∞ Is AT&T afraid of iPhone users, MMS and tethering?

Users have been upset with AT&T since the iPhone 3G S and its ability to send MMS (multimedia messages) was unveiled last week at Apple’s Worldwide Developers Conference (WWDC). Tethering was also a big hit at the show, but again AT&T was nowhere to be found. iPhone 3G SThe answer seems quite simple: AT&T is afraid of what will happen to its network once millions of iPhone users start sending MMS and connecting their computer to the network.

There is history behind the theory. Remember the South by Southwest debacle? Throngs of 3G users descended on Austin, Texas and completely overwhelmed AT&T’s network. That was only three months ago. What has AT&T been able to do since March to significantly balance the foundation of its network?

The bigger question is what will happen when millions of people across the U.S. start using MMS and tethering all at once? At this point, I think you would see the network crumble like a house of cards.

It’s true that AT&T supports MMS and tethering on other devices in its network, but let’s be honest, they are not the iPhone. I’ve purchased so many phones over the years from Nokia, Motorola, Sony and none of them were as easy to use as the iPhone. And that’s just what AT&T counts on.

It’s easy to offer tethering and MMS support if only a small percentage of its users can figure out how to use it. It will be an entirely different picture when iPhone users decide to start hooking up their computers.

It’s also true that AT&T should have been planning for WWDC well in advance, so support could be announced for the new features.

Sadly, that wasn’t how things went down.

What happened instead was that during the keynote, Apple’s Scott Forstall stood in front of a large screen of carriers supporting the features and AT&T was not on the list. It was the only time during the keynote that attendees were visibly upset.

And rightfully so. That is just terrible for AT&T, no matter how you look at it. It took a full day for the company to acknowledge MMS and tethering were coming on the iPhone and that they would be supported.

Realistically, AT&T had little option but to respond. They were being raked over the coals by the media and hopefully recognized the shot across the bow that Apple fired at the keynote.

AT&T now says that MMS will be available later this summer at no extra cost to customers with a text messaging bundle. That was definitely unexpected, but pleasant news. Tethering is listed as being sometime “in the future.”

It’s no wonder Apple and Verizon are reportedly in talks to bring the iPhone to those users. Verizon is in the process of upgrading its network to 4G, which will be head and shoulders above where we are now.

It also means that Apple could release one iPhone and have it work on all of the GSM-compatible networks. Seems like a win-win for Apple.

I’ve been an AT&T user for 10 years and I have to admit that I’ve had very few issues. Overall, I’m satisfied. However, I won’t be satisfied for long if Apple enables features on the iPhone that I can’t use because AT&T can’t get it’s act together.



  • davidcl

    If AT&T fears that they don’t have the network capacity to support these features in use, then delaying the availability of the features is a good move. It still sucks, but it beats launching the features and having the network crash and burn. That would be a PR disaster.

  • Hrmer

    The dilemma now is whether to get the 3GS and re-up with AT&T for two more painful years of inferior service/coverage, or wait for Verizon to save us from it.

  • yet another steve

    I don’t get all the reports that Apple visibly ridiculed, “fired a shot across the bow” etc at AT&T. Apple, in fact, handled it as gently and diplomatically as it could. short of withholding features in 3.0 from the whole world because AT&T wasn’t ready in the US, just what could they have done/said?

    Obviously the info wasn’t going to make AT&T look good. But was there ANY way to avoid that?

    Apple simply choose not to withhold or delay the features from the entire world. And then did its best to gloss over AT&T. But an audience of developers was certainly going to notice.

    The mobile world outside of the US is quite advanced and competitive. Apple can’t compete globally by withholding features until AT&T is ready.

  • James Gowan

    Hell… in my area: there’s no 3G… stuck on EDGE. Totally lame, AT&T.

    (nice article, JD)

  • davesmall

    I have tethering on my iPhone 3G. I was one of the lucky few who downloaded the $10 NetShare tethering application from the App Store before Apple took it down.

    It’s a bit hard to configure but it’s OK once you get it working.

    Even though I’ve had tethering on the iPhone for some time I haven’t used it very much. I think that will prove to be the norm. It’s a life saver when you need it but you don’t need it very often.

    I’ve used it a few times when Comcast cable service had technical problems and my WiFi connection went down. Also a couple times at a hotel when I didn’t want to pay the $15 per day Internet connection charge for relatively brief sessions online.

    I don’t see iPhone owners using tethering very much. That would be even more true if AT&T decides to charge extra for it (I don’t think they should. I’m already paying them for a data plan and hitting me again for tethering would be double dipping).

    Though tethering works it isn’t nearly as speedy as WiFi. And it sucks down battery life on both the computer and the iPhone. You almost need to put the iPhone on a charger while connected. I see it as nice to have for occasional use but don’t see a lot of hours online with it.

    • James Grinter

      ” I see it as nice to have for occasional use but don’t see a lot of hours online with it.”

      It’s the “occasional” use that I think the telcos need to price for.

      Here in the UK O2 are offering tethering for an additional monthly charge. But I’m not likely to want to use it very often, so I would not make use of the service if I had to pay a monthly fee.

      A competitor telco (T-Mobile UK) has a low-cost data service (with a USB-stick modem) which you pay a per-day fee for any day you use it. Now if tethering were priced like that that I’d make use of it.

  • http://infinitesummit.com/ Stephen Hultquist

    AT&T have known that the new software would have these capabilities for years. AT&T, unlike most businesses, have not suffered an economic downturn. Instead of reinvesting and being proactive in building out a network that would be the envy of the world and everyone using Verizon (arguably the best network in the US), they instead dragged their feet and allowed for their biggest advantage (the iPhone) to have a new version for which they cannot support the newest features.

    This is the epitome of foolishness. Just as they gained millions of customers with the announcement of the various iPhones in the past, they will lose them the moment there is a competition for those customers.

    Fear never leads to success. Monitor your network, degrade performance smoothly if it’s over used. And give your customers what they want. It’s really not that hard.

    ssh http://twitter.com/shultquist

  • Eric

    Not to defend AT&T too much, but I haven’t seen anyone really point out the implications of iPhones accounting for something like ~40% of the mobile web traffic in the US. The iPod Touch is something like 25%. That means the other 35% of web traffic is from Sprint, TMobile, Verizon, and all the other AT&T non-iPhone users combined. If we use web traffic as a proxy for data usage, and just divide it up evenly, this implies AT&T’s network is seeing 4x-5x the data usage that Verizon is seeing (granted, not accounting for WiFi on the iPhone). The point is that due to the iPhone, AT&Ts network is probably handling a crushing amount of traffic – something the others simply don’t have to deal with.

    Is there any reason to believe that Verizon’s network is/would be better than AT&T’s if it had to deal with the data usage of millions of iPhones? It seems unlikely that they have 4x or 5x excess capacity just siting around. I’m sure someone who had the time could crunch the numbers more explicitly, but it seems to me an interesting question.

  • Tom Rozycki

    With all due respect to davesmall, I was extremely upset that I missed out on NetShare, and I expect that many users will use tethering “more than they thought.” Hell–I barely texted before my iPhone. Count me in as an early adopter and a VZ defector if they offer it first/more betterer.

    • davesmall

      Well Tom, you won’t use tethering when you have access to a direct internet connection or WiFi because 3G speeds are like jogging in ankle deep mud by comparison. I think tethering is great to have for emergencies. Be nice if you were spending the weekend at a B&B with no internet connectivity. However, you already have your iPhone and you don’t need to tether to check email or look up something on the web.

      Interesting that you should mention texting. I had SMS on my last four phones including my first generation iPhone. I can tell you the exact number of text messages that I’ve sent and received during my entire lifetime because that number is zero. I was delighted with AT&T allowed me to opt out of texting with the 3G upgrade. I use email constantly but have never seen a need for texting and think it is ridiculous for them to charge $$ for those little messages.

  • Tim

    Eric,

    You make a good point that AT&T’s network is hit harder than other companies’. Don’t put the iPod Touch’s numbers in there, though, since it only surfs on WiFi, not on AT&T’s network.

    • Eric

      Not that it’s a big deal, but if you use the mobile browser share numbers (from a recent widely reported StatCounter report), it doesn’t break out browsers by connection type but does explicitly list the iPod Touch. So to ignore the iPod Touch, you have to adjust the numbers appropriately which would give the iPhone over 50% browser share.

      The takeaway is that AT&T’s network is likely seeing the majority of ALL data traffic on all networks. So it’s not clear how you can actually compare network quality without similar traffic on each network.

      And also AT&T is not likely making more money off of each iPhone customer – if they were a BlackBerry customer, they’d have to pay the same data rate, but would use far less actual data bandwidth. Thus they are a better customer for AT&T. Now, that’s not to say that AT&T didn’t get many more data customers by having the iPhone than they would have otherwise. But the network cost per added iPhone user is way way higher than for anyone else. One has to wonder if they really took that into account in their build-out plans pre-iPhone. I suspect not.

  • Grover
    It also means that Apple could release one iPhone and have it work on all of the GSM-compatible networks. Seems like a win-win for Apple.

    You seem to have this situation backwards. The primary technical reason to stick with AT&T is that they are the largest GSM provider in the US, meaning they can use exactly the same hardware everywhere in the world and get some nice exclusivity kickbacks. A Verizon iPhone would mean engineering a CDMA model of the iPhone solely for Verizon alone and then producing a second model for everywhere else in the world. And each of those is multiplied by the number of different models, an issue compounded if they ever release alternate models (iPhone mini let’s say). It’s not completely out of the realm of possibility, but historically Apple has gone to great lengths to streamline its product lineup (i.e. the laptop update), so they’d have to be pretty desperate to go that route.

    That being said, they doesn’t mean they can’t (and shouldn’t) use the possibility as leverage against AT&T.

  • Riq

    I find it hard to accept any arguments defending AT&T. Sure Apple may benefit from the exclusivity arrangement with AT&T, and AT&T has clearly benefited from the exclusivity of the iPhone and the resulting migration of who-knows-how-many users from other networks to AT&T. But with great power comes great responsibility … or something like that. (Sorry, had to.) It’s offensive that AT&T, with Apple’s implicit approval, tells the entire U.S. market that the only way to own and iPhone is to accept a contract with AT&T (that offers increasingly fewer options) and then suffer for the fact that they actually can’t bother to deliver the services for which the phones were built and sold.

  • http://briandigital.com/ Brian

    One, I’ve heard AT&T has 4G in their sites, too, and are looking to move to it in a similar timeframe as Verizon.

    Two, when the exclusive deal is up, I really doubt Apple will sign another exclusive contract, with all the trouble the AT&T has brought (though, to be fair, it’s made all involved a lot of money). I’m sure they’ll make a CDMA version (how hard can it be to swap out a radio chip set and have two kinds of firmware… the OS won’t care) and let’s not forget that South Korea also uses CDMA, so that combined with Verizon’s huge user base is a lot of extra users… certainly worth the investment.

    Three, I think AT&T really needs to step up their game and show themselves to be worth of iPhone customer’s loyalty, because the first 2 years have been waiting at the exits. If they get their 7.2Mbps 3.5G net going quick and reliable, and create reasonable tethering plans, they have a shot at retention.

  • Robin Darroch

    There is another big difference between AT&T and many (most?) of the providers on that big screen at WWDC: if you have an iPhone in most other countries in the world, you get a data plan which includes a certain amount of data per month, then whopping usage charges if you go beyond that. A typical allowance in Australia is 500Mb, then 35 cents PER MEGABYTE beyond that. This means that allowing tethering is in the carriers’ interest: people who aren’t careful how much data they use with tethering will end up with massive bills.

    As I understand it, when you get an iPhone on AT&T your data use is unlimited… so if the actual use per customer goes up massively, it is AT&T’s loss in having to provide that for no extra revenue.

    I’m not saying it’s good for AT&T not to support features that the iPhone provides, but discredit where it’s due: other providers stand to make huge amounts of extra revenue by allowing tethering, while AT&T does not.

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  • Jocca

    AT&T network is overwhelmed by the number of iPHone users constantly surfing the internet and hogging up their bandwidth. This is one more reason why Apple should start selling the device to other networks and spread the burden around. I solved my problem by canceling my account with the company. My first generation iPhone is using the Verizon MiFi 2200 card for internet access and Skype for phone and the speed and robustness of the connection is just so much better than what AT&T has to offer. It is simply crazy. Skype connection sounds very good and robust but the software needs a lot of work to make it better. It is now still very hard to detect an incoming call and most of the time you find this out through e-mail notification, but it works great for outgoing calls.

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  • http://www.buzzingup.com Susan Grewal

    AT&T is never ready because the userbase of iPhone is enormous, but the point is which other operator can handle this load and then too being GSM because Apple does advertise iPhone as being calling and using internet at the same time which can only happen on GSM network not on CDMA phones