new campaign comes with PR flacks saying how AT&T is dumping it's old campaign attacking Verizon, trying to end the cell phone coverage/speed war, or perhaps just admitting defeat. Best not to compare cell phone service when your service sucks. Instead, stress "innovation."

Speaking of which, here's a good piece explaining why AT&T's ad claims that it has the "fastest" network don't mean it's any good:

Fastest Doesn't Mean Best

Basically, measuring the speed of a network isn't a good indicator of how well it serves customers. It's more important to have more coverage (which is what Verizon has been saying all along). Funny the timing of these two pieces. AT&T gives up on the war against Verizon (where it claimed it's network was the "fastest") just as a detailed study reveals that fastest doesn't mean anything. Or worse. It actually might be a result of AT&T simply not having enough towers and too many customers. More people using one tower means it is moving more data per minute, but not in any way that helps customers. It's kind of like McDonald's saying, we have the fastest lines of any fast food restaurant. It might be true because you have the longest lines, and thus move more customers per minute. It doesn't mean you have the fastest "wait" in line. So AT&T might have the "fastest" network simply because it's servicing too many people with too small an infrastructure.

Another very interesting piece of information from this article is that AT&T doesn't move as much raw data as Verizon or Sprint. In fact, it's moving quite a lot less. Verizon and Sprint are handling a lot more raw data because they have more mobile laptops users and those users consume a great deal more data per customer than iPhone users.

This blows holes in AT&T's iPhone "data hog" argument where supposedly greedy data hogging iPhone customers are responsible for all it's network problems. Nope, iPhones consume a lot less data than laptops, so your network problems are because your network sucks compared to Verizon and Sprint.

It also predicts that there are going to be lots of problems for AT&T's network once all those iPad's start accessing it. iPads are likely to use lots of data like laptops (I suspect even more) so AT&T is going to start having some serious problems keeping up with them. (Creating a huge opportunity for it's competitors.)

The statistics showing how much more data laptops use might explain why AT&T has refused to offer iPhone tethering. They know data traffic would explode, and their network couldn't handle it. The problem with that is, if you can't service a device like the iPhone that technically allows tethering, then don't service it. Don't charge a fortune and not deliver. (And lie that you're going to offer tethering service "soon.")

AT&T should have spend a hell of a lot more money upgrading it's networks, but instead it focused on executive bonuses. Maybe that's what it means by: Rethink Possible. You think it's possible? Time to Rethink.

Sick of AT&T's iPhone Tethering Delay? Maybe It's Time to Switch. Others Already Have.

2010-04-12T13:32:00.000-07:00

AT&T's lies about iPhone tethering "coming soon" might have persuaded some customers to hold on, but now the alternative options are becoming too easy (and cheap) to resist. Particularly in regard to mobile hotspots:

Dumping AT&T from Your iPhone

AT&T's delay on tethering has created a serious market for their competitors. The needs of those millions of iPhone customers AT&T is collecting profits from are not going to be ignored by other companies, just because AT&T decides to.

AT&T's attitude seemed to be that those customers would just suffer along without tethering until AT&T got around to forcing tiered pricing on them. It didn't work. Technology, this time in the way of mobile hot spots, keeps moving forward even if AT&T isn't ready for it.

Offering reasonable tethering rates would have been a good way to keep iPhone customers happy, and away from competitors. Too late. Once someone switches from AT&T service for their iPhone, you think they're going to sign up for AT&T service on their iPad?

Randall Stephenson's prediction that the iPad was a "wi-fi" device might come true in an unexpected way. It will be a wi-fi device that people use with Verizon or Sprint mobile hotspots. The above post points out what I've said before: AT&T's gouging of Apple fans has led to a lot of us thinking that a cheap alternative no-contract phone and a good wi-fi connection (mobile hotspot) is better than AT&T iPhone service.

By the time AT&T offers iPhone tethering they might be forced to give it away for free in a desperate attempt to keep hold of valuable iPhone customers. AT&T might finally learn that being a dumb pipe is better than being a pipe no one wants to use anymore. But by then it might be too late even for free.

Is iPhone OS 4.0 Another Nail in the Coffin of Apple's Relationship with AT&T?

2010-04-09T12:07:00.001-07:00

David Braue writes for ZDNet "one can't help but wonder whether Ralph de la Vega, CEO of AT&T, used to steal Steve Jobs' lunch money in primary school…" in a piece on how the upcoming iPhone OS 4.0 further erodes AT&T's business model:

Why iPhone 4.0 Turns AT&T into a Dumb Pipe (Even More)

The thing is, de la Vega didn't steal Job's lunch money. He's stealing every iPhone customer's lunch money. AT&T's business model is based on charging people for things they don't use, over charging them for things they do use, and penalizing them for not being able to understand the difference (as they make it as complicated as possible). In other words, like most cell phone carriers, AT&T views it's customers as suckers to get ripped off. Meanwhile, they do everything they can (through monopolistic practices and government lobbying) to make sure customers have no choice but to suffer or go without essential services.

This has got to change, and it will. Apple is just ten years ahead of everyone else. AT&T is clinging to an old business model that simply won't survive in a new tech age.

AT&T's fear is that it will become a "dumb pipe," but there is nothing wrong with providing a key service, and doing it well. But the business of actually providing data fast and cheap, seems to bore AT&T, as it's crappy service in key markets like New York indicates. It would require investments in infrastructure that might interfere in executives yearly bonus pools. Meanwhile, offering innovative services that people will happily pay for (something AT&T is in a perfect position do do as the controller of the pipes) requires the kind of creativity and smart execution that a soul crushing bureaucracy based on simply on greed can't muster.

AT&T can change, but the first step is to stop treating customers with contempt. You can't figure out how to make customers happy while also focused on treating them like chumps. If AT&T doesn't change, somebody else will offer the dumb pipes without all the bullshit, maybe even Apple.

Five Reasons AT&T Fears and Hates the iPad

2010-04-02T17:12:00.000-07:00

On the eve of it's wide launch tomorrow, everyone is buzzing with talk about how great the iPad is. Reviews have all been raves, hundreds of thousands have been pre-sold, and lines are forming at Apple Stores. It seems everyone is excited and can't wait to get their hands on iPads.

Well, everyone except AT&T. You would think that given most of it's profits are due to it's exclusive deal on the iPhone, and it has first crack at iPad 3G users thanks to a new deal with Apple, AT&T would be gushing about the device. You would think they would be touting it in advertisements, on their webpages, and in their stores. But no, what you hear from AT&T about what is likely be the biggest tech launch of the decade is: silence and crickets.

The silence is a lack of iPad announcements (like new apps) or special deals for loyal AT&T customers. (Okay, I know there aren't any of those.) The cricket chirping came from AT&T CEO Randall Stephenson who went out of his way to dismiss the iPad as primarily a wi-fi device. This with hardly a "but it's nice, too" comment. In fact, he almost sounded like he was pouting about how the iPhone is better. Given the way AT&T is acting, you'd almost think they fear and hate the iPad. Well, they do. And they should. Here's five reasons why:

1. It's Unlocked. Steve Jobs went out of his way when he announced the iPad to point out that it was "unlocked." Yet he went on to say (as people groaned in pain) that AT&T was the only carrier that will provide service for it. So what does that mean? Since AT&T is the only carrier that will offer 3G micro-SIMs that fit into the iPad, and there are apparently technical reasons other carriers can't easily offer them, who cares if its unlocked? Aren't people still stuck with AT&T? No. The biggest problem for AT&T is that the iPad has none of the stupid contractual restrictions that were placed on the iPhone by AT&T in order for Apple to get a deal to cover it. For contractual reasons, not technical ones, the iPhone was restricted from easy VoIP apps and alternative messaging. AT&T and all the other telecoms know that traditional voice calling and SMS messaging are a thing of the past. Everything is going to be done through the internet, cheaper, faster and with better sound quality. But Apple's iPhone deal placed a lot of unnecessary restrictions on customer's ability go get around AT&T's voice and messaging charges. The iPad has none of these restrictions, and companies are already offering VoIP apps. This is a huge problem for AT&T if the iPad takes off in a big way. On top of that, there is nothing stopping people from offering alternative 3G micro-SIMs with technical work arounds. While it might not be a major carrier that has already invested in a non-compatible network, a new carrier might be able to jump into the business (perhaps offering service just in New York where AT&T is at it's worst). Also the iPad's one external connection is flexible enough that people might be able to connect an accessory that allows it to tap into other cell carrier service. The iPhone's current contract prevents that, but because the iPad is unlocked, 4G Sprint add on accessories are certainly a possibility. The bottom line? Unlocked is bad news for AT&T, no matter how you look at it.

2. It's Going to be a Traffic Monster. Mr. Stephenson's dismissal about iPad being a "wi-fi" device can't obscure a very inconvenient truth about the iPad and AT&T's new service for it. People using an iPad are going to be consuming A LOT more data than people using an iPhone. Odds are people will be surfing all day on iPads, using massive amounts of data compared to iPhones. This is a big problem for AT&T, which is why Mr. Stephenson has tried to bury his head (and investors) in the sand about it. First, odds are iPads are going to swamp AT&T's already barely functional cell towers and create even more service problems for AT&T customers and lead to even more calls for Apple to end it's exclusive deal. (And create business incentives for alternative services on the unlocked device, see #1.) Even if Mr. Stephenson is correct, and few people buy the 3G version and mostly use wi-fi connections, that's bad news for AT&T too. First, it means AT&T has been cut out of serving a popular device, and people might use it's messaging and voice features instead of AT&T's more pricy services. On top of that, high data use by even a few 3g iPad's complicates AT&T's stated goal of charging tiered pricing for data on the iPhone. For some time, AT&T has wanted to gouge iPhone users by claiming "data hogs" were to blame for all the problems in their network. But how can AT&T charge more for using data on an iPhone than on an iPad? If iPhone "data hogs" even exist they will be switching to iPads. The iPad came at a very bad time for AT&T's plans for tiered pricing. They wanted to charge for data "like water" but if data is like water, you can't charge more for it on some devices then others. If AT&T has a problem delivering enough "water" to iPhone data hogs, why did it just cut an unlimited deal for new iPad data hogs? And once people used to using the iPad on unlimited wi-fi data plans they are unlikely to accept tiered pricing on cell data plans. The unlocked nature of the iPad probably means an end to AT&T's tiered pricing dream. In fact, AT&T's best hope is the iPad is a complete bust, and people stick to using their iPhones. But that's not going to happen.

3. It Works Better with Wi-Fi. Another reason Mr. Stephenson might have said the iPad was a "wi-fi" device is that odds are people using it with AT&T's 3G service are going to be unhappy. So he was almost warning people, don't bother to get the 3G. Please. Unfortunately, once again, AT&T loses either way. I suspect that a very large percentage of people will opt for 3G enabled iPads, but then be bitterly angry about how slow AT&T's service is compared to wi-fi. This means customers will start up AT&T service, get pissed off with how slow it is, and then cancel, making AT&T look bad for investors as it quickly gains and loses customers. This will also increase demands for faster (faster than AT&T) networks. Even if AT&T is correct and iPad users don't get the 3G option, that will increase desire for larger wi-fi networks. Larger home service, more coffee shops, etc. The bottom line is that the iPad is a device that simply wants a network a lot faster and better than the one AT&T is currently able to offer. And there's no reason AT&T will be the one to provide the network people finally do flock to. The iPhone, on the other hand, just barely worked well enough on AT&T's 3G network to still be really useful. So AT&T made a ton of money off of people unhappy with AT&T. This isn't likely to happen with the iPad. People who get pissed off with AT&T service will simply dump them and look for alternatives.

4. No Contract. As mentioned before, people are unlikely to be happy with AT&T's 3G service on their iPads. That they can pop in an out without a contract is going to create a lot of problems in AT&T's business model. While customers hate long term contracts, there are legitimate reasons for cell phone companies to demand them. In the case of the iPhone, it was much more popular than imagined. Without long term contracts, it's hard to see how AT&T could have justified the capital expenditures necessary to improve their network to handle it (even badly). With the iPad, AT&T is in a real bind. Odds are, customers are going to be bitching about bad service, but even if AT&T invests in improving it, there is no promise customers will stay long enough for it to recoup it's investment. They can switch to something faster at any time. So once again, the best thing for AT&T would be if the iPad just kind of went away. Unfortunately, it's not going to.

5. It's an iPhone Replacement. The best thing about the iPhone is… not the phone part. As a phone, the iPhone is expensive to purchase, and costs a lot more per month than just about any alternative and you're stuck with crappy AT&T which has the worst customer ratings of any major cell service. In fact, the only reason to buy an iPhone, other than as a expensive status symbol, is because it's also the best small web surfing mobile computer. Oh, well, it was. Now the iPad is. The iPad is much better at doing just about everything people really needed an iPhone to do, except calling. Checking e-mail, maps, the web, etc. The iPhone is a classic example as a Jack of all trades master of none. Yes, if you only want one device in your pocket, the iPhone is it. But if you're planning any serious computer work, you usually carry an iPhone and a laptop. While the iPad is meant as an alternative to the laptop, and it is, it handles a lot of iPhone functions better than the iPhone. I can't be the only one that thinks a better combination would be a cheap disposable cell phone (with a no contract T-Mobile connection), a iPod nano, and an iPad in my backpack. This isn't to say that the iPhone is going away. But the iPad could seriously effect it's growth, especially if AT&T continues to charge a premium for servicing it. Budget minded students in particular might use the iPad as an iPhone replacement, meaning no long term contract, no voice and messaging charges for AT&T. On top of that, Apple fans who hate AT&T will finally have a meaningful way to express themselves even in advance of AT&T losing it's exclusive iPhone deal. How many people hate AT&T enough to dump their iPhone's now that the iPad provides an unlocked alternative? It will be interesting to see.

If the iPad is so bad for AT&T, why did it even make a deal to support it? Because it had no choice. All the problems above don't go away if AT&T isn't the 3G provider. In fact, they all get worse if T-Mobile or Verizon has the contract. If some customers (and many future ones) switch from iPhones to iPad's at least AT&T gets a piece of that wireless revenue. AT&T was backed into a corner and had to make Apple a competitive deal. That's why Randall Stephenson sounds as excited as a groom at a shotgun wedding. Because both barrels of the iPad are aimed at his head.

All an all, the iPad isn't good news for AT&T. But it might be good news for it's abused customers. Revenge is sweet. Thanks Apple!

UPDATE 4/3/2010: Apple's wi-fi iPad is on sale now. A search for "ipad" on AT&T's official website comes up with zero results and a soft, sad comment: "Did you mean: iphone?"

Even Alec Baldwin Hates AT&T

2010-04-02T14:51:00.000-07:00

It's bad when a famous Oscar host goes out of his way to attack you:

Worst Wireless Service in the US

Why is AT&T Underestimating iPad Traffic Strain?

2010-04-01T21:07:00.000-07:00

In anticipation of the iPad's arrival on Saturday, several blog posts speculate that iPad 3G traffic strain will make AT&T's already shaky network even worse. Here's one:

iPad Likely to Strain AT&T Network

Duh. It seems inconceivable that in big market's like New York and San Francisco where serious problems in iPhone service already exist, the addition of thousands, perhaps hundreds of thousands of new iPad's won't create problems.

Which brings up the issue of why AT&T CEO Randall Stephenson has deliberately played down potential problems by claiming the iPad will be primarily a wi-fi device. Is he just dim? Or a liar? Does the head of one of the USA's major telecoms, entrusted with the future of our nation, not understand technology enough to see what a game changer the iPad is? Or is he just lying (as he does about iPhone tethering) without caring about the loss of credibility he'll face when his widely repeated public statements are proven completely wrong? Hard to say, but rest assured Uncle Bell will be around to remind him of how wrong he was.

The smart thing for Mr. Stephenson to have said, but then that would be out of character, is "I don't know how the iPad will impact our network, but rest assured we'll do everything we can to fix any potential problems."

AT&T's Last Chance to Get It Together With the iPhone?

2010-03-31T13:11:00.000-07:00

Tech Crunch speculates that with rumors of AT&T's exclusivity coming to an end, Apple's deal to make AT&T the initial exclusive partner on the iPad may be a going away gift:

iPad a Parting Gift to AT&T?

But another way to think about this is that AT&T still has some time to get it's at together in regard to providing good service to iPhone customers. Like not lying to them about tethering, being honest about cell tower problems and not having flacks blame the hardware, not double billing for text messages, and not working night and day to force tiered pricing down customers throats. Will AT&T change it's colors? Probably not until it has no choice.

Will Apple Attack AT&T With the iPhone?

2010-03-26T15:13:00.001-07:00

While beloved by it's customers to the point of obsession, Apple (or rather its boss Steve Jobs) has a long history of stabbing it's business partners in the back. Or, even more often, the front. The list of victims is long. Here are just a few big ones:

1. Apple Tricks Microsoft: In 1997, when Steven Jobs returned to a broken down and almost bankrupt Apple, he convinced Microsoft to make a high profile $150 million dollar investment and promise to keep supporting the Macintosh system with Office to help the company stay afloat. Microsoft, like all of Apple's eventually betrayed business partners, had it's own reasons to support Apple. Mainly, at the time Microsoft was so dominant in the tech world that it was facing business monopoly lawsuits and government investigations. A crippled Apple with a tiny market share seemed like a good thing to keep breathing with a pocket change investment. Yet a perplexed Bill Gates wondered aloud why Jobs would even bother to fight for Apple's survival. Gates famously said, "He can't win." Gates thought Microsoft's continued dominance of the tech world could never be challenged. At the time, it was assumed any market Microsoft decided to enter it would control. Unfortunately, Apple not only survived, but flourished. It's new operating system was first class, and made inroads in business and government while Microsoft has made several missteps with Vista. Apple became the dominant force in sexy new tech businesses showing Microsoft could be beat. Apple took over music with the iPod and smart phones with the iPhone. It's market share for browsers, Macs and multi-media products continues to rise. Apple's Stores are some of the most profitable retail space in the world. Apple's early partnership with Google's search engine provided comfort and support to a key Microsoft enemy at a critical time in the development of the internet. Microsoft's star has fallen greatly since it's "partnership" with Apple. Bill Gates retired not looking like a victor, but like someone who needed to get out before his company sank further. Apple looks likely to pass Microsoft in market cap this year, something that even the most wild eyed Mac enthusiast never would have dreamed of in 1997.

2. Apple Double-Crosses Intel: In 2005, Steve Jobs got big time support from Intel to switch microprocessors. Apple had been using it's own co-designed PowerPC processor but simply couldn't compete with Intel's deep pockets of R&D money to keep competitive in the processor speed race. It made more sense to let Intel make processors so Apple could focus on other key areas of it's growing business. Naturally, Intel was happy to have a new customer (even with a tiny market share) and a little less competition for processor design. But Intel went a step further. It highly publicized the partnership, it's CEO danced around an Apple stage in a costume for Jobs, and Intel provided a lot of tech support to help Apple make the critical transition to Intel processors. This gave Apple computers a lot more credibility in business and government circles. It isn't going too far to say that if Apple hadn't successfully made the shift it's entire flagship Macintosh business might have imploded. So what was Intel's big reward? Who's making the processors for Apple's hot new iPad? Apple's new processor design company. While allowing Intel to keep making processors for it's older graying desktop computer business, Apple has cut Intel out of what might be the biggest new tech sector of the next decade.

3. Apple vs. Adobe. While Apple and Adobe have long had a love/hate relationship, when Apple was on the ropes in the late 1990's, Adobe could have completely pulled the plug by cutting off updates to it's Photoshop, Illustrator and After Effects products. High end graphic design was one of the only business areas where Apple had significant market share. Adobe hung by Apple with two massive updates, first to Apple's new OS X operating system and then through Apple's shift to Intel processors. While Apple could complain about Adobe being a little slow on the updates, Adobe spent fist fulls of money to do them. Apple's response? It first came out with Final Cut Pro, which killed Adobe's own film editing market, and hurt it's After Effects business. Apple also came out with iPhoto, which cut into Photoshop and finally, Apple dug the knife in deep by actively going to war against Flash with the iPhone and the upcoming iPad. With a business partner like that, you don't need cancer.

In Apple's defense, in all of these cases it did what was best for it's customers. Rarely has Apple made moves against the best interests of the people who buy Apple products. (Apple even dumped it's own technically superior Firewire for the more popular and less expensive USB.) But still, anyone who gets in business with Apple should be looking over their shoulder for sharp objects. Because if Apple sees an good opportunity, old relationships rarely get in the way.

Which brings us back to the subject of AT&T. Apple and AT&T have had a great partnership with the iPhone. Both have made a ton of money and gained huge market share quickly. Which means, if history has taught us anything, Apple is about to screw AT&T. Here's a piece on some of Apple's options:

iPhone as Weapon Against AT&T

The question is not whether Apple will turn on AT&T, the question is when. I don't know the answer to that, but my guess is over the next two years.

The other question is what AT&T is planning to do about it. The answer to that I know: nothing. AT&T has no post Apple plan. It simply sucked up as much money as fast as it could with the iPhone and has been burying it's head in the sand about what to do if Apple turns on it. It is a company lead by reactive managers. They hope something like the Google phone or a new Palm handset will provide the iPhone with some competition. They hope they can buy up enough market share to be irreplaceable to Apple. They hope… they hope…

What they should have been doing is investing. Investing iPhone profits to build cell tower infrastructure so good Apple wouldn't think to replace them and customers wouldn't dream of leaving them. They should have come out with original apps to enhance the value of iPhones and other services that would make using an iPhone without AT&T service unthinkable. They didn't and now it looks like it's too late. AT&T execs are more focused on talking about charging for data "like water," complaining about data "hogs," waging battles against net neutrality, and figuring out how to cut land lines to small towns. In other words, warring against the interests of it's own customers. So when Apple finally does turn on AT&T, the people who will be cheering the loudest will the the one's with AT&T subscriptions.

Canada Gets Free iPhone Tethering. Why Can't Americans? Oh, Because We're Stuck With AT&T.

2010-03-26T08:58:00.001-07:00

If you don't live in American, technology is a wonderful thing. You see, in Canada, if you have an iPhone, you can tether it to your laptop for free:

Free Data Tethering in Canada

Of course, if you live in America, you can't use an iPhone without having an expensive contract from AT&T. Which means not only do you not get tethering, but you have to listen to AT&T Executives lie year after year that it's coming "soon."

Unlike in Canada (and other parts of the world where people have phone companies that don't hate them), AT&T normally charges an extra $30 a month for tethering. That's a huge rip off, but at least if you have a need for tethering, you might bite the bullet. But AT&T won't even offer that crappy deal to it's iPhone customers (it's most profitable base). Why?

Well, probably because AT&T has this big pipe dream for tiered pricing, which it also says is coming "soon." But customers hate the idea and AT&T hasn't been able to convince other carriers to come aboard in forcing it down American's throats. So better to prevent customers from being able to use their products, than let them get used to the idea that things shouldn't cost extra for no reason.

When will AT&T finally come to its senses? Probably too late. Only after it has real competition, and by then it will have antagonized so much of it's most profitable customer base, it might not survive.

Poor AT&T Signal? AT&T Offers a Solution: Pay Us More

2010-03-25T14:29:00.000-07:00

Once again, the rocket scientists at AT&T are inventing new ways to piss off customers that are unhappy with AT&T service:

Pay Us $150 if You Want Your Cell Phone to Work at Home

AT&T should be giving MicroCells away for free, because they basically save AT&T tons of money by channeling calls off of their cell towers. Also, providing good service (so people continue to pay monthly bills and don't switch carriers) should be more important to AT&T in the long run, than making a few bucks by selling something that shouldn't be needed in the short run. But short term thinking is what get's execs their yearly bonus, so screw customers who complain.

Like this comment at the bottom of the link:

"Classic AT&T. Having failed to provide the service subscribers pay for, their solution is to sell them another service. Their motto should be "We add insult to injury."

Uncle Bell couldn't have said it better himself. It's staggeringly greedy to charge for something people shouldn't need when they pay you each month for service "anywhere." Are customers really supposed to go: "Wow, I've been paying $60 a month and my phone doesn't work good. Now, I only have to pay $150, and maybe it will get better!"

UPDATE: Here's some more commentary on AT&T's latest efforts to insult it's customers:

Dear AT&T, WTF?

I remember many years ago when satellite TV came around and cable companies laughed because it was really not nearly as convenient as cable and cost just about as much. They were then stunned when it took off very quickly. What they didn't count on was that people absolutely despised their cable companies, even though they reluctantly paid for cable.

AT&T is heading for a very similar wake up call. One of these days, when iPhone customers have a choice, they're going to be surprised at how many of their customers go running. Now, maybe AT&T thinks it can worry about that when it happens, cut rates, improve service, whatever, but I suspect they will find that there are a lot of customers that will run regardless of deals, just because they're so angry at AT&T's shoddy service for so long. They might find they will lose millions of customers for life.

Apple Dumps AT&T!

2010-03-23T08:14:00.000-07:00

Actually, not completely. But news just hit that Apple is selling iPhone's without a required AT&T contract.

Apple Sells iPhone's With No AT&T Contract

But these phones are not unlocked, so unless you take them out of the country, they won't work. So what exactly does this mean? Apple is preparing for iPhone competition? Getting rid of old inventory by selling it to people sneaking them to Dubai? Uncle Bell doesn't know. I'll keep you informed as it develops.

How the iPad is Dangerous to AT&T's Profit Strategy

2010-03-22T10:16:00.000-07:00

It's looking more and more like AT&T CEO Randall Stephenson's hope/delusion, that the iPad is simply a wi-fi device and customers won't be interested in AT&T wireless service is wrong and wrong headed. This is not to say that he won't be correct and a majority of iPads will be sold without 3g connectivity. But it's likely that everyone is radically underestimating how many iPad's will be sold it's first year, and AT&T will be completely unprepared for the extra traffic even a percentage of those will mean to it's network. He's also missing the larger implications of the iPad replacing the iPhone as the Apple geek's favorite mobile internet platform. Here's typical geek thinking:

What Do I Need Voice Service For?

Blogger Jeff Haywood voices prototypical tech geek thinking. If forced to make the choice between having a phone or an internet connection, they quickly choose the internet connection. In fact, without even thinking twice about it. This AT&T's worse nightmare. Geeks who hate talking on the phone and prefer e-mail wonder why they're paying 40 bucks to be reminded that they're too afraid to ask for a girl's phone number.

Naturally, AT&T prefers that people pay for things they don't use, it's free money. And they prefer people are forced to keep paying for things they don't use by long term contracts. The iPad threatens both of these things, which is why Stephenson is whistling in the dark when he thinks it won't impact the iPhone business.

No, the iPhone business won't go away because of the iPad. Not everyone is afraid to call girls. But iPhone growth won't continue as quickly if people who don't really need it for voice end up switching to the iPad. And people who do need voice, wonder if they aren't better served by an alternative cheap cell phone with no contract and an iPad with no contract.

AT&T needs to rethink it's policy of forcing people to pay for what they don't use if it wants to stay competitive in the iPhone business. Instead of thinking about how much money it can rip from customers pockets in the short term, it should think about how to develop long term customer loyalty. Self identified geeks, like Haywood, should have the option of not activating their voice service, or getting very low cost "emergency" voice plans. Who knows, maybe someday they'll find a girl they can talk to and get married and need a family plan. Non-geeks who want the iPhone for voice, but don't use it to connect to the internet, should have the option of not paying for data plans. Who knows, maybe someday their grandkids will teach them how to Twitter.

In the meantime, if AT&T won't provide iPhone customers with real choices, the iPad, with a contract AT&T seems to already regret, might provide it without them.

Sprint Ad Demolishes AT&T iPhone Service

2010-03-21T13:12:00.000-07:00

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:

Sprint for the iPhone?

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…

AT&T Gets Some Good Press

2010-03-17T11:40:00.000-07:00

It's a good press day for AT&T. Hat's off to its normally clueless flacks.

AT&T Announces Eco-Friendly Charger

More Positive Spin on SXSW

Why Does AT&T Continue to Piss Off It's Most Important Customers?

2010-03-15T16:15:00.001-07:00

So here's a piece talking about how dependent AT&T's profit (that is, whatever is left of it after Randall Stephenson's pay package) is on it's exclusive monopoly on the iPhone:

AT&T Dependent on iPhone

So the question is, why do they keep on pissing off their best customers by lying about tethering, the most wanted missing feature for the iPhone?

AT&T Continues to Lie About Offering Tethering Soon

AT&T Lies Some More

UPDATE 3/6/10: Another piece on why AT&T needs the iPhone:

10 Reasons Why AT&T Would Lose Without iPhone Exclusivity

iPhones Work at SXSW

2010-03-14T14:20:00.000-07:00

Whether AT&T actually got it's iPhone act together in Texas or it's PR Flacks spun a story in the right direction, this is a very good piece on AT&T's iPhone network:

AT&T'S Network at SXSW

AT&T Critic really does want to be impartial, so when the cell boy's occasionally do something right, we want to point it out. Good job! These high profile conventions are important to the tech world, so if you need to send out some mobile trucks to handle the traffic, do it! It will pay off in good press if things go smoothly.

UPDATE 3/15/10: Of course, the question quickly arrises, if iPhone's can work in Texas (oh, it's not a design flaw?) then why can't they work everywhere. Like San Francisco.

AT&T Doesn't Know Why It Needs Tiered Pricing, But It's Urgent

2010-03-12T08:29:00.001-08:00

AT&T CEO Randall Stephenson, as fitting the leader of a high tech company, is a visionary. His vision? Customer's pay more for less and he personally pockets more and more money as customer complaints rise.

At the Executive's Club of Chicago he outlined a key detail of his vision; tiered pricing. (Now called "variable pricing.") Despite record AT&T profits, all-you-can-eat data pricing has to go away. Soon. Why? Well, he has no answer to that. Because there is no reason. He also doesn't know when variable pricing will begin, because he can't really do it on his own, he'll need the collusion of other cellular carriers to force it down customers throats. So for now, all he can do is say, "It's coming." Hopefully when the government isn't looking.

AT&T CEO Hogs Profits

AT&T Decides Not to Invest in 4G. 3G is just fine!

2010-03-11T09:22:00.000-08:00

People are still scratching their heads about AT&T chief executive Randall Stephenson's odd comments that the iPad won't be popular on cellular networks. (AT&T currently being the exclusive cellular service for the upcoming iPad.) One possible explanation is that AT&T doesn't want to make an investment in upgrading it's 3G network to compete with Verizon's coming 4G Long Term Evolution (LTM) and WiMax.

AT&T Doubles Down on 3G

You see, if people don't use iPads out of range of their home WiFi networks (some of which AT&T provides) then AT&T doesn't have to worry about keeping up with the demand for faster cellular networks capable of providing lots of data. Obviously, they already can't support their current customer base of iPhone's properly, so if millions of iPad customers sign up, there will be even more complaints.

While this might be wishful thinking (maybe iPad users can just hang out at McDonald's and use AT&T service for free), it would seem it's just typical short sighted AT&T quick profits over long term investment strategy that appears to be Stephenson's policy. Keep profits high, don't invest, push the stock up and…

Escape with a golden parachute? Pocket big bonuses? Whatever Stephenson's plan is, presumably he has an exit strategy before it turns out the iPad is a very mobile device and people aren't going to be willing to accept 3G on it.

Meanwhile, us iPhone users are waiting for our own exit strategy, from AT&T. 4G and WiMax look promising.

AT&T Exec Randall Stephenson Doesn't Get the iPad

2010-03-10T09:11:00.000-08:00

So last week AT&T chief executive Randall Stephenson got tech blogs buzzing with an uncharacteristically upbeat and insightful discussion about the future of the iPad. "Apple's iPad is a total game changer and AT&T is determined to be leader in providing services for it. Not just fast and trouble free low cost data access, but we also plan to offer some very exciting must have apps. I can't tell you everything we're working right now, but we see this as a very important enterprise tool and plan to be at the forefront of offering business services that can be delivered on the iPad." Smiling brightly, he continued, "We're also talking to some content providers about special deals for AT&T customers and we're going to offer some free apps that are pretty exciting. We know customers will have a choice between using the iPad on wifi systems or our cellular network and we want to make sure it's worth the extra money for them to buy the more expensive product and sign up for mobile access."

In fact, the speech was so uncharacteristic that he didn't actually say it. I just made all that up. I repeat, he didn't say anything upbeat, optimistic or insightful. He didn't uses words like exciting or "free." He didn't talk about trying to make customers happy or valued. He didn't smile. In fact, he just kind of pissed on the idea that anyone would bother to buy an iPad that could use AT&T. His exact quote was "My expectation is that there's not going to be a lot of people out there looking for another subscription." And then he changed the subject to tiered pricing. Here's Reuter's take on his speech to investors:

Randall Stephenson Says The Craziest Things

Of course, this did get the web buzzing, but not in a good way, more in a "what the fuck is he talking about" kind of way.

"iPad Will Use Far More Bandwidth than iPhones"

Christians Agree AT&T Charges Too Much

Why Isn't AT&T Geeked?

Tiered Pricing is What We Want Even if Customers Don't

What's so stupid about his speech is that even if Mr. Stephenson believes what he says, why the hell say it? Why try to cool expectations of a hot new product that AT&T gets to charge a monthly fee for? And after all the bad press AT&T has gotten lately, how could anyone not wonder if he isn't big on the iPad because AT&T isn't capable of servicing it? Obviously, Mr. Stephenson is focused on cramming tiered pricing down the throats of an unwilling customer base, but can't he take a moment off of that pipe dream to try to pretend to be upbeat about AT&T's newest service? And is it smart to point out that people are already pissed off about how high their iPhone bills are?

It seems more likely Stephenson knows the iPad is going to be big, and that customers are going to be pissed off when they find out that AT&T service is slow and costly. So apparently he wants to cool expectations so he can later blame the public for being stupid enough to sign up for AT&T service. Or perhaps he knows that AT&T's offer of cheap unlimited data with no contract for the iPad completely contradicts his claims that there is a desperate need for tiered pricing, so he wants to try to claim he didn't expect people to actually use the iPad. And apparently he doesn't care much if he's later proven to be wrong, because, after all, he has no problem lying about providing tethering "soon." Oh, and of course, if people actually use the iPad for lots of data access, then why can't iPhone customers have tethering?

Whatever it is, let's take a moment to imagine a fantasy world where the exclusive provider of iPhone and iPad service said something like the stuff I made up at the top of this post. Wouldn't that be nice? Wouldn't it be nice to have an AT&T run by someone who at least pretended to care about his customers? Who could talk about the future without mentioning that he plans to raise rates as soon as the public is "educated" to accept them? That could talk about innovation without saying the government needed to provide financial incentives? Oh, well, we can only dream.

Class Action Lawsuit Against AT&T Over Tethering?

2010-03-06T10:21:00.000-08:00

I've been complaining for some time about AT&T's lies that it would offer iPhone tethering "soon." (Soon taking over two years.) Now, MacDaily, which has generally been a defender of AT&T's shaky service, is finally joining the chorus and suggesting it's time for a class action lawsuit:

AT&T Fails to Deliver Tethering

This is something AT&T needs to take seriously. It really isn't good policy to have your executives go around publicly lying to customers about offering critical services on products they hold questionable monopolies on. You could get away with that back in the 1970's (the era AT&T suits seem to long for) but you can't today when your lies can be Googled. AT&T enjoys the benefits of a heavily regulated business that discourages free competition thanks to helpful government policies. But that can quickly work against them when the public gets fed up.

The danger of a class action suit is that once it gets started, it could go a lot farther than tethering and really look at all the anti-trust implications of AT&T's war against it's own customers desire for free technology. And unfortunately for AT&T, all it's government lobbyists and PR flacks aren't very helpful in a US court of law.

AT&T's Latest Brainstorm: Make Customers Pay DVD Late Fees

2010-03-03T09:41:00.000-08:00

Hard hitting reporters at the Kansas City Dot Com just broke this amazing story from Fierce Wireless. AT&T execs, and Verizon execs, would like to implement tiered pricing!

HEAVY MOBILE DATA USERS PAY MORE

Tireless AT&T Flacks are still out there spinning this non-news news. AT&T wants tiered pricing, but won't say how or when. This has been "reported" for over a year. So what's the story here? Who are these execs talking to?

Well, each other, of course. How do you spell "collusion?" How do you spell "price fixing?" It's wonderful the internet not only provides a tool for bored teenagers to talk about their sex lives, but also for executives of giant conglomerates to social chat about how to manipulate prices nationally through fake news stories.

So let's see, AT&T already has a cap of 5 gigs of data for it's "unlimited" data plans. (As does all other US cell carriers, hmm… no collusion there.) The average iPhone user tops out at a mere 270 megs a month. Which is a few hours of surfing and streaming a month. So what's all this about heavy data users paying for other users? The fact is, most users are paying for a ton of data they aren't using. Why should "heavy" (over 270 megs and less that 5 gigs) pay more? Oh, because these telecoms are so greedy they don't see a good thing when they have it.

I suggest AT&T execs take a look at another big corporation that worked against customers for so long, they created competition that is slowly killing them. Take the example of Blockbuster:

Blockbuster Returns to Late Fees

You remember Blockbuster. It was a giant company that basically took over the entire DVD rental industry by buying up competition, out building and advertising, and wiped out Ma and Pop stories. Kind of like how AT&T has built it's market share by buying up competition.

Like AT&T, Blockbuster never offered any new innovations, it simply got bigger than anyone else and wiped out the little guy. But, like Mom and Pop stores, it's primary source of income was not making customers happy (that's was beside the point) it was in charging late fees (money for nothing) that customers hated. But for a long time, they had no choice because there was a Blockbuster on every corner. Even more fun for Blockbuster was pushing around the big Hollywood studios who had no choice but to cut them great deals. (Something AT&T has wet dreams about once they control data access in America.)

But you can't keep a business running by pissing off your customers, even if you control market share. Because Netflix came along, with no late fees, and then Red Box with much cheaper late fees, and easier access to customers (through grocery stores, etc.). So Blockbuster has been slowly dying, unable to innovate and compete. They dried dumping late fees, but their business model was dependent on them and they had to reinstall them.

The Blockbuster model that the rocket scientists running AT&T want to follow. Gain control of the market through size, and then charge people for "data" overages. It won't work, and it will doom AT&T. It will create competitors from where they least expect it. But maybe current AT&T execs aren't worried about long term growth. They're more interested in short term profits. And charging people for air might give them that.

I humbly suggest that AT&T execs turn away from the dark side before it is too late. Concentrate on offering Americans cheap, fast, unlimited data and build new exciting business models around that. If you continue to simply crunch numbers and try to figure out how to charge people more for less, you make not even survive long enough to jump out with a your golden parachute.

Take a look at this amazing quote from AT&T CEO Randall Stephenson about Congress' desire that America compete globally with fast data access: "If the objectives are 100-megabits capability to every home in the United States, that is going to require a lot of investment. To drive that kind of investment will require a redirecting of subsidies that exist today."

This is the head of one of American's major telecoms? We can't give people fast access without government subsidies? This after AT&T has an amazingly profitable year based on it's monopoly on the iPhone? Excuse me, if AT&T can't do it, I suspect Google will.

If AT&T is not capable of being the leader in providing America with high speed data access, maybe it's time for it to get out of the business and try something new. How about DVD rental? Blockbuster is going bankrupt. Maybe there's an opening there. Perhaps you can charge double late fees.

AT&T's Missed Opportunity on iPad Pricing

2010-02-28T10:01:00.001-08:00

I rarely have nice things to say about AT&T, so I want to praise them when they actually do something right. The announced prices of their data plans for the upcoming iPad are very fair and reasonable, especially in the current marketplace. It also shows some smart corporate thinking. They were willing to be very competitive to get in on the ground floor of the iPad. Here's an older story that talks about how AT&T stepped up to the plate to outbid other competitors:

AT&T Brought It's A Game to iPad Bidding

In some ways, the pricing on data plan doesn't seem very generous or groundbreaking. AT&T already charges $29.99 a month for unlimited data on iPhone. Why should it be anymore on the iPad? However, AT&T gets a lot of extra cash from each iPhone it services, both for voice and texting, so if it charged extra for just data on the iPad, that wouldn't be unreasonable. As the story points out, current data only plans offered for laptops and other devices are across the board higher per month for comparable access. Also, it's very likely iPad users will consume a lot more data that iPhone users, so keeping it at $29.99 unlimited is a good deal.

The $14.99 for 250 megs is a little less of a great bargain, because, as a recent Los Angeles Times story points out, almost every real user will quickly go over it and need to pay the higher rate. However, there's no crime in providing a lower cost option (be nice if there was one for the iPhone). And it can be argued that it is a good deal for someone who rarely uses anything but their wifi connection, yet wants the option of cell service in an emergency.

So all in all, kudos to AT&T brass for their upcoming iPad deals!

Of course, this being AT&T Critic, I can't leave it at that.

First, history would seem to indicate AT&T is an evil conglomerate run by soulless machines that only do nice things briefly if it furthers their goal to take over the world and destroy the internet as we know it. (That is, by getting rid of net neutrality.) So, it might be tempting to look at this as temporary effort at fairness and competitiveness that will only last long enough to get them market share, destroy their enemies, and install themselves as gate keepers so they can later create misery by raising rates. Kind of like the cable companies. It's certainly a possibility.

Or, it might be a classic example of a headless, clueless corporation whose executives have no long term plans and simply were forced by Apple to make a competitive offer without any idea of it's longer term implications. This also seems likely, since the pricing plan is completely in contradiction to AT&T's public claims that high data use cannot be sustained unless they "educate" the public to accept tiered pricing. If the public needs to be educated, why not start on the iPad? And if high data use is a big problem, how does AT&T expect to handle millions of new iPad customers on unlimited plans?

The truth is probably somewhere between all these, AT&T is an evil, but clueless, corporation that knows it must be competitive if it wants to be in the iPad business.

The shame here is that AT&T is losing another opportunity (like the one it squandered with the iPhone) to change it's corporate stripes and prepare to compete in the new world of technology. You know, the one where customers expect stuff for free, or low cost, and then reward companies by spending extra money later on stupid things like ring tones and apps that tell jokes.

In particular, the data limit on the lower priced $14.99 plan, while being perfectly fair, is shortsighted. The data cap is deliberately pegged to be something a normal user will have to go over eventually, if not frequently. The Los Angeles Times article points out that the average iPhone user consumes 273 megs of data a month. (Which, by the way, blows holes in AT&T's complaints about a data hog crisis.) So why did AT&T pick a 250 meg limit on the lower priced plan? Because it forces everyone into the higher priced plan.

Now, as I said, this is still a fair business deal. If you're unsure whether you need a connection, or really aren't planning to use it much, $14.99 provides an option, and there's nothing better than customers having options. The problem is, AT&T doesn't understand that you don't want to needlessly bleed your customers. Keep your customers happy, and in the long run, they will reward you.

In the real world, anyone with the money to spare, will probably pay for the higher plan without blinking. And use it. People who are hurting for money, will go for the lower plan. Unfortunately, most of them will quickly find out they go over the limit, and have a choice to make. Dump AT&T all together, or pay more.

This is a mistake. The biggest danger to AT&T is not that it doesn't make enough money from the lower priced plan, it's that the average iPhone user decides they don't want to pay AT&T at all. The iPad, unlike the iPhone, is really a very useful device that is best used with a wifi connection (either free or part of someone's home or business connection). People who don't have a lot of money will be sorely tempted to avoid AT&T all together. And they will be able to do it. This puts further pressure on AT&T's corporate efforts to "educate" people that data isn't free. (It is, AT&T just doesn't want you to know it is.)

It remains to be seen whether the iPad is a device that sits in peoples home's and offices and works perfectly fine without an AT&T connection, or whether it's so useful on the road that it's worth an extra $29.99 a month. AT&T's pricing could actually effect the future of the iPad, as customers try to figure out how best to use it, and software makers design apps based on customer expectations. My guess is that AT&T could potentially train millions of customers not to use their service, simply because they have too low a data cap on the lower priced plan. Millions of businesses, that might be willing to foot a $14.99 bill for their employees to have internet access, might balk at $29.99.

In fact, it might be better for AT&T simply not to even offer a $14.99 rate that customers will quickly find doesn't fit their needs. While corporate suits might like it when customers are suddenly forced into a higher bill, working people don't. From a PR standpoint, AT&T is opening itself up to a lot of complaints by new customers what find out that watching a 3 minuted Epic Beard Man video is just enough to push them over the limit.

A fairer rate would have been 500 megabytes. That way the thrifty iPad user could reasonably function at the cheaper rate. And high end users would still pay for the extra data. Moreover, the iPad is unlocked. Whether AT&T faces any real competition for customers will depend a lot on how happy customers are with AT&T service. Having a large base of customers begin their relationship with AT&T by finding out that $14.99 is just a fake out to lure them into a higher priced plan is not a good start.

But offering a real deal, to keep long term customers happy and to build a happy customer base, is the kind of Net 2.0 thinking AT&T's leadership still hasn't clued into. Back in the AT&T board rooms clueless execs rub their hands with delight. "See, it's great, they get into the lower priced plan at $14.99 and POW, they go over the data rate and KABOOM, pay $29.95! It's genius!"

But this kind of thinking, how much can we rip away from customers pockets for nothing, is a serious problem at AT&T. (The actual price of providing 500 megs vs. 250 megs is nothing, and the difference between providing a customer with 250 megs or unlimited is pennies, certainly not $15.) Instead of thinking of a customer paying $14.99 as someone who is paying $15 too little and needs to be punished, AT&T should think of them as someone who they might lose if they don't provide a realistic option. That $14.99 customer is someone they can try to encourage to use other services, like AT&T's mapping and family tracking apps.

Oh, but those apps are crap, right? And cost too much. Well, maybe that's the real problem. A modern Net 2.0 company loves to have regular customers, at any price, and then use the data to figure out what to sell them. Rather than trying to cap usage, AT&T needs to invest some R&D on coming up with must have services and apps. The real way for it to make money is for a customer to sign up for $14.99 a month, and then also buy five apps from AT&T for $4.99 each. And sign up for a special music channel at $1.99 a month, etc.

Then when the person gets a raise, they'll bump up to $29.99 for unlimited data. Or have kids and buy them all iPads, or recommend AT&T to friends because it's such a good deal. The fact is that people like to spend money. And if you provide them with something they like, odds are they'll give you as much money as they can spare. You don't have to try to beat it out of them or trick it out of them.

Back in the 1970's, that kind of negative business thinking, that the customer was an enemy you had to game, was very popular in corporate America. And it really screwed things up. It's a shame it seems that the leadership behind AT&T still pines for those days. They don't appear to understand they are in a very different world where customers are empowered with information and options like never before. Hopefully, AT&T execs will eventually figure that out and turn toward the light.

Big Surprise: Most iPad Cell Customers Will Have to Pay for the Higher AT&T Data Plan

2010-02-26T11:52:00.000-08:00

The Los Angles Times has a good piece that estimates that most iPad users will quickly go over AT&T's lower priced $14.95 a month rate with the 250 Megabyte limit:

AT&T's 250 Megabyte Plan for iPad

So basically, anyone that actually wants to use their iPad will have to pay the higher $29.95 a month for the unlimited data plan.

I'll be writing another post about this soon…

AT&T Hungers for Tiered Pricing Like The Dark Lord Hungers for the One Ring

2010-02-21T08:48:00.000-08:00

There is no logical basis for tiered pricing of data, including phone calls, texting, and internet access. Data is not like water, or even electricity for that matter. It doesn't cost significantly more to provide unlimited amounts once you have build out the capacity for it. The costs of keeping track of, billing and limiting data is far greater than the marginal costs of providing unlimited data. (This is, of course, one of the key points of net neutrality.)

Customers also hate tied pricing and unpredictable billing associated with it. In fact, customers hate is so much, they will go to great lengths, to avoid it. Companies that only offer tiered pricing are always beat by companies that offer fixed pricing. So it's only when customers don't have a choice that they will reluctantly accept tiered pricing.

Despite all this, AT&T (and Verizon) are desperate to fight the battle against fixed pricing (unlimited plans) and institute tiered pricing over the wishes and best interests of their customers. They talk about "data hogs" but what they really want is to bleed customers like stuck pigs. Unfortunately, they haven't completely been able to buy up all their competition and force customers to accept tiered pricing, yet. But they're working on it.

In the meantime, they keep trying to float the "tiered pricing" trial balloon in the media, always with embarrassing results. Never-the-less, their PR flacks are ordered to keep trying and so we get this completely fake "news" story planted in the Chicago Sun Times today that says fixed pricing's days are numbered:

Chicago Sun Times News Stories Can Be Bought by AT&T Flacks

So what's the news here? Nothing. In fact, all evidence points to the opposite of what is being "reported." AT&T and Verizon are expanding unlimited plans, not shrinking them, and MetroPCS seems to think phones with unlimited talk, text and data should only cost $40 a month (they even pick up taxes).

The only "evidence" provided that tiered pricing is needed is that "3 percent of smart-phones account for 40 percent of traffic on AT&T's network." Of course, the truth about this statistic is that 97 percent of AT&T smart phone customers aren't using their phones as much as their phones are capable. That is, most people are playing a lot for 24 hour access to data they never use. This is the truth behind fixed pricing. That people end up paying extra for stuff they don't use. 97 percent of people in this case. That's why AT&T is hugely profitable right now.

So what are the sources to prove that "tiered pricing" is inevitable? A months old quote by AT&T exec Ralph de Vega which he has already half retracted and an analyst who offers "The main point is to start to educate customers away from what they were trained to think…"

How can they be educated by AT&T to stop thinking they don't want to pay wildly fluctuating bills? With fake news stories about a fake upcoming crisis that will require tiered pricing?

Right now, AT&T is the most profitable cell phone provider primarily because it is making tons of profits off the iPhone. The iPhone offers fixed pricing on internet access (something Apple insisted on) and AT&T wants to kill that. It knows it can't now, but it wants to in the future. So it thinks it needs to lay the ground work with fake news stories so later when it takes over smaller companies, kills competition, and gets government to support anti-competitive practices it will be in a position to force tiered pricing as "necessary."

It is staggering that the leadership of AT&T cannot understand that simply wanting something is not the same as needing something. And that there are things you might want that are bad for you. Like bleeding your customers dry for no reason other than short term profit gains. They seem oblivious to the history of business and technology that shows time and time again that companies that fight against the best interests of their own customer ultimately lose. If AT&T got what it desired, a monopoly on cell phone traffic and tiered pricing, it would create a massive market for a new technological breakthrough that would provide fixed pricing to customers who dumped AT&T. If it wasn't for it's lucky deal on the iPhone and Apple's foresight in insisting on fixed pricing for the iPhone data, AT&T would probably be bankrupt now. That it is unable to understand it's good luck with iPhone and learn from it, is staggering.

But since AT&T isn't capable of thinking like a new technology company, and focusing on innovative ways to serve it's customers better, it instead wastes valuable resources planting these fake news stories in dying media like newspapers. The purpose, of course, is to try to confuse the issue enough so AT&T can make backdoor deals with the FCC and other carriers and force tiered pricing down customers throats.

The brass ring for short term thinking AT&T execs is not getting the 3 percent of "data hogs" to pay more. Those tech savvy high use users will be the first dump AT&T if it has anything truly resembling real tiered pricing. The goal is to force those 97% of people who don't use a lot of data to occasionally pay extra if they bump over a fixed limit. Much as AT&T likes to talk about billing people for data "like water" the reality is people will simply stop using their phones much if they have to pay for every bit. The goal is to create occasional billing spikes when a customer does something unexpected to bleed an extra twenty bucks out of someone who is already struggling with monthly bills.

It won't work and AT&T probably knows it won't. But their leadership probably thinks it's "worth a try." After all, they confused people for a couple decades with bullshit billing for "minutes" and "rollover minutes" and "nighttime minutes." Why shouldn't it work again this time? But let me be the first to tell them that really need to knock this off. This is not 1970. Whether AT&T gets it or not, they are at a technological crossroads. And if they don't get their act together soon, they will be left behind like AOL, GM, and other big corporate dinosaurs who stopped serving their customers and thought their customers should serve them.

Happy Valentine's Day from AT&T Critic!

2010-02-14T18:09:00.001-08:00

Google's High-Speed Networks Threaten AT&T's Future Plans

2010-02-10T11:57:00.000-08:00

The United States has the worst broadband network, in terms of coverage, speed and customer pricing, of any advanced nation on the planet. We are well behind Japan, Korea, most of Europe and even much of the Middle East. This is not an accident. It is a direct result of lax government regulation that has allowed cable companies and telecoms to buy up competition and raise prices without regard to service. Part of the business strategy of these broadband oligarchies has been to deliberately limit the speed of their networks until their dominance of the market is secure. Their dream then is to charge per data bit (tiered pricing), in total disregard to the real economics of providing service and the well being of their customers. They will have then achieved an evil businessman's dream come true. They will be charging people for literally nothing, since the cost of providing 20 bits is really nothing more than 200.

If these companies had gotten a hold of the internet at its beginning, it never would have happened. They would have killed it in the cradle through their greed. In fact, the internet came about primarily because big corporations, who could have easily set up their own proprietary networks early on, couldn't provide services anyone was interested in paying for. Those corporations that tried, like AOL, failed. Cable companies have a unique opportunity, through their municipal monopolies, to provide high speed networks at a low cost with great content. They are losing the battle to a free internet filled with pictures of cats. They simply charge too much, and provide too little. Everything is moving rapidly to the internet, and they know their future will be simply providing access to it.

Meanwhile, telecoms like AT&T with national networks of cell phone towers, also have a unique opportunity through virtual monopolies to provide proprietary networks with services and content that could easily compete with what is offered free on the internet. But they can't. So the future of the cell phone tower business is also simply as a means of providing access to a free internet. But they want to charge as much as possible for it, and their business plan is to limit speed and access until they've figured out the highest possible profit margin.

Left on their own, cable companies, and big telecom would kill or hobble the internet of today as a teenager. But there are other big companies that simply have too much to lose by handing over the internet to clueless corporations that want to charge for air simply because they are good at lobbying government.

Thus Google has been forced to get into providing internet service:

Google to Build High-Speed Networks

I think this is the last thing Google wants to do, they would prefer a competitive marketplace they have nothing to do with. But because the United States is falling further and further behind in the basic technology of the internet, they have little choice. This is clearly a shot at over the bow at AT&T and the cable providers. A warning that they need to change course.

Otherwise Google will step in and change it for them.

I'm sure AT&T, Verizon and Comcast and the others will work frantically to try to stop Google's initiative. Working behind the scenes, they succeeded in killing various US cities efforts to provide low cost citywide coverage. All sorts of pressure will be brought to bear against Google to prevent them from entering this market. And it might work.

But ultimately, their efforts will fail. The United States cannot continue to exist as a major world power with a third world broadband. If Google doesn't step in, Apple will, or Microsoft or some other big company. If that doesn't happen, small cities will finally do it on their own. (As they probably should have to begin with.)

Because the technology for providing quick and virtually cost free broadband is getting cheaper every day. AT&T has huge advantages in being able to service customers, if they want to. They have a national network of towers, national business offices, servers, scientists, workers, etc. If they want to provide low cost access they can compete and beat anyone else.

But if they continue to act as if this is something difficult, or impossible, they will eventually be replaced by some geeks working in their garage. Everyday, the technology that would enable a small company to compete against these big conglomerates gets cheaper. It could start in one city, with a small company providing super high speed access for very little (as Google plans to do) and then another and another. It could happen with a company providing access to apartment buildings and small businesses. The threat is very real.

Google's shot at the bow should serve as a wake up call. Hopefully, big telecom will respond in the true American way, by competing and making it unnecessary for Google to move further into this market. But if they respond according to their tradition, which is to delay and confuse the issue by pressuring Google behind the scenes to retreat, they might dodge a bullet to their arm by moving into one that gets them in the head.

UPDATE: BoingBoing posts that Google also has made available a ISP speed tester so the average person can find out how their network speed stacks up.

YouTube ISP Tester

AT&T To Remain Exclusive iPhone Carrier Through 2011?

2010-02-10T10:02:00.001-08:00

This is all over the internet: rumors that Apple will stick by AT&T as the exclusive carrier until at least 2011.

Apple Extending Exclusive iPhone Deal with AT&T?

There's a good case to be made for Apple waiting to dump AT&T, especially with the iPad coming out. Apple's selling iPhone's like crazy, making money like crazy, and will have its hands full gearing up to meet iPad demand. No particular reason to rock the boat now. Except iPhone customers hate AT&T, but so far, they don't really blame Apple.

For AT&T, this is good news for continued high profits. But there's danger here too, unless AT&T finally get's it's act together and fixes it's service problems. iPhone customers are really pissed off, and increasingly becoming active about their unhappiness with the status quo. The danger for AT&T is that they get the ear of regulators and this becomes a national consumer issue, which it should be. AT&T has other issues it would rather have government focus on then why it has a monopoly on the iPhone and can't service it.

It won't hurt Apple if the government steps in and forces it to dump it's exclusive rights deal, or come up with a new national broadband policy that allows customers to freely move devices between carriers (and forces carriers to adopt a universal standard). It AT&T doesn't want regulators to step in, it needs to take advantage of this opportunity to really improve service.

FCC Looking to Take Advantage of iPad "Crisis" to Give Away Spectrum

2010-02-07T09:00:00.000-08:00

Remember back in 1996-1997 when the internet crashed because AOL allowed it's customers unlimited use? Oh, you don't? Well, surely you remember the headlines all over the media because AOL dial up customers experienced service outages? Oh, don't remember that? Do you at least remember the important FCC "hearings" on the issue? Do you remember AOL? They were like this big company that dominated internet access and… well, they offer free e-mail service now. You see AOL originally charged per bit and in 1996… oh, forget it.

Well, the FCC remembers! And the "crisis" of 1996 for AOL dial up users experiencing outages still rings in their ears like yesterday. No one at the FCC forgets the compelling testimony at the "hearings" on the issue. A tearful witness confessed that when they wanted to find out if "they had mail" they had to dial up repeatedly.

FCC FEARS IPAD MIGHT MEAN A REPEAT OF DARK DAYS OF 1996!

Thankfully, under the relentless scrutiny of FCC "hearings," some bright scientists at AOL were able to solve the crisis by "upgrading their modem and server capacities." Who would have thought?! Okay, so here is where I need to get a little technical, so try to keep up with me. You see, modems are these things that send bits of data across the internet and servers are these things that store information, or something. "Capacity" is a technical term a little too complex to go into here, but basically, more of it is better. "Upgrading" has to do with fixing stuff, often electronic things. Now, back in 1996, the internet was just beginning to take off. The concept of having to "upgrade" your "capacity" was almost unheard of. There was no way that a large company like AOL, that had been charging per bit to customers, could anticipate that demand would increase once they offered unlimited use, let alone that that demand might cause"outages." Further, no one could have imagined the solution would be to "upgrade capacity." Thankfully, the FCC had "hearings" on the issue and the problem was solved after much national hardship. (AOL anticipating customer demand for unlimited service would have been as unbelievable as AT&T imagining that millions of new iPhone customers would strain their systems.)

Well, with the coming of the iPad, bright eyed bureaucrats with long memories want to prevent another crisis. Solution, according to the FCC? Steal spectrum and give it to the big telecoms for nothing. Now, I'm not an expert on spectrum, but I suspect it has absolutely nothing to do with any issue AT&T might or might not have with providing service for the iPad. Or with AT&T's current problems servicing the iPhone. I suspect the solution to iPad demand might be that ground breaking idea from 1996 to "upgrade capacity." But even if there was any spectrum issues, it has utterly nothing to do with AOL's "historic" problems in 1996. (And the FCC can't think of anything else that has happened since then that might apply?)

AOL's problem was that it wanted to charge per bit (tiered pricing) and it's competitors didn't (because customers like flat rates). AOL waited far too long to switch over, and when it did, it wasn't ready. The real lesson of all this is that corporations shouldn't fight fixed pricing, and they need to be ready to service customers before they offer service. AOL didn't understand that, and it betamaxed itself.

Of course, that doesn't stop FCC bureaucrats in the service of big corporations from trying to use the hype of a new product people want to make unrelated changes in our nation's telecom policies to serve their master's special interests. And it doesn't stop corporate "Spin Trolls" from weighing in on the comments section to try to further the bullshit. Thus we have a "guest" comment on the FCC blog stating:

"I'm glad someone at the FCC finally understands… if we don't manage the wireless spectrum, either through tiered pricing models or forms of network management (i.e. Bit-Torrent curbs) we will end up with slow, congested, wireless networks."

First, Mr. De la Vega, if you're going to make anonymous posts, pick a clever female name and stop with the "guest." (But don't use your World of Warcraft avatar name!) Second, obviously, the lesson of AOL was that tiered pricing and limiting customers use of bandwidth DOESN'T WORK. Why would anyone suggest returning to 1995? My suggestion to AT&T is to learn from the AOL debacle and embrace customer's desires before you become a historical footnote. Like the 1996-1997 crisis that no one remembers.

Meanwhile, if the AOL crisis caused FCC hearings, why aren't they having them over AT&T's iPhone service problems? And if the FCC is worried about the iPad, why doesn't the FCC encourage the development of a national standard for wireless carriers so customers can switch easily between competing companies? Why is the solution always offered to any problem customers might have to either limit their options (with tiered pricing or denial of services) or give money to corporations (free spectrum)? How about a free market and free competition?

AT&T Still Doesn't Get It

2010-02-05T09:30:00.000-08:00

AT&T is offering a nice little App on the iPhone App Store that helps families track each other on maps:

AT&T Announces Family Map

Now, most apps on the App Store are free and it would make a lot of sense for AT&T to just offer this app as a nice free service to it's loyal customers who pay at least $100 a month for their iPhone and if they're a family with more than one, then at least $200 a month (or $500 if they have a couple teenagers). So offering them a way to keep in contact, safely, is just good corporate policy. Making sure a customer's teenager isn't kidnapped is good PR.

Now, a lot of apps are offered for $.99 cents and if AT&T wanted to cover their development costs, no one would fault them for charging a buck for something so useful. And of course, really great apps cost as much as $9.99 to download, and if you really care about your kids, (or whether your husband is cheating on you) that doesn't seem too much to pay.

So what does AT&T charge for this nice little app?

They want $9.99 A MONTH. Do I need to say anymore? Do I really need to explain why AT&T doesn't get it? Why this is so wrong headed and greedy and stupid? Why AT&T will make far less money on this than they would if they charged 99 cents? Why if they don't change their corporate thinking they won't survive any iPhone carrier competition? No… you get my point.

No word yet on whether AT&T will eventually ask for tiered family map pricing in addition to the $9.99 a month. You see, if you daughter goes to a particularly dangerous party, you'll have to pay extra to map that, or if you grandchild hasn't called you recently, there will be service fee for locating her and… you get my point. After all, family map "data hogs" might needlessly clog up the system by actually using it.

Business Week Plugs AT&T Critic!

2010-02-04T08:53:00.000-08:00

Roben Farzad gives AT&T Critic a great plug in Business Week's cover story:

AT&T's iPhone Mess

While it was nice to see my name in a major business journal, the most interesting part was reading another promise from AT&T Operations President John Stankey that iPhone tethering is coming "soon."

But why not now? Well, according to Stankey, "You don't want to throw more gasoline on the fire." What? You're kidding? Roben, did he really say that?!

So let me get this straight. The "gasoline" would be extra data use by tethering on the iPhone? The "fire" would be AT&T's inability to handle all that data?

So if there's a "fire" why not stop iPhone sales? Or, why not charge extra to new customers to discourage more traffic than AT&T can handle? Or, charge a lot for tethering until AT&T's networks can handle it. No, instead, AT&T needs to "manage" it's current customers by preventing them from doing what they would like on the iPhone. So current iPhone customers get to pay $120 a month to have their uses "managed" so AT&T doesn't have to slow their market share growth. Thanks, AT&T!

Even if that was remotely defendable in terms of handling unexpected iPhone demand, it certainly doesn't fly when AT&T is planning to be the exclusive provider of service for the iPad, which will use exactly the kind of data stream that tethering would require. So AT&T prevents it's $120 a month customers from using their technology so it can sign up millions of more customers at $30 a month to do what it's old customers wanted to do.

And then, I guess, once AT&T is in control of enough market share, they'll give us the honor of charging us for tethering too. Just so long as it doesn't effect it's quarterly profits. Because despite AT&T's problems servicing it's customers, it's making tons of money on them. Money that could have been invested into fixing it's cell towers, but that might hurt short term executive bonuses. AT&T's customers can wait, or rather, they have to wait because they have no choice. AT&T has a monopoly on the iPhone in America.

Communist countries fall apart because when you have an economy that isn't based on a free market, where the government isn't answerable to the people it rules, it rots from mismanagement. The government makes decisions based on staying in power, not on what is best for the people it governs.

This is why business monopolies are generally illegal in true democracies. Because the bosses of a monopoly make decisions mainly based on keeping power, not serving their customers. This is what has happened at AT&T because they have a monopoly (of questionable legality) on a key piece of technology, the iPhone. They are making decisions not on what is best for the iPhone customers that are shelling out big bucks every month, but based on their desire to grow market share and dominate the market. So tethering doesn't fit in AT&T's plans for control of America's cell towers. So iPhone customers can't have it (but AT&T Blackberry customers can because AT&T doesn't want to lose that market share). This is wrong.

In his Business Week piece, Mr. Farzad says that the "Mackay Bells of the world" wouldn't be a problem for AT&T if it still had a strong landline business (a fading monopoly). But while I specifically may not be a problem for AT&T, others like me are. And AT&T needs to stop abusing it's monopoly power and start competing like a free market corporation. Charge for your service, charge more if it is expense or scarce, but don't exploit one set of customers to finance market share growth on another.

I started this blog just a couple months ago as an experiment. Thanks to the wonder of the internet, I'm able to broadcast it globally 24 hours for free. I've got no advertising, no name, no access to politicians. But in that short time I have a growing audience and am now quoted by big business journals. I don't expect to be able to have a large impact on AT&T's business practices, but my complaints, and my ideas, do have merit. They circulate to others. And other "Mackay Bells" who are unhappy with the way AT&T is handling it's monopoly are also writing to the world. This is the way revolutions are started. AT&T needs to consider what happens to tyranny when enough people get pissed off.

If Apple doesn't allow other carriers to service the iPhone soon, the US Government needs to step in. American's will demand it. And if Apple does allow other carriers, AT&T needs to consider the way it has mistreated it's customers, and quickly change if it wants to compete in a truly free market. I humbly suggest it starts practicing now.

Meanwhile, everyone else needs to understand why laws enforcing net neutrality are critical to our democracy.

What Happened to Tethering on the iPhone?

2010-02-03T07:45:00.000-08:00

One of my biggest pet peeves against AT&T is that it needlessly prevents it's customers from being able to use it's technology to the fullest while it tries to figure out how much it can tear from their wallets. For example, tethering on the iPhone.

AT&T could offer tethering on the iPhone tomorrow. There's no legal, or technological reason not to. It just doesn't. Not only that, tethering your iPhone is so simple, AT&T has to actively force Apple to prevent people from doing it with a simple downloadable app.

Even so, it's a fairly simple hack if you're willing to jailbreak your iPhone:

Tethering Hack

Tethering with no monthly fee. But jail breaking your phone violates your service contract and can create other problems. Why should AT&T customers have to go to complicated (and possibly illegal) lengths to do something that every other iPhone carrier in the world offers?

The answer is, because AT&T hasn't figured out how much it wants charge you yet. And it wants to charge you a lot. But it thinks maybe it can't. So it would like to charge you a little, but sneak in hidden fees that charge you a lot. But maybe it can't do that.

So in the meantime, while AT&T thinks about a price structure, you're screwed. No tethering. For the rest of the world, it's 2010 and internet access is widely available. In America, thanks to AT&T, it's 1970 and you can't do anything the phone company doesn't want you to do.

How do I know AT&T's confusion on a price structure is the only reason it isn't offering tethering? Because it's a fact. Oh, sure, they might say their are legal reasons, bandwidth issues, making a deal with Apple issues, or other crap. But I'm telling you I KNOW it's because they can't figure out how much they want to charge.

Well, that and they'd rather you couldn't do it. They would rather that you have to pay separately for a separate AT&T USB dongle and pay $60 a month for that device's service. And sign a separate 2 year service contract. That's what they'd like. And that's what you have to do, if you're an AT&T customer with an iPhone and a laptop and you want to access AT&T's wireless network. At least for now.

So that's the reward for being an AT&T iPhone customer. For $120 a month in iPhone service, you get AT&T actively working behind the scenes to disable your phone so you're forced to pay an additional $60 a month (and service contract) for something you should be able to do for free.

Fine, AT&T hates you. They're greedy. Okay. Then at least be honest. Tell us, "You're never going to get tethering you bastard customers! So stop whining or we'll raise the price of texting to 50 cents!" At least then, we could move on with our lives. Stop dreaming and get used to the idea that no tethering is the price of having an iPhone in America.

But no, instead, AT&T lied. Back in November 2008, AT&T Mobility CEO Ralph De La Vega promised an audience at the Web. 2.0 Summit that tethering was coming "soon."

AT&T CEO Ralph De La Vega Announces Nov. 6, 2008

So Ralph promises it will be soon. But he doesn't say how much it will cost. Will it be free, like on a jailbroke phone? Nope. AT&T flacks float a price $30. They get the word out to loyal AT&T customers that it's coming soon, for a price:

It will Cost $29.95 a Month

But with no official date offered, AT&T PR flacks send out the message that it's only being delayed because it's complicated. More complicated than the Blackberry on which (for some reason) AT&T allows tethering.

Tethering Coming Soon AT&T Just Wants to Make Sure it Works Double Good!

Once again, possible price, $30 a month, limited data cap. For unlimited data, AT&T will get you a wireless PC card (with extra service contract). In case $30 for the imaginary coming service might seem a little high, AT&T flacks tried to confuse the issue. Maybe it will be even cheaper:

Tethering Only $10 Gotta Love AT&T

And no, really, it's going to come. AT&T flacks wouldn't be planting blog stories if it wasn't:

It's Still Going to Come! Nov. 9, 2009

Of course, it never happened in 2009, and there is still no word of it happening in 2010.

So how much longer does AT&T intend to prevent us from using our iPhones to their fullest? Well, now the focus is on the iPad. Rumors are still floating that AT&T is going to lose exclusive rights to the iPhone, so it appears that AT&T doesn't give a shit if it's loyal iPhone customers get tethering any time soon.

Which brings us back again to why? Why not offer tethering?

Because AT&T is a dinosaur. It wants to live back in the Jurassic (1970's) period when customers had to pay whatever it wanted to charge. That time is gone, but AT&T can't stand it. So it just stands there pouting.

Everything is moving toward the idea of free or very low cost global internet access. And AT&T hates that idea. It still wants to charge for night time and weekend minutes. It still wants two year contracts to charge for NOT providing service when you want out of them. AT&T simply doesn't want to make an honest buck providing a needed service.

If AT&T wanted to charge $60 a month to tether your iPhone, there are probably a bunch of iPhone users who would simply pay it for the convenience. If it charged $30 a month, there would be many more, and probably enough more to make up for the lower price. And the fact is, at $10 a month, it would probably still make a ton of money, and keep it's iPhone customers happy. But AT&T doesn't want that. What it wants is to charge $14.95 a month, for limited data, with $29.95 for more data, with $0.49 per megabyte overages and two year service contracts with early cancellation penalties.

What AT&T loves is when you pay a fixed monthly fee and EXTRA money every now and then to make your life miserable. You know how when your phone bill is suddenly a lot higher than you thought it would be, and you freak out about if you can pay it? You know that "$240? For what? Service overage? What?" That sinking feeling in your stomach because a strange roaming fee cost $130 and that means you can't have fries with your burger for the next two months? AT&T loves that. They love those hit you when you aren't looking charges that mean you worry about paying your rent. They love you being forced to pay more than you expected.

That's what tiered pricing is all about. And AT&T hungers for tiered pricing like the Dark Lord hungered for the One Ring.

But Apple said no to tiered pricing. So AT&T has said no to tethering. So all we American iPhone users can do is wait for AT&T to finally realize it can't get what it wants and give in, or until Apple gives up and allows other carriers to offer iPhone alternatives. Or AT&T can swallow up all it's competitors and bring back 1970. Which is maybe it's long term plan.

iPhone AT&T's Profit Golden Goose

2010-02-02T09:33:00.000-08:00

AT&T just added 3.1 million iPhone users and more than a third were new AT&T customers. This despite all the bad press concerning AT&T service and iPhone problems in New York.

AT&T Fourth Quarter

The iPhone is responsible for huge AT&T profits. So why has AT&T been almost silent since the announcement that it would be the only carrier offering service for the new iPad? Why isn't AT&T crowing about that victory?

Is there something AT&T knows that we don't? Like Apple has another carrier in the wings?

Verizon iPad and iPhone in June?

2010-02-01T19:20:00.000-08:00

Rumors persist that a Verizon friendly CDMA iPad is coming:

Verizon Compatibility A Certainty

Doctor AT&T's Revenge!

2010-02-01T12:15:00.001-08:00

AT&T Says They Can Handle New iPad Traffic

2010-01-29T10:47:00.001-08:00

AT&T seems to be saying the right things and not speculating too much in this piece.

Unlocked but Locked

It also covers this issue of whether T-Mobile could offer service, concluding that it can't. I'm still unconvinced. I'll keep you posted.

iPad's Micro SIM Won't Work With T-Mobile?

2010-01-29T10:40:00.000-08:00

This is another piece that goes into more detail about the new Micro SIM that will be standard on the about to be released iPad.

Micro SIM Explained

I'm not sure I believe all the conclusions here, especially that it won't work with T-Mobile. To me, the most interesting part about all this is the fact that T-Mobile won't comment.

Will the iPad work with other carriers? Stay tuned…

AT&T To Fix Network For iPad?

2010-01-28T10:09:00.000-08:00

NOTE TO AT&T FLACKS

This is the kind of press you want:

USA Today Says AT&T Will Fix Network

Stop lying, fudging and avoiding service problems. Simply say you're spending tons of money to fix (or make better) your network. Even if it isn't true, this is what customers want to hear. Customers are either happy with AT&T service (so they don't care if you fix it) or they are unhappy (and want to hear it's being fixed). Whether it's better than Verizon or some study shows it's really great doesn't matter if you can't get a signal in your building. Service your customers either with a good network, or the promise it will be fixed soon. And then if you must slip in information about how it really is better than most other choices, fine.

Since it appears, for now, we iPhone users are stuck with you, here are some other tips on PR so you can at least stop annoying us more than is necessary:

1. Keep a lid on your execs spouting about data hogs and the need to raise prices. Data hogs are your best customers. Will people who use their iPads a lot also be data hogs? And no one believes your execs when they say that raising prices on some people will mean others will pay less. So just knock it off. Either raise prices or not. Don't hint at it.

2. Stop trying to blame imaginary iPhone hardware problems for your network. The iPhone is where most of AT&T's profits come from. So fix your network to work with it or shut up. I really will bitch slap someone if I buy an iPad and later read a planted press piece that the reason I can't get a decent 3G connection for $30 a month is because it was badly designed.

3. Treat iPhone customers the way they should be treated, as your platinum clients. Send us a nice e-mail talking about how you appreciate us and how valuable we are to you. Throw us a freebee now then then like some fun Apps or content. Maybe even a free week of service or cut the ridiculous charges for texting. Treat us like you don't want us to jump ship the minute we have an alternative carrier.

4. Stop floating anti-net neutrality politics in the press. Stop trying to fool us into thinking that if you aren't regulated you won't try to fuck us. We aren't stupid. Have the decency to fuck us behind closed doors by paying off politicians. And then keep quiet about it. I want to enjoy Jon Stewart clips on the Huffington Post without be distracted by some idiot saying that telecoms need FCC support to fund network improvements.

UPDATE: Seems like AT&T is getting on message. Nice guys:

NY Times

Does Micro SIM Lock the "Unlocked" iPad into AT&T?

2010-01-28T05:01:00.001-08:00

So still trying to sort out all the news about Apple's new iPad and whether it was a vote of confidence (or surrender) to AT&T. Looks like more of a mixed bag, but I need more information. Here's one piece of the puzzle. An explanation of the new SIM card. (It's getting a lot of traffic, so you might have to hit the link a few times)

Apple iPad's Micro SIM Explained

The post says: "In fact, from AT&T’s perspective, this is better than a software lock in some ways — you’re not going to be able to download a hack that gets you on another network, so you’re totally at the mercy of your carrier at choice for providing a compatible card."

Hmm… but how difficult really will it be for other carriers to come out with micro SIMs? Can't be that hard. And they have several months to get up to speed. I don't think the jury is out on this yet.

Why Did Apple Stick With AT&T?

2010-01-27T15:49:00.000-08:00

Still trying to find out exactly what the new iPad deal with AT&T means. Here's some commentary:

Why Did Apple Stick with AT&T on the iPad?

Apple iPad Unlocked! What Does This Mean for AT&T?

2010-01-27T11:44:00.000-08:00

Apple announced it's long rumored iPad tablet.

Apple Announces iPad!

Big news is that it's unlocked! And it offers "no contract" AT&T 3G service. And I was just writing about AT&T's poisonous contracts. Hmm… very interesting! More as this develops quickly…

AT&T's Early Termination Scams Are Catching Up With It

2010-01-27T09:38:00.000-08:00

Early termination fees are a poisonous drug that the big telecoms, and AT&T in particular, are addicted to. AT&T tried to quietly settle one lawsuit involving them while the FCC is investigating the issue:

AT&T Settles ETF Lawsuit

While I'm sure that there are AT&T execs that enjoy the idea of customers having to pay to escape poor service, long term these kinds of contracts are bad for business. It creates incentives for AT&T to offer deals it can't really live up to (like getting more iPhone subscribers than it's cell towers can handle) and provides profits for failure when customers exit unhappily. Long term, failure isn't a good business model.

Does AT&T really want it's future to be tied to scams? Is it really unable to complete by trying to offer the best possible service? Does it really want to train a generation of cell phone customers to be wary of being ripped off?

One of the biggest growth areas in telecom has been "no contract" cell phones. This is a direct result of ETF scams. These kinds of "no contract" deals are really putting downward pressure on monthly service charges. AT&T has been forced to respond with it's own "no contract" deals with the "GoPhone." But despite AT&T's marketing muscle, profits from the GoPhone have not been amazing and AT&T's hopes that many customers would shift into full monthly contracts have not been happening.

Customers can tell the difference between reasonable ETF fees (especially for discounted phones) and unreasonable ones. Outrageous termination fees are going to create a customer base with little or no loyalty to brands, who will simply see phones as disposable devices that should be acquired and tossed based on whoever is offering the lowest rates.

AT&T is at a cross roads now that it will be losing iPhone exclusivity. Provide real service, build a real brand with a loyal customer base, or complete simply on the lowest prices. What kind of business do they want to be in? Do they want to be Chevy or Mercedes or Yugo? For several years, they didn't have to choose. They were charging high rates to iPhone users and making huge profits with marginal service. They also ran after the low price market with GoPhones.

Without the iPhone, or anything new to make up the difference, they will have to make a choice or see their profits fall apart over the next decade.

UPDATE - POST IPAD ANNOUNCEMENT: Did AT&T want to bury this settlement announcement prior to the "no-contract" deals Apple forced it to take for the iPad?

Apple Says AT&T Will Improve

2010-01-26T10:09:00.000-08:00

I suppose it's better late than never:

Apple Says AT&T Will Improve

What's kind of weird about this piece is that Apple COO Tim Cook says "we've personally reviewed" these plans. Why do we need Apple to confirm that AT&T will really fix it's network? Oh, because AT&T keeps lying. It lied about tethering, it lied before about fixing it's network, it lied about why it stopped selling in New York, etc., etc.

This, of course, is a nice way of Apple kissing AT&T goodbye when it dumps them tomorrow as everyone expects and Verizon leaps in. Hopefully, this will finally be a wake up call for AT&T and they really will fix their network and try to compete on service.

AT&T Is Better Off Without iPhone?

2010-01-25T07:37:00.000-08:00

So the big rumor today is that AT&T will lose it's exclusivity on the iPhone (no big surprise) and that it will be announced Wednesday when the new Apple Tablet is said to be revealed. (That is a bit of a surprise.)

AT&T Rumored to Lose iPhone Exclusivity

Of course, AT&T flacks are out in force, trying to pre-spin this news. They ran to friendly blogger Tom Brady to get out their side of the story:

Loss of iPhone Great News for AT&T !

Brady has previously devoted columns to the widely discredited NYTimes piece claiming that hardware problems in the iPhone, not AT&T, were really to blame for AT&T service problems. (For some reason, the iPhone works great every where but in America. Maybe we have a different version with hardware problems.) He, of course, repeats this unsubstantiated bullshit and says it will be great for AT&T not the be the whipping boy for iPhone problems. Never mentioning why other carriers would want a defective product. (Oh, because it makes huge profits for them? But won't that mean AT&T profits will be hurt?)

Another blog post gets it right by saying that the announcement of AT&T's loss of exclusivity at the iTablet unveiling would be "hugely embarrassing" for AT&T.

Steve Jobs Announces AT&T Sucks

But AT&T spin doctors do manage to get a little rub in at the end that maybe they'd be "happy" not to take the heat for service problems. Right…

With an end finally in sight, AT&T's mishandling of it's iPhone exclusivity opportunity has to go down as one of the biggest corporate tech blunders in recent history. The iPhone gave AT&T huge profits with which to have built out its network and be well ahead of any competitors. But instead, it gouged customers with needlessly high prices, denied problems and basically acted so arrogantly it alienated the richest and most tech savy group of trend makers in the technology sector: Apple customers. These are people who are known for brand loyalty.

The end of iPhone exclusivity should have been a question of "why?" to AT&T iPhone customers. Instead, they are going to packing up to leave like they are passengers on the Titanic.

Customers Don't Want Apple Tablet if It Requires AT&T

2010-01-22T08:07:00.001-08:00

Here's an interesting piece that talks about whether the coming Apple tablet will be exclusive to AT&T or Verizon:

AT&T and Verizon Both Get Tablet?

The most interesting part is that 34% of potential customers DON'T want an Apple tablet if it requires an AT&T connection. OUCH!

So the most talked about, most anticipated, and desired device of the new decade becomes a turn off to customers if it's connected to the exclusive carrier of the iPhone? Wow, AT&T sure did a great job of angering Apple customers in a few short years!

What's sad is that AT&T execs probably don't react to numbers like this. They just assume that people are going to hate them. So they hate their customers back. They want their money, but they don't care if they're happy or not. They act as if their customers are ungrateful. They assume that no matter what they do, people will hate them.

Guys, it doesn't have to be that way! Honestly, it isn't that hard to keep customers happy. People love Apple, and it overcharges for it's products. It makes mistakes and sells crappy devices sometimes. It charges a huge nerd tax. But customers love it because they feel like it is trying. And it innovates. It tries to provide new things for people, rather than raking up rates on old things or preventing people from doing things they want to do.

There is no reason that people have to hate their cell phone provider. AT&T, take a serious look into your own heart. Why do you hate your customers so much? Is it… that you really hate yourself?

Deep down, don't you want to be loved? Isn't the reason that you hate your customers because you need love so much? But you have to make the first step. You have to reach out and offer a hug. Tell your customers how much you love them, and they'll love you back. There is still time. But you don't know how, do you? I'll tell you. Let Uncle Bell help you. I'll give you one simple example.

Give away free tethering on the iPhone. Now. It won't cost you much, and it will make millions of the most tech savvy iPhone customers extremely happy, very quickly. You could build huge loyalty almost over night.

Seriously, guys, consider it.

Fake Price War Between AT&T and Verizon Hides Real Costs

2010-01-21T09:01:00.000-08:00

A terrific piece on cnet breaks down the new cell phone plans being offered by Verizon and AT&T:

AT&T-Verizon Plans Compared

No big surprise, but Verizon and AT&T's recently announced "cuts" in cell phone rates really mask rate increases. Cnet breaks it down nicely. For most customers, rates will increase. (So why should we believe AT&T and Verizon execs when they promise that tiered pricing would mean lower rates for most customers?)

Also, as it's no big surprise that AT&T's rates and Verizon's rates are almost identical in every way. (How do you spell, "collusion?" Kind of like you spell price fixing.) Of course, the pricing packages are put together in as confusing a way as possible to make it difficult to compare the real costs of service (not even including taxes, etc). But the short of it is that Sprint costs on average $20 less a month than AT&T or Verizon and T-Mobile $40 less a month.

So what does one get for the extra money you pay to Verizon or AT&T? Verizon claims to have a better network. AT&T claims to have the best. Neither are much different. As far as I can tell, Spring and T-Mobile customers are just as happy, if not more, with their coverage. AT&T, of course, has the worst customer service ratings.

So right now the only thing AT&T has to offer for that extra $40 a month is that if you have an iPhone, you'll have no choice but to use their service. That seems likely to change soon, and real rate decreases will happen if you can move your iPhone service to T-Mobile over the coming year.

Until that happens, lets talk about why rates are confusing. Despite what AT&T execs and Verizon execs claim about "data" hogs and wanting to price cell phone service like "water" or "electricity" (how about pricing it like gold?), the real costs of cell phone service are in… service. It costs money to put the phones in stores, to sell them, to bill you, to answer questions, solve problems, all those things that require actual people (and sophisticated software created by people). Yes, you also need towers and electricity and computers and networks, but once those things are in place, the costs per customer don't vary much whether someone uses their phone a lot, or a little. It's pennies, not even nickels. Obviously, it costs to build capacity, it costs to expand coverage, but once that coverage and capacity is in place, flat pricing makes the most sense. Not only because the difference in a high use customer and a low use customer is marginal (pennies) but keeping track of all those "minutes" or data usage costs more in paperwork and computer time than the actual cost of use.

Unless, of course, you're charging a lot for that imaginary extra cost. For example, it probably costs $20 or so just to provide national cell phone service to a customer, whether he uses his cell phone a lot or a little. Then real difference between a high use customer and a low use customer might be as little as 30 cents in electricity. Keeping track of exactly how much each customer uses might cost an extra buck in paperwork, so you're losing money just bothering. That is, until you charge $30 more to the customer who's only costing you 30 cents more. Get it?

This is why all true low cost providers usually drop tiered pricing and go quickly to flat rates. It's not worth the paperwork unless you can convince people to pay extra for it. This is why in the early days of the internet, within a few years, all providers went to unlimited data plans. But big telecom has been fighting this ever since, because there's money to be made in the illusion that "data hogs" cost more. Thus, it's important for bills to be as confusing as possible.

But low cost providers like T-Mobile, calling cards, Skype, Vonage, are making it harder and harder to convince people that cell phone "minutes" are worth paying extra money for. So "unlimited" plans are becoming more and more common (notice they never call them "flat rate") for voice service. AT&T and Verizon can't continue to charge $40 more for the same voice service without offering something else.

So these big Teleco's are shifting the pricing away from voice and focusing on data plans. The new pricing really is about charging people for mandatory "data" plans. People with midrange phones that have lousy internet features now have to pay to use them. Whether they want to or not. Of course, maybe if people get used to using midrange phones for internet, they won't need iPhones and AT&T can stab Apple in the back. Hey, it probably won't work, but why not try?

The Holy Grail for AT&T and Verizon would be if they can somehow shift from charging for imaginary "minute" costs and charge for imaginary "data" costs. But customers scream whenever they bring it up. So in the meantime, they charge separately for extra services. $50 for voice, $20 for texting, $30 for internet, etc. Once again, these are imaginary distinctions. The costs of servicing a cell phone are about the same, whether someone uses texting or voice or data. But the illusion of providing extra service is something these big companies can demand extra money for. Here's a great piece by Stacey Higginbotham on Verizon's confusion in trying to figure out how to charge customer's for data:

Verizon Execs Can't Figure Out How to Charge for Air

So when are these companies going to stop playing games with customers by trying to rip them off with imaginary services? Why not offer "actual" real services that people would pay extra for? I would pay extra for a cell phone with switchboard services, meaning it could use more than one phone number and manage messages from more than one line. This is very technologically possible, but nope, no one offers it. There are businesses that would pay to have a live person take messages, why doesn't AT&T offer that option to the average customer? What about offering concierge service? How about some exclusive content? How about data storage? (Why can't I send old messages from my iPhone to a long term message storage site?) I would pay extra for tethering my iPhone tomorrow, but AT&T lied about providing that service a year ago. Why can every other iPhone user in the world tether but not AT&T customers?

Instead, what we get are announcements of "price cuts" that hide price increases. Maybe these huge corporations will keep getting away with this, but I suspect it's going to catch up with them eventually. Someone will provide real competition some day soon, and they simply won't know how to respond until it's too late.

AT&T Needs to Spend Billions to Fix Network

2010-01-20T07:37:00.000-08:00

Here's some real analysis about AT&T's network problems:

AT&T Needs to Spend Billions to Catch Up

Funny, no mention of the NYTimes puff piece that quoted "experts" in saying AT&T's network was just great. Did AT&T flacks forget to wine and dine PCWorld? Or have they just given up trying to spin what great coverage they have?

AT&T had an incredible opportunity by being the exclusive carrier of the iPhone, but it squandered the profits and alienated it's customer base. This year, it will almost certainly lose iPhone exclusivity, and a large number of unhappy subscribers. What a waste.

AT&T's Failing Empire

2010-01-17T07:56:00.001-08:00

Here's a great piece. Can't add much more than read it:

AT&T Rebellion

AT&T and Verizon Don't Think Net Neutrality Should Apply to Them

2010-01-15T08:38:00.000-08:00

Coming right on the heels of Verizon and AT&T's winks at each other to collude on tiered pricing to limit and manage customers data use, they now want the FCC to allow them to violate the principles of net neutrality:

THROW NET NEUTRALITY OUT THE WINDOW!

See how this works? First, you charge extra for extra data use, something that traditional internet providers don't do (or didn't until they were sucked up by giant telecoms). Then, you start offering free or lower priced content through your own channels.

With any luck, in ten years people will be forced to watch an AT&T channel because it's too expense to watch anything else, and a Verizon channel, and once again, big business will be in control of content.

You shouldn't have to pay extra for access to the full internet. That's a key principle of net neutrality. Big corporations shouldn't use customer's money to subsidize access to content they favor, that's another key principle. This a seriously slippery slope.

Cell phones are rapidly becoming one of the key ways people access the internet. If big telcoms are allowed to start favoring content on it, they could destroy the internet as we know it very quickly.

Here's one example. Maps. Several companies, including Google, offer free maps and directions to anywhere. These worked great on the big internet (your home computer) but work even better on the iPhone. For free you can find out where you are and how to get to where you want to go. This is a standard free feature. And if you don't like Google maps, there are alternatives that are also free, or charge a one time app fee. Great.

But AT&T tried to offer an iPhone mapping service and wanted customers to pay $9.99 a month for it. As far as I can tell, no one was interested and reviews on the iPhone app store were horrible. So it was a no go.

But bring in tiered pricing and allow cell phone companies the right to violate net neutrality and the game changes. First, AT&T starts charging per data bit. Maps are a lot of data and your bill goes up every time you use them. No more free maps, maps cost money suddenly.

So AT&T offers their own mapping service for "free" with no extra data charges. People use it to save money. Then what happens to Google maps and other free services? Well, they no longer are free, and worse, the money being charged to customers that use them doesn't go to Google but to AT&T. AT&T's free mapping service not only gets more and more customers (and market share) but also money from anyone that doesn't use them. Google and other map companies can't offer a "free" service that AT&T charges people for forever. So they stop offering these services.

Once that happens, guess what? Once the completion goes away, AT&T can start charging for it's own mapping service.

It is important for people to really understand that there is a war going on right now for control of the internet. And big telecoms, like AT&T and Verizon, want to completely control it. And seriously people, they have to be stopped.

Verizon and AT&T Agree on One Thing: Tiered Pricing

2010-01-14T10:22:00.000-08:00

AT&T's PR problems have prevented it's flacks from getting out it's message that people need to get used to the idea of tiered pricing for the iPhone. So Verizon is taking up the banner:

Verizon Floats Tiered Pricing Too

How do you spell "collusion?" Take a look at the movie, The Informant, if you want to understand how big corporate collusion on price fixing works. The trick is, it's great for all the corporations to make a deal to fix prices and screw customers. But that's illegal. If you get caught. So what they do is all agree, without formally agreeing. (In the Informant they made the mistake of finally secretly meeting and actually agreeing in words.)

One way for them to agree, without secret meetings that might be taped, is to talk to each other in the press. So AT&T execs talk about how tiered pricing is needed, and then later Verizon execs nod their heads. Now there's absolutely no reason to piss off customers by floating around these toxic subjects in advance, but it's a great secret code for execs to talk to each other to agree on fixing prices.

The truth is, there is no technological reason for tiered pricing. It makes utterly no sense, other than as a quick fix to rip off customers and boost short term profits. In the long term, it's going to hurt these big telecom companies, but in the short term, it will help exec bonuses. Why should they worry about their customers? They only pay for their salaries.

Is AT&T Going to Lose iPhone to Verizon?

2010-01-13T20:04:00.000-08:00

It's just a question of time before Apple makes deals with other carriers:

iPhone to Verizon?

But probably nothing is going to happen until the new Apple table comes out. And that is looking to be such a game changer, anything is possible.

How to Make Your AT&T Phone Bill Disappear

2010-01-11T08:30:00.000-08:00

This can't be good news for AT&T. A device that let's you get around playing high cell phone charges:

Magic Jack Cell Phone Provider Destroyer

Actually… while this is a cute little toy, and might be embraced by some people who really can't afford much else, it isn't a real challenge to AT&T or other cell phone providers.

But this brings up a very important issue: the real cost of making phone calls is almost nothing. Yes, it does take considerable money to put all the infrastructure in place, but after that, it's just moving bits around for almost free.

So while this particular device isn't a big threat to big telecom, the threat is out there. Someone is really going to come up with a device that is a game changer, or build a satellite or figure out a new kind of cell tower, or something. You can't keep over charging for something that doesn't cost much.

But you can charge a lot for good service. So do the math AT&T. Stop floating plans to charge tiered pricing for data, 30 cents for texting and midnight minutes and other crap on top of your already outrageously high bills. Get your act together on the service front, provide real value for your customers, or wake up one day and find out that a company that only charges $20 a year for phone service has taken over your business.