Why Apple Should Dump AT&T

Wednesday Jun 17th 2009 by Mike Elgan
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Thanks to AT&T's slow execution on support for new iPhone features, its horrible customer service, and its high and confusing prices, yet another iPhone launch has been compromised.

The new iPhone 3GS is much faster, more elegant and more usable than any other iPhone. With each new version, the high quality of the iPhone stands in stark contrast to the low quality of its exclusive US Carrier: AT&T.

I think it's time for Apple to drop AT&T -- or, at least offer iPhone on a second US carrier.

AT&T simply cannot keep up with Apple. The carrier lags the handset maker in technology, customer service and pricing.

The Technology Lag Problem

The shiny new iPhone 3GS offers a long list of great new capabilities. Among these are tethering -- the ability to use the iPhone as a mobile broadband modem for a laptop or netbook -- and multimedia texting, which means you can send text messages with pictures and videos.

While carriers around the world are supporting these new capabilities on Day One, AT&T is unable to do so. The company promises support eventually.

BlackBerrys, Palms and Windows Mobile devices have supported tethering for years. The inability for iPhones to tether has convinced many that iPhone isn't ready for business. Now Apple supports it, but AT&T can't.

Apple has finally introduced iPhone video. And what do people want to do with videos? Text them to their friends! But again, AT&T's failure to support this feature out of the gate means users are still waiting.

AT&T's failure to prepare for the 3GS launch reminds me of their inability to provide adequate signal coverage in small towns like, say, New York City, when the first iPhone launched. When Apple rolled out the iPhone 3G, AT&T's 3G coverage lagged as well.

The iPhone was first with a multi-touch user interface. But on other technologies like 3G, tethering and MMS, the iPhone is actually something of a laggard. In fact, Apple is behind the curve in many of these same technologies that AT&T is struggling to keep up with.

The Customer Service Disaster

Apple is also in a totally different class from AT&T when it comes to customer service. At the Apple store, you can make an appointment with a "Genius Bar" dude or dudette, and when you have your appointment, you'll usually find yourself talking to someone very knowledgeable about the products.

At the AT&T store, in stark contrast, they act like they've never heard of the iPhone. They're almost always unaware of their own policies and prices, as well as iPhone particulars.

After convincing my wife to upgrade from a Blackberry to an iPhone, I was told at the local AT&T store that she was ineligible to upgrade at any price. They simply refused to sell her an iPhone.

After two hours of trying to get AT&T HQ on the phone, I finally convinced corporate to call the store and set them straight. By then, my wife was so freaked out by the bad customer experience that she decided not to use an iPhone after all. AT&T cost Apple a customer.

AT&T service prices are also too high, especially for international coverage. I know someone personally who signed up for AT&T's 50 MB Global Add-On package. Yes, that's 50 MB per month for $60 in addition to all normal iPhone voice and data charges. Despite dozens of phone calls, the service didn't work for the first month. Then suddenly it worked.

This person surfed the Web a bit, visited Facebook, etc., and ended up quickly surpassing the 50 MB limit, racking up more than $1,500 in data overage charges in the first 36 hours. During this initial period, there was no way to tell how big in megabytes any given Web site was, nor any way to check the charges, as AT&T was unable to post information within that time on "pending charges" page.

After some telephone negotiations, AT&T agreed to look into the possibility that they just might drop the price of data for that first 36 hours down to $500, but only if he agreed to sign up for the $200-per-month plan (that's in addition to all normal iPhone voice and data costs).

Because the person is a college student backpacking on a very limited budget in cheap countries, he's now paying more for his data plan add-on than he is for room and board. His low-budget trip has turned into a high-cost nightmare, thanks to AT&T. That is, if they agree to reduce the charges.

Next Page: the iPhone 3G S upgrade fiasco

If they charge him for the whole amount, his once-in-a-lifetime backpacking trip is over. He'll have to leave immediately in order to afford paying for the use of an iPhone in Europe for a day and a half.

Studies have shown that iPhone users do far more Internet surfing that users of other phones. The wonderful qualities of the iPhone become merely a trap for those using it abroad -- especially when AT&T isn't capable of providing iPhone users with timely feedback about how much data they're using.

This is just one small example. You can find hundreds of other examples online of AT&T's horrible customer service.

The 3GS Upgrade Fiasco

When Apple's Phil Schiller announced the iPhone 3GS earlier this month, it appeared that the whole pricing and upgrade plan was very clear. He said the iPhone 3GS is just $199, and the 32 GB version just $299. Those with an existing contract would pay $200 more.

It turns out to not be that clear at all. AT&T in fact has set up a three-tier structure for iPhone 3GS pricing. If you don't own an iPhone, you get the prices Schiller specified. If you're a current user and qualify for an upgrade, you have to pay $200 more than the new-user price for each of the models ($399 and $499, respectively). And if you don't qualify for an upgrade, you pay yet another $200 for each ($599 and $699).

That's right: Some of Apple's best, most loyal customers will actually be paying $700 for an iPhone.

Both Apple and AT&T were slammed by many users about the carrier's upgrade policy, which was viewed by many as a kind of "loyalty tax." Many expected that users who qualify for an upgrade could get the same subsidized price on the iPhone handset as new customers. After all, they qualify for an upgrade, and are also signing up for a new, 2-year contract.

Angry iPhone users circulated a petition via Twitter, which at press time had gathered more than 14,500 "signatures."

As a result of the petition and other pressure, AT&T modified its upgrade plan by saying that any iPhone user eligible for an upgrade by September 30 could get the upgrade up to three months early.

This insulting offer does little more than add more confusion and uncertainty into the price people will be paying for their iPhone upgrade. All it does is shave a few weeks or, at most, three months off of the time a tiny handful of users will have to wait before getting a phone at $200 higher than new users will pay.

Thanks to AT&T's slow execution on support for new iPhone features, its horrible customer service, and its high and confusing prices, yet another iPhone launch has been compromised.

It's mildly gratifying to rail against AT&T. But ultimately, we have to blame Apple.

It's Apple that chose to grant an iPhone monopoly to a single carrier. It's Apple that chose AT&T. And it's Apple that has failed to convince AT&T to keep up with technology, service and pricing.

It's time for Apple to do us all a favor and drop AT&T as the exclusive US carrier -- or, at least offer us an alternative company to do business with.

The iPhone is just too good for AT&T.

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