Here’s a superficially curious, but fundamentally quite important, bit of legal wrangling for you. Reuters is reporting that the District of Columbia has filed suit against AT&T Corp for the recovery of unused balances on calling cards purchased from the telecom giant. Estimated at somewhere between 5 and 20 percent of the overall value of the cards, the so-called breakage — leftover credit that customers neglect to use — has typically remained with the carrier as a sort of predictable bonus. The DC Attorney General, however, is seeking to have breakages treated as unclaimed property, which under district law means that after three years they must be returned to the state. Whichever side of the fence you sit on, the decision on this case will set a significant precedent for the future of such prepaid services.
Looks like AT&T is about to get a version of the LG Arena — these shots of a GT950 with the carrier’s branding just hit the tubes. The phone hasn’t been officially announced by either AT&T or LG, but the safe bet is that the 950 is just a bespoke variant of the familiar Arena KM900, so look for a three-inch 800 x 480 touchscreen with LG’s S-Class UI, a five megapixel camera, GPS, Wi-Fi, and 8GB of storage. We’ll have to see whether this hits at CES next week or MWC in February — but until then you can get a feel for this thing by checking out our KM900 hands-on video right here.
A day without landline phones? Some may say that’s inevitable, but it looks like AT&T is now starting to try to speed things up a bit, with it recently responding to an FCC request for comments with a 32-page filing that details its position on the matter. That more or less boils down to two major requests: that the FCC eliminate the regulatory requirements that it support a landline network, and that it provide a firm deadline for phasing it out. To back up that request, AT&T has provided the FCC with a whole host of statistics that paint a bleak picture for landlines, including the fact that less than 20% of Americans rely exclusively on switched-access lines for voice service (though plenty more still use them as their primary voice service), that at least 18 million homes now use a VoIP service, and that those two numbers are fast growing in opposite directions. Needless to say, such a change would have a broad range of regulatory implications, and AT&T isn’t providing answers for everything — like exactly how it expects that last mile of users to transition away from landlines, or how to deal with issues of public safety or those with disabilities.
Every cellular network has its problems with voice quality, occasional dropped calls and imperfect data coverage. And AT&T has some things other networks don’t: It has even been ranked the fastest 3G network in some wireless surveys, such as the 12-city bandwidth test recently performed by Gizmodo. The company is also clearly responding to the problems, rigorously pumping out upgrades for networks in major cities all over the nation, according to its 2009 press archive.
Yet AT&T has taken some serious heat. A Consumer Reports survey, which polled 50,000 readers spanning 26 cities, ranked AT&T as the worst cellphone service in the United States. Meanwhile, YouGov’s BrandIndex survey showed a steady decline in AT&T’s brand perception.
AT&T has a perception problem, to say the least, and most of that can be tied to its performance as the sole carrier of the most popular phone in the nation, Apple’s iPhone.
“They had some interesting parts this past year,” said Michael Gartenberg, an Interpret analyst. “You’re Apple’s partner with sharing the iPhone, and you’re getting booed louder than Microsoft. That means you’re not hitting it the way you should.”
Surely, AT&T made a number of mistakes this year, and many of them were indeed related to the iPhone. From mixed messages to broken promises, here we document the communications company’s communication failures of 2009.
Mixed Messages
Boos echoed throughout the audience at Apple’s Worldwide Developers Conference in mid-2009, when Apple vice president of marketing Phil Schiller delivered the bad news: Tethering for the iPhone would be provided by 22 carriers around the world, but not AT&T.
The second piece of disappointing news: Multimedia messaging, the ability to send images and videos through a text message, would be immediately available for 29 carriers around the world, but not for AT&T customers until “late summer.” More boos greeted the announcement.
In statements sent to the press, AT&T was quick to defend its network when customers complained about the lack of immediate MMS and tethering support for the iPhone.
“We absolutely will offer MMS on iPhone 3GS and iPhone 3G with 3.0 upgrades in late summer once we complete some system upgrades that will ensure our customers have the best experience with MMS,” AT&T said in a press statement. “These upgrades are unrelated to our 3G network.”
Three months later, the company posted a video (above) explaining the challenges of supporting the enormous growth of data usage thanks to the rise of smartphones. When speaking about MMS for the iPhone, a company spokesman said, “We’ve been working for months to prepare the radio access controllers in our network to support this launch. That means calibrating base stations all over the country; frankly, that’s a very time consuming process.”
Unrelated to the network, huh?
Also in September 2009, AT&T acknowledged in an interview with The New York Times that it faced challenges because of the data-guzzling smartphones.
“It’s been a challenging year,” said John Donovan, AT&T’s chief technology officer. “Overnight we’re seeing a radical shift in how people are using their phones…. There’s just no parallel for the demand.”
Then, a few weeks ago, AT&T’s CEO of mobility, Ralph de la Vega, said 3 percent of its data users are taking up 40 percent of AT&T’s wireless capacity, and that the company was working on ways to cut down their usage. That would imply plans to impose some sort of limitation on data use. Currently AT&T offers all of its iPhone subscribers unlimited data plans.
Over the course of a year, AT&T went from denying network issues to acknowledging there were challenges in supporting data. And then de la Vega pointed fingers at heavy data users. That didn’t go over so well: De la Vega’s statement inspired the satiric blog The Secret Diary of Steve Jobs to launch Operation Chokehold — a protest with the intention of bringing down AT&T’s network.
Dan Lyons, the author of that blog, was joking, but angry customers took him seriously and actually tried to assault the network with heavy data usage. Though the protest did not come anywhere near to overloading the network, Operation Chokehold made headlines all over the web.
Empty Statements
Earlier this week, AT&T’s website briefly stopped selling iPhones to New York customers — for reasons unknown. Bloggers quoted customer service representatives who said New York was not ready for the iPhone, because there weren’t enough towers to support it.
That explanation made no sense: If the network were already overloaded, how would slowing down online sales address the problem? iPhones were, after all, still being sold in brick-and-mortar stores in New York, so suspending sales online would be ineffective.
A few hours later, a different customer service representative said the sales were suspended due to fraud issues — a plausible explanation. But customer service employees are not considered official representatives of the company.
AT&T’s official response? A statement that explained nothing: “We periodically modify our promotions and distribution channels.”
After the story had already been reported by countless media outlets, AT&T resumed online iPhone sales in New York, turning it into a non-story in just a day. But it was too late: Bloggers had already drawn conspiracy theories about AT&T being unable to serve New York.
Something worth noting is AT&T has a responsive, stellar public relations team that uses a Twitter account, a YouTube channel and a Facebook page to interact with the media and consumers. The story could’ve been defused in a matter of minutes with a clear, believable explanation. Instead, AT&T used its PR to respond with an empty statement, leaving the world guessing the reasons for the suspension of iPhone sales in New York.
Broken Promises
AT&T broke a few promises. The company missed by a few days its “late summer” deadline of delivering MMS, which was minor. More notably, the company did not deliver an official tethering plan to AT&T iPhone customers this year, even though de la Vega said during the 2008 Web 2.0 Summit conference that tethering would arrive for the iPhone in 2009. With 2010 just two days away, there is still no tethering plan for the iPhone.
AT&T has also effectively broken its promise of “unlimited” data, by restricting the ability of certain apps to access its 3G network. In mid-2009, Apple rejected a TV-streaming iPhone app called SlingPlayer.
SlingMedia told Wired.com it had to modify the SlingPlayer application to work only with Wi-Fi — not on AT&T’s 3G network — in order to gain Apple’s approval. Apple made that request on behalf of AT&T, whose terms of service state television signals may not be viewed on a device over an AT&T internet connection.
“Slingbox, which would use large amounts of wireless network capacity, could create congestion and potentially prevent other customers from using the network,” an AT&T spokesman said. “The application does not run on our 3G wireless network.”
The effective crippling of the SlingPlayer app raised concerns among many that Apple and AT&T were closing the mobile web by regulating the type of content that could be accessed over the 3G network.
Will 2010 Be Better?
Despite damage to its brand in 2009, AT&T is still seeing massive subscriber growth, so the company is still doing great from a shareholder perspective, said Tero Kuittinen, an MKM telecom analyst. According to the company’s financial results, AT&T generated $40 billion in revenue and $10 billion in profit in the third quarter of 2009.
Kuittinen cited clever marketing and a good selection of phones from Apple, LG and Samsung as reasons for AT&T’s success.
“That’s the dream of any company,” Kuittinen said. “To provide bad service at high prices and still have great benefits.”
It would appear that AT&T isn’t the only carrier in the world suffering from a horrible and nagging case of the iPhones. In an interview with the Financial Times, O2 head Ronan Dunne apologized to customers for the poor performance the network has been experiencing since the introduction of the iPhone 3GS to its airwaves this summer. Just as US customers (particularly those in dense, urban areas) have learned to struggle through dropped calls, the inability to make or receive calls, or weak data connections, our brethren on the other side of the pond have felt a similar sting. Says Dunne, “Where we haven’t met our own high standards then there’s no question, we apologise to customers for that fact,” adding that the carrier had fixes at the ready and that the issues would be “more than addressed” shortly. Unlike the widespread problems here, the O2 mess seems to be relegated largely to London, though it’s curious to know that AT&T isn’t alone in being hamstrung by a network clearly not prepared for the onslaught of data being pushed up and down its virtual pipes. Also unlike the AT&T situation is the fact that O2 has solutions in mind (including the installation of 200 additional mobile base stations in London), and they’re clearly taking ownership of the situation. Ahem, Ralph.
Update: AT&T responded and let us know they had fixes underway too. Here’s an outline of forthcoming changes the carrier says it’s making.
We are nearly doubling the wireless spectrum serving 3G customers in hundreds of markets across the country, using high-quality 850 MHz spectrum. This additional spectrum expands overall network capacity and improves in-building reception.
We are adding about 2,000 new cell sites, expanding service to new cities and improving coverage in other areas.
We’re adding about 100,000 new backhaul connections, which add critical capacity between cell sites and the global IP backbone network.
We’re enabling widespread access to our Wi-Fi network – the largest in the country with more than 20,000 hotspots in all 50 states – allowing them to take advantage of the best available AT&T mobile broadband connection.
We’re rolling out even faster 3G speeds with deployment of HSPA 7.2 technology, with initial availability in six markets planned by the end of the year.
We may never know exactly why AT&T suspended online sales of the iPhone to residents of New York last night, but it doesn’t matter anymore — the site’s been updated and online sales are back… online. In other news, previously spiking sales of pants in the New York area have suddenly flatlined.
The Consumerist reports that one of its readers has been unable to buy an iPhone from AT&T’s online store. According to the report, an AT&T customer representative told him that “the phone is not offered to you because New York is not ready for the iPhone […] You don’t have enough towers to handle the phone.”
The Consumerist obtained a written statement from AT&T spokesman Fletcher Cook, in which Cook said “We periodically modify our promotions and distribution channels.”
This story is being taken by many to be an attempt by the carrier to follow up on AT&T mobile boss Ralph de la Vega’s statement that “the company is […] working on getting the data hogs to cut down their usage,” while at the same time “pushing its wireless margins into the 40 percent range next year from around 38 percent in the third quarter.”
Others reports are speculating about the possibilities of credit-card crime, and that the hold on online sales in NYC is a security measure to curb fraud through online purchases. This would make some sense, as the iPhone can still be bought in physical stores. In fact, simply refusing online orders from zip-codes where fraud is rife seems like a remarkably effective and elegant cure.
What is certain is that AT&T’s lack of a quick response is causing it PR damage. A simple, clear statement of intent would have been enough to diffuse this story. Well, that and some new cell-towers in New York.
Updated 1:30 p.m. PDT: AT&T.com has resumed selling iPhones to New York customers. The company has not provided a statement explaining the temporary suspension of online iPhone sales in New York.
Here’s a Sunday night conundrum for you: it’s no longer possible to purchase an iPhone from AT&T’s online store if you live in New York City, and as of right now, the carrier isn’t saying why. Making matters worse, some online customer service reps have apparently gone rogue in providing explanations to curious would-be customers and the occasional inquisitive blogger — the Consumerist was told that NYC wasn’t “ready for the iPhone,” and a few others (including us) were fed a line about credit card fraud causing a ban on online sales. The fraud explanation would actually make sense, considering NYC-area Apple and AT&T stores all have the phone in stock and are happily selling them, but Ma Bell still hasn’t put this story to bed with an official explanation — all we’ve heard so far is the charmingly generic “We periodically modify our promotions and distribution channels.” Way to quell a fire with the gasoline of ambiguity, friends. Anyway, if you want an iPhone in New York City right this instant, you should start walking to the 24-hour Fifth Avenue Apple Store, taking the opportunity to assess your priorities and fundamental sense of purpose along the way. The rest of us will continue spending a reasonable percentage of our income on housing.
AT&T today stopped selling iPhones online to New York metro-area customers through their att.com Web site because of “increased fraudulent activity in that area when ordering the iphone,” an online customer support representative named Timothy told me this evening in an online chat.
Now, that’s not what online customer support rep Daphne told the blog The Consumerist, but it’s what Timothy told me. According to a Consumerist post, Daphne told their writer “New York is not ready for the iPhone” because the city doesn’t “have enough towers.”
Although AT&T CEO Ralph de la Vega has previously admitted that the company needs to “do better” with their network in New York City, I suspect Daphne’s career with AT&T may be short lived from here on out.
Timothy told us that iPhones are still available at AT&T stores in the New York metro area. Apple’s Web site had no problem selling me an iPhone for use in New York City online, so if you want to buy online, try apple.com.
Consumerist is investigating a reader’s complaint regarding the inability to purchase an iPhone through AT&T’s website when using an NY zip code. So far they’ve discovered that, according to a CS rep: “New York is not ready for the iPhone.”
The conversation Consumerist’s Laura Northrup had with an AT&T customer service representative after confirming that iPhones could not be purchased online when using any New York zip code almost plays out like an SNL skit:
Daphne: Welcome to AT&T online Sales support. How may I assist you with placing your order today?
Laura: Hi, I was looking at the iPhone 3Gs and the system tells me that I cannot order one in my ZIP code. My zip code is 11231. (Brooklyn, NY) Is this true? Are iPhones no longer available in New York City?
Daphne: I am happy to be helping you today . Yes, this is correct the phone is not offered to you because New York is not ready for the iPhone.
Daphne: You don’t have enough towers to handle the phone.
Laura: Thank you for your help. So the phone is not available to people anywhere in the city?
Daphne: Yes this is correct Laura.
Yikes. We know that AT&T’s aware that it sucks in NY, but is the solution to a localized network strain from heavy data usage to stop online sales of a particular phone? Doesn’t exactly seem like a sensible idea, especially since there are plenty of iPhones in AT&T’s brick-and-mortar New York stores.
Something else that’s peculiar about this “sales ban” is that folks in San Francisco, another spot where data puts a huge strain on AT&T’s network, are able to purchase the iPhone online:
I’m definitely curious to hear if AT&T makes an official statement on this issue and what the, probably innocent, explanation is. Hell, I’d be happy with just another Luke Wilson pep talk. [Consumerist]
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