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Did AT&T's Bad Week Kill Their iPhone Exclusivity Extension?
Carrier takes a severe iPhone-related beating
by Karl Bode 04:34PM Wednesday Jun 10 2009
You can't say it's been a very enjoyable week for AT&T's wireless division. The carrier was booed this week at Apple's developer conference for the news that -- unlike dozens of other Apple wireless partners -- AT&T wasn't yet ready to support iPhone tethering or MMS support. They were then lambasted for the subsidized price of the new iPhone 3GS and the penalty incurred by current iPhone users still under contract. This is after a few months of criticism for the crippling of applications like Skype or Slingbox at AT&T's request.

Today finds AT&T being boxed on the ears once again for ongoing service quality issues, including frequent dropped calls and inconsistent service coverage. The Street.com notes how AT&T cut $2.5 billion from their 2009 capital spending budget, and will spend 15% less on network maintenance and upgrades than the $20 billion spent last year. According to one analyst, there's internal discord surrounding how that money should be spent -- and whether AT&T should continue to milk HSPA or just fully embrace LTE (like Verizon):
"Money isn't the only problem, there's also a lot of indecision" says Telecom Pragmatics analyst Sam Greenholtz, who talks to the technology decision makers at all the major phone companies. "They don't know what to do with the money they been given to spend," says Greenholtz. "They are doing upgrades here and there, but overall they are split with some wanting more 3G spending and others saying a quicker move to 4G should be the priority."
AT&T denies to the website that the AT&T wireless network is anything less than "first class," but connectivity issues have plagued AT&T since the initial launch of the first iPhone on AT&T's then-outmatched EDGE network. The iPhone 3G was subsequently launched with full HSDPA wireless broadband support, though even AT&T sort of admits they weren't ready for the bandwidth demand and at time suffered congestion outages. Here we are again, with AT&T's HSPA 7.2Mbps upgrades seemingly lagging behind Apple.

This latest scuff up is occurring while Apple and AT&T are in negotiations to extend AT&T's exclusive iPhone contract -- which expires next year. Verizon, who recently took some shots at AT&T's wireless network, would love to pair the iPhone with the launch of their LTE wireless broadband network next year. With the heat that AT&T has been taking of late -- it seems less and less likely that Apple would want to extend their exclusive arrangement with AT&T, but it all depends on just how wide AT&T is willing to open the checkbook.

Ditching AT&T for Verizon assumes Verizon would make things better. While there's a marked difference in quality between the networks (at least from this author's experience in New York), Verizon isn't any friendlier when it comes to open applications on open networks -- despite the sound and fury to the contrary. Remember too that Apple came to Verizon first, and Verizon thought Apple's asking price was simply too high.

Clearly this is hippie crazy talk to wireless industry executives and free market fanatics, but perhaps the answer is the elimination of exclusive handset agreements (at least of any more than six months). That truly gives consumers the ability to choose the handset they want on the network that suits them best -- or performs the best in their geographical area -- without chaining the customer to one carrier for the benefit of Apple's wallet.

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