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The iPhones have created enormous problems for AT&T's data and voice networks. As few as 12 iPhones streaming video can reportedly swamp an AT&T tower's data broadcasting abilities.  (Source: Hot Cellular Phone)

AT&T has partnered with McDonalds, Starbucks, and Barnes & Noble, thus far, to offer its customers free Wi-Fi, in hopes of reducing strain on its network. IPhone users, according to analysts consume five times as much data as BlackBerry or Windows Mobile users.  (Source: Valleywag)
Company looks to new partnership, such as a major one with McDonalds to ease the burden on its network

AT&T of late feels that it has been bullied and maligned.  First, it argues, Verizon attacked it on its geographic 3G coverage, which the company felt was inaccurate as its coverage by population was much better than the maps might indicate.  Second, the company received enormous flak when AT&T Mobility President Ralph de la Vega was asked at a business event on December 9 about what steps his company might take to control iPhone data usage. He responded with remarks that seemed to indicate that his company was planning to charge users who overused their "unlimited" plan.

Those remarks led to a planned data protest entitled "Operation Chokehold", which went down on Friday, December 18.  While the protest didn't seem to do too much to AT&T's network, it did convey the frustration of the company's subscribers.

In an interview with BusinessWeek, Mr. De la Vega now says that his remarks were misinterpreted and his company was never planning to impose higher fees.  He states, "There were no follow-up questions, so I figured everyone understood what I was saying. I guess I should have been more clear."

While many have speculated that AT&T will drop the $30-per-month unlimited data plan in lieu of a tiered pricing scheme, in order to ease its data troubles, Mr. De la Vega unequivocally denies this speculation, stating, "There are things people say I said that I didn't say. We have not made any decision to implement tiered pricing."

Rather than a stick, he says AT&T will use a carrot approach to try to solve its data issues.  Namely, it is ramping up efforts to provide free Wi-Fi to iPhone subscribers through a series of partnerships.  Its hoping that when iPhone users switch from 3G to Wi-Fi regularly, the strain on the network will be lessened.

The move is essential to AT&T as Wi-Fi via wired broadband is much cheaper than 3G data transmission.  It is estimated that as few as 12 iPhones streaming video can swamp a single iPhone tower, leading to Apple suggesting that terrorists could use unlocked iPhones as a dangerous weapon to our nation's communications.

iPhone users use an estimated 60 percent of mobile web data, though they only have about a 24.7 percent smart phone market share (in a 36 million unit market) according to ComScore.  IPhone users pay on average $95-per-month for this usage, about twice what smart-phone subscribers on other networks pay.  However, the average iPhone user uses approximately five times the data of a BlackBerry or Windows Mobile user.

To prevent such network swamping, AT&T has announced a deal with fast food giant McDonalds to waive the $2.95 Wi-Fi charge for customers at the chain's 11,000 restaurants.  AT&T already had similar deals with the ubiquitous coffee-superchain Starbucks and the bookstore chain Barnes & Noble.

AT&T's voice network also has seen its issues.  In cities the carrier's hardware partners have reported sky-high dropped call rates.  The company cut capital expenditures this year from $20.3B USD in 2008 to an estimated $17B USD this year, leading many to criticize it for not investing enough in its network.  The company responds to these criticisms by arguing that its spending this year was simply more focused on trouble spots, such as San Francisco.  Mr. De la Vega comments that in San Francisco "our network has never performed better".

His company is also considering Femtocells -- personal, portable signal generators -- as a promising solution to the company's 3G voice and data problems.  Unfortunately, those cells are still not available and no concreted details have been provided on how they're priced.  It's refreshing to see that AT&T will not be punishing its customers for its shortcomings, but its management has their work cut out for them in terms of improving their network and keeping their customers from jumping ship to rival carriers.

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Tiered Data Plan
By tom12 on 12/22/2009 5:02:05 PM , Rating: 2
I do not need a data plan because i hardly use it. But i still end up paying 30 bucks a month. My point being, why am i being charged for something i donot use? Isnt it logical that people who use the services ought to pay for it. Tiered data plans make so much more sense for the consumers because those who use it will be charged and those that dont will not be. But it may not be all that good for at&t as only 5 - 10% of iphone users are data hogs, so they may not generate as much revenue from them as they do by charging all of us. I think its clear as day that at&t is only interested in swelling its profits and doest care for its consumers.

RE: Tiered Data Plan
By jayarr8 on 12/22/2009 9:37:51 PM , Rating: 1
Hmmm....why did you sign up for the data plan if you don't want it. Cancel the data part and save 30 bucks.

RE: Tiered Data Plan
By Master Kenobi on 12/23/2009 10:24:09 AM , Rating: 3
The iPhone is required to have a data plan.

RE: Tiered Data Plan
By mikecel79 on 12/23/2009 3:54:26 PM , Rating: 2
As are all Smartphones from ATT now. It's not just iPhones anymore. WinMo, Blackberries, Symbian, etc all require data plans.

RE: Tiered Data Plan
By ChristopherO on 12/24/2009 1:57:28 AM , Rating: 2
Because you bought a smartphone? If all you needed was a phone, then you shouldn't have bought a smartphone. That smartphone costs a lot to make compared to a garden variety flip, and forcing you to get a data plan is the only way they can offset their costs in a reasonable amount of time.

If half the people with iPhones didn't have data, the phone would cost vastly more since they're banking on that extra $720 to cover their costs (marketing, phone, network support, etc). And despite everyone's concern about being ripped off, AT&T only has a 9.5% profit margin (good, but not ridiculous considering Apple has a 16% margin). Given that, they can't afford to price themselves much cheaper... I personally use T-Mobile, just because VZW and AT&T are astronomically more expensive. You want one of those carriers, you'll always pay through the nose. Heck, my plan is $80/mo for unlimited everything and coverage is fine here in CA since T-Mobile took over the old PacBell network when Cingular bought AT&T Wireless (ironically the PacBell network was older but had a lot more towers).

I guess the real advice is... Use the data plan more.

RE: Tiered Data Plan
By namechamps on 12/24/2009 8:32:21 AM , Rating: 2
I doubt you will save anything on a tiered plan.

Likely it would go from something like this
$30 - unlimited data

to something like this
$30 - 1GB of data
$50 - 5GB of data
$70 - "unlimited" data

or knowing the carriers they might even try something like:
$39.95 - 1GB of data
$59.95 - 5GB of data
$79.95 - "unlimited" data

"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)

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