MacDailyNews - Where Mac news comes first

 MacDailyNews Poll

Deal of the Day

5 Day Most Commented

Opinion Archive

Current Headlines

Latest Joy of Tech

  • Latest Joy of Tech!

MacNN

AppleInsider

Macworld UK

TUAW

MacRumors

Yahoo! Finance AAPL

iTunes Top 10 Albums

Mac OS X Downloads

Sat, Nov 21, 2009 - 04:05 PM EST  —  AAPL: 199.92 (-0.59, -0.29%)  |  NASDAQ: 2146.04 (-10.78, -0.5%)

Is AT&T weighing down Apple’s iPhone?
Thursday, June 11, 2009 - 08:59 AM EST

"Some in Silicon Valley remain stumped by Apple Inc.'s ongoing exclusive distribution deal with the increasingly maligned carrier, AT&T Inc. Since Apple announced its new iPhone 3G S Monday, the griping among fans has been non-stop," Therese Poletti reports for MarketWatch. "Some are wondering again, as they did at the launch of the first iPhone, is AT&T an albatross for Apple?"

"AT&T said in its press release on Monday that the new iPhone 'will be compatible with High Speed Packet Access (HSPA) 7.2 technology, which offers theoretical peak download speeds of up to 7.2 Mbps (megabits per second), though actual speeds will vary as these capabilities become available. AT&T plans to begin deploying HSPA 7.2 later this year, with completion expected in 2011,'" Poletti reports.

"So if you buy the new iPhone 3G S for $199 now, it seems you are paying more for useful features in the phone, not the network. A compass, better camera with video capabilities and voice dialing or calling up songs from your iTunes playlist are among the big features," Poletti reports. "The version with a 32-gigabyte flash drive costs $299, and current iPhone owners who are not eligible for upgrades will pay even more for their phones."

MacDailyNews Note: Because they have not yet finished paying for their current iPhones.

Poletti continues, "There were two other points of contention after Monday's announcements. AT&T was absent from the list of carriers worldwide that will immediately support a feature called tethering. This will let the new iPhone 3G S act as a sort of wireless modem for laptops. Apple showed a list of the initial 22 carriers around the world that will support tethering next week at launch; AT&T was conspicuously absent. [Apple's new iPhone OS 3.0 offers] "MMS, for sending multimedia messages like photos and video, but AT&T won't offer that service until late this summer. Another mystery."

"But software developers tell another side of the story. When a customer buys an application in Apple's iPhone App Store, whether it's a game or car navigation software, it's simple to buy through an Apple iTunes account," Poletti reports. "Apple's App Store is a direct contrast to shopping for applications on other cell phones, which feature games or applications that give carriers a big share of the revenue. The billing of these sales is also more convoluted, as each transaction is processed by the carriers, who take a cut of the sale. Consumers are billed separately by the developers."

Apple's rivals "are eager to create the kind of ecosystem with the thousands of software developers that Apple has fostered [with AT&T]," Poletti reports. "As competition gets more fierce, time will tell if Apple's exclusive AT&T deal is indeed an Achilles heel."

Full article here.

Bookmark and Share

Always -- Free ground shipping with orders over $50 at the Apple Store.

Reader Feedback: = registered.
Unregistered users: Feedback from multiple usernames are subject to deletion. Off-topic and posts from suspected astroturfers will be removed.

Jun 11, 09 - 08:08 am Comment from: gomer37

I don't care that much about HSPA, let alone 3G. I'd be happy with the ability to CALL FROM MY HOUSE.

"Can you hear me now?"
No, AT&T;.

Jun 11, 09 - 08:13 am Comment from: SCY

I wish I could take my iPhone to T-Mobile...they are a much better carrier than AT&T;ever was

Jun 11, 09 - 08:15 am Comment from: Bill

This whole situation could be nipped in the bud if Apple would just buy Sprint. I believe Apple could reinvent cellular communications in this country. It is amazing that this country lags so far behind other parts of the world in communications and communications speed.

I believe Apple could probably buy Sprint outright. Just imagine the iPhone with a speedier network. As long as AT&T;can get by with their mediocre speeds, they will keep teasing us with "more speed and more bars in more places coming soon" junk that they have been pushing. Many places are still using EDGE as the primary network. AT&T;cannot even get 3G working reliably in many places. No MMS, and no tethering until later, if then...

Apple needs to wake up and realize that this relationship with AT&T;is holding them back more than helping them. What will it take for Apple to realize that AT&T;has no vested interest in improving the network. Apple would be better off having a network of their own, and sell the iPhone on all systems.

Jun 11, 09 - 08:17 am Comment from: Michael T.

SCY,

Where you happen to use it, that is.

AT&T;is perfect for me and T-Mobile doesn't even have a signal.

Anecdotal stories are meaningless.

Jun 11, 09 - 08:23 am Comment from: AL

one major problem I have and many other business travelers have with ATT is their rediculously high international roaming rates and fees.

ATT has unlocked every other phone I have had, but not the iPhone. I used to be able to put in a local SIM when I travel.

AND NO...

Jailbraking is NOT an option for business users.


Their World Traveler plan is a joke. Even if you agree to their $1 min plan, they still hit you with line access charges and other roaming fees which rip you off.

I wish Apple would allow travelers to use approved carriers in other areas with one phone.

OR

BUILD a phone like Nokia which has TWO SIM slots.

Jun 11, 09 - 08:23 am Comment from: Norwegian

Lack of Tethering and MMS is ridiculous of AT&T;Complaining about having to pay their 3G phone before they can get subsidies on the 3GS is just as ridiculous

Jun 11, 09 - 08:25 am Comment from: SCY

Gee thanks Michael...I thought the point of a comments section was to express our own points of view, however meaningless they may be to some...but thanks nonetheless I'll take that under advisement when I think of my next anecdote

For the record the city I live in is the home AT&T;Mobility's headquarters (Atlanta, GA) and in many sections of the metro area lack of signal and dropped calls are the norm, something I can't say for T-Mobile

Jun 11, 09 - 08:28 am Comment from: Erk

I think they are going to have slower sales by far initially, which will ram p up substantially come Dec/Jan 10 as current iPhone owners become upgradable. I do not intend to pay the extra $200 for the extra features.

The thing that really irritates me is the voice dialing only on the 3Gs, both current models have the power to support it with no issues, there are multiple apps out there that already give this feature. That said, I am looking for simplicity however (for the wife) Having to open an app, wait for it to load, then speaking the name is leaps and bounds behind holding down the home button for a few seconds to enable voice-dialing (you never actually have to look at the screen at all). Poor show here Apple.

Jun 11, 09 - 08:36 am Comment from: Hanz und Franz

In Germany, Apple seems to be staying exclusively with T-Mobile.

It is the phone companies that are holding back the iPhone. Great new phones and prices; but the phone plans just kill the whole idea for my family.

Jun 11, 09 - 08:38 am Comment from: Rob

"As competition gets more fierce, time will tell if Apple's exclusive AT&T;deal is indeed an Achilles heel."

I guess Apple will have to put on some steel reinforced work boots.

Jun 11, 09 - 08:38 am Comment from: Fair and Balanced

In a word, YES.

Jun 11, 09 - 08:42 am Comment from: Big Als MBP

What part of signing a 2 year contract do you iPhone 3G winers not understand? Of course you have to pay for the iPhone 3G before you get subsidies on the iPhone 3G S.

Jun 11, 09 - 08:44 am Comment from: Rike

Lack of T-Mobile kills my chance for a iPhone here in the US. I had ATT for four years and hated the dropped calls and inability to connect with someone eight miles away. I'll stick with T-Mobile and a iPod touch.

Jun 11, 09 - 09:02 am Comment from: anypats

My wife and I have now been AT&T;customers for 10 years with very few problems at all. We almost always have a full signal and rarely drop a call. There were a couple of months in a row with a small billing problem but it was quickly resolved and the second time it happened they gave me a $50 credit for the inconvenience.

That being said, I am a current original iPhone user and have already paid for the 32GB 3GS. Can't wait to get it.

Jun 11, 09 - 09:04 am Comment from: Random Guy

As tired of some of you are of the "whiners" who aren't being offered the lowest available price on the 3GS, I'm even tireder of being scolded by people who say I have to "finish paying" for my ATT subsidized iPhone 3G.

I bought the 3G at launch last year, to replace my original (and non-subsidized) 1G. To suggest that in a year's time ATT hasn't more than made up for their $200 subsidy on the 3G with all their ridiculous data plans nickel-and-dime add-ons and fees is a joke.

TCO for an iPhone with a 24 month service agreement is over $2000. Don't tell me ATT doesn't start making money until month 24.

Subsidies are a bad idea anyway. Carrier lock-in means your cell company can safely ignore current customers and put their emphasis on signing up fresh meat. And I'm not the only one believes ATT isn't delivering on their promises: At the 3GS launch event, Scott Forstall could barely contain his urge to rip ATT a new one for foot-dragging on new features, as they've been doing since the original 1G launch. The biggest bug in the iPhone ecosystem is ATT.

Methinks that The Death Star is about to learn a hard lesson from Apple (and rival wireless carriers) when their exclusive on the iPhone expires. A schooling they richly deserve, IMAO.

Jun 11, 09 - 09:10 am Comment from: aking

WHen does the exclusive with AT&T;end?

Jun 11, 09 - 09:15 am Comment from: NObueno

DOWN with ATT.

I will not be getting an iPhone til it goes to Verizon. Period. Not worth ATT crap reception.

Jun 11, 09 - 09:17 am Comment from: AppleJack

It's really hard to discern whether all the complaints about AT&T;are legitimate, recognizing the realities of cell phone service in America. America thrived on the greatest land-line system in the world (created by AT&T;) for over a century. Cell phone service was simply not really needed. Just ask anyone more than forty years old who lived anywhere other than America.
Also, considering that AT&T;now carries the 65 percent of total mobile traffic that is iPhone, . . . in addition to all their other phones, . . . I think that the fact that their system functions at all is quite remarkable.
They have literally absorbed a tidal wave of new service, and managed to keep on functioning. We know that AT&T;plans to have the new services as soon as possible, because they announced them before Apple. That fact that they had the wisdom to give Apple free rein speaks to the fact that they aren't stupid enough to withhold newer and better service without a reason. For cryin' out loud everybody, last month they even announced that they were lowering service fees!
What do you people expect? Building these networks ain't magic, and it ain't cheap.
Sheesh! All these complaints about service are for a product that isn't even on sale yet!

Jun 11, 09 - 09:23 am Comment from: anypats

Original iPhone was released June 29, 2007 and the exclusivity deal with ATT is for five years which means we'll probably see at least one more generation under ATT only.

There have been rumors of Apple buying out the remainder of the contract but I can't imagine ATT agreeing without substantial sums of money.

Jun 11, 09 - 09:25 am Comment from: Big Als MBP

@ Random Guy,

Sorry, I didn't know someone held a gun to your head and made you sign that 2 year contract with AT$T.

My apologies.

For the rest of you who willingly signed a valid contract, suck it up and face up to your legal obligations.

Jun 11, 09 - 09:26 am Comment from: therepguy

If offered T-Mobile would bend over backward to add Apple and provide those services with speed

Jun 11, 09 - 09:32 am Comment from: DogGone

Unfortunately we have to live with carrier subsidies for few more years. Pay as you go phones are becoming more popular in the US and will probably be the norm in 5 years time.

Remember that the carriers are looking to maintain their position. Contracts and subsidies increase their income and reduce volatility. I'm sure they are worried that soon people will be able to switch networks wherever they feel like it in just the same way you can with a landline.

Soon enough the iPhone will cost less than $100 to make and Apple will be able to sell them unsubsidized. Then I'll bet the phones will be available unlocked and suitable for any network.

The writing is on the wall and just like the music cartels, the cell carriers are doing their best to make money while they can.

Jun 11, 09 - 09:37 am Comment from: jbella

Everyone says they can't wait until AT&T;is no longer the exclusive carrier for the iPhone, but when you think about it, there is really no other option. Who else is apple going to use? The only other possible carrier is T-mobile since they operate the only other GSM network. Verizon and Spring both run CDMA networks. It's also clear to see why Apple chose AT&T;over T-mobile. T-mobile has the smallest network of all the major carriers. It also just started rolling out it's 3G service. Up to now it's only available in a handful of cities.

This all changes when Verizon switches to LTE. AT&T;and Verizon will both switch to LTE in the coming years.. but keep in mind that this is a total technology switch for Verizon. They would have to build their network up from scratch. In all likelyhood, their LTE network wont be as good as their CDMA network for quite a while. It's a big country.

Jun 11, 09 - 09:42 am Comment from: SCY

These companies wouldn't have to worry about volatility if they focused on serving their customers...look at Verizon's churn rate..

Look at tiny regional carriers like Metro PCS, they have no contracts and offer unlimited everything. Metro PCS already as 6 million customers and were even though t about a couple years ago

Jun 11, 09 - 09:42 am Comment from: jocknerd

All the carriers are shit. I'm waiting for the day when WiMax is available all over the country. Probably 10 years out. Maybe I'll get more excited about mobile internet then. Right now, unless you can find wi-fi, the mobile internet experience flat out sucks no matter what carrier you are on.

Jun 11, 09 - 09:44 am Comment from: SCY

But why does Apple have to have an exclusive carrier...look at Canada or Australia...the iPhone is carried by two carriers then the carriers have to step up their game if they want to attract customers who would have a choice. Yes T-Mobile is small, but that's still over 30 million customers, any cell provider in Europe would kill for those numbers

Jun 11, 09 - 09:46 am Comment from: SCY

Granted the mobile internet experience isn't great, but I've been using it since the days of GPRS so it has grown by leaps and bounds...It sure has been convenient for me on many occasions

Jun 11, 09 - 09:52 am Comment from: Whatever4real

Honestly, I live in a small little town with leas than 50,000 people but I get full bars for my reception in my house. I am typing this in my bathroom an it is still full bars. I have never noticed a dropped call. I don't get 3G and my bill is about 10 dollars higher than my sidekick 3 was with t mobile. However, customer service is horrible and this upgrade thing is a mess. Last time I upgarded from my previous 2G I got a subsidized price. Yes I purchased in day one and have the receipt to prove it. This time I get shafted because the release date is not on the same day as last year. AT&T;know we are all going to sign new contracts. T mobile subsidized the phone every time I went from sidekick 1 to sidekick 2 to sidekick 3. It becoming clear to me that AT&T;is trying to leverage the iPhone to get users to pay more for services and handsets. I still believe this is outragreous. This will undoubtedly lead to shorter lines at the stores and smaller preorders because day one 3G adopters won't be able to get a quality upgrade.

Jun 11, 09 - 10:56 am Comment from: joel90069

Nobody is claiming that the ATT subsidy is illegal. Obviously, they have the right to enforce the terms of the contract their customers signed. The point of the article was whether ATT is "weighing down" Apple. Regardless of their legal right ATT's unenlightened policy regarding subsidies will seriously hurt sales of the 3GS. A survey released several days before the keynote showed that approximately 70% of 3G owners planned to upgrade if a new iPhone was released. I would bet that figure has probably dropped to less then 10% now that the $200 subsidy will be enforced. If that's not weighing down I don't what is.

Jun 11, 09 - 11:26 am Comment from: Bizlaw

If people think AT&T;is dragging Apple down, then buying Sprint will sink Apple. Sprint is a clusterfsck. First, Apple would have to change either the iPhone (introduce a new model to work on Sprint's network) or accelerate Sprint's change to a worldwide GSM standard.

I had several clients who worked for Sprint or who were contractors with Sprint. Horror stories all around. Sprint exists hoping someone will come along and buy it, not that it will increase sales and become a great mobile service provider.

Jun 11, 09 - 11:47 am Comment from: tom O'Connell

You're all griping about the "early upgrade" price... consider my plight... because I couldn't get a 16gb black in the first week, I am being charged $699... right... $700 to "upgrade" to 3Gs...despite the fact that ATT admits I can cancel my existing contract for $125 penalty and buy a new line for $299... BUT they will NOT let me transfer my phone number for 79 days and they threaten me with a "possible" requirement of a deposit of up to $2000... thugs and jerks... Apple should not be associated with such shabby policies in any way... DUMP ATT, STEVE !!!

tom

Jun 11, 09 - 11:48 am Comment from: Random Guy

@Big Als MBP

You illustrate my original point beautifully. Yours is exactly the kind of "you owe The Death Star your loyalty for their generosity" scolding I'm getting weary of. ATT has more than "covered their nut" on iPhone 3G customers over the past 12 months. In return for our business, we've gotten marginal service and lagging feature capability.

Apple-heads that are used to buying the newest kit for the same price as everyone else aren't likely to be satisfied with the "you'll use that phone for 2 years and like it" business model -- especially when it's being imposed by a company as slow-moving and inept at customer care as ATT.

If current customers start skipping the 3GS because of these contractual complications and it hurts sales, I predict that the screw-you price on "early upgrades" will disappear.

- Extend the buyer's service agreement for another 24 months and give them the lowest entry price on the 3GS? All but the most disgruntled ATT haters would probably grit their teeth and swallow that.

- Charge a current customer $200 more for the 3GS than a walk-in who's never owned an iPhone before? That's not gonna fly. In the long run, iPhone users won't put up with it. Especially from ATT.

Jun 11, 09 - 12:21 pm Comment from: alansky

Is AT&T;weighing down Apple's iPhone? YES!

Jun 11, 09 - 12:23 pm Comment from: alansky

It is amazing that this country lags so far behind other parts of the world in communications and communications speed. —Bill

It's because America is a nation of sheep. More grass anyone?

Jun 11, 09 - 12:53 pm Comment from: Dominick Guevara

ATT is a joke, period.

No iPhone for me and my wife until Verizon.

Jun 11, 09 - 06:06 pm Comment from: Fred Stein

ATT Service coverage is bad. Their phone support is worse. This will start to help iPhone competitors take market share in the US.

Jun 12, 09 - 10:49 am Comment from: Predrag

..."to replace my original (and non-subsidized) 1G. To suggest that in a year's time ATT hasn't made up for their $200 subsidy on the 3G (...) is a joke."

Random Guy:

Please don't perpetuate this inaccuracy.

Original iPhone was SUBSIDISED The subsidy was about $150 upfront, plus $8 per month for two years.

And 3G subsidy was around $450 upfront (no monthly anymore), and not $200 as you suggest.

Apple receives at least twice as much in upfront subsidy than any other smartphone (or dumbphone) maker. What does AT&T get in return for paying such high subsidy? They charge the same amount for the monthly plan as they do for Blackberry, Treo, Blackjack, Incite, etc. The only thing they get is a user who is less likely to jump ship (because they now have an iPhone, which they can't get anywhere else).

AT&T is no better or worse than any other carrier. The diferences are pretty much negligible.

Jun 12, 09 - 11:37 pm Comment from: Romeodawg

I live in Oakland/San Francisco and AT&T;'s service is so terrible for me that I have more than 14,000 rollover minutes racked up... I just can't depend on actual phone calls any more, because I'm so often dropped.... so I do mostly emails and text. Which is pretty pathetic. And for that level of service, I'm paying more than $100/month for 900 minutes plus data?

I love the iPhone, but I also look forward to an alternative to AT&T;. Where is the Apple of phone carriers?

Jun 13, 09 - 12:33 am Comment from: jmoor1

I work and live in the NY Metro area. I have a Verizon phone from my company. I spend 35+ hours a week on the road. I get plenty of dropped Verizon calls. I have an Iphone 3g (personal) and also get dropped calls. I was in a town in Long Island and my good old Verizon would not hold a call. I was in Red bank NJ and my Iphone was dropping calls. Every network has problems. My company is looking to move it's 125 lines from verizon to someone else. Verizon told us, go ahead. I think Sprint may be what we're looking at. I hope not. I live in Queens and Sprint doesn't work on my block well.

That's going to be a huge task for VZW to convert to LTE.
Are there any VZW phones work on GSM?
What are those 80 million customers going to do?

Reader feedback page 1 of 1 pages:

Always -- Free ground shipping with orders over $50 at the Apple Store.

Add Your Feedback:

Register or Login

Name:

Email: (optional)

Emoticons | Allowed HTML Tags

Remember my info   Notify me of follow-up comments?

Please enter the "MDN Magic Word" you see in the image below: