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

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

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!

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?

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

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?

Rumors persist that a Verizon friendly CDMA iPad is coming:

Verizon Compatibility A Certainty

Doctor AT&T's Revenge!