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Ma Bell Hangs Up on iPhone Owners

Ma Bell is either senile or has a death wish. Either way, AT&T (NYSE: T  ) blew it Friday when it said it would provide free Wi-Fi service to iPhone subscribers -- then rescinded the offer minutes later.

"AT&T knows Wi-Fi is hot, and free Wi-Fi even hotter, which is why we are proud to offer iPhone customers free access to the nation's largest Wi-Fi hotspot network with more than 17,000 hotspots," the ad read, according to Wired News.

It appears that writer Brian X. Chen couldn't get a detailed explanation for the abrupt switcheroo. Two different AT&T spokespeople gave him the same answer, word for word. "Clearly, they were both reading from the same script," Chen wrote.

Right, Brian. Except it's worse than that: In my opinion, they were literally reading from a script. I'd bet money on it. I wrote dozens of scripts to cover very similar corporate gaffes during my dozen or so years in the PR biz.

But AT&T's screw-up is as bad as anything I ever dealt with as an insider. It shows a lack of understanding of how close AT&T is to being disintermediated, a dot-com era verb that means "to be cut out of the transaction." I'm doing it every time I use my home Wi-Fi connection to make calls via the rebellious Truphone software.

And let's be clear: Apple (Nasdaq: AAPL  ) has shifted strategies. Pervasiveness, not margins, are the goal. We know this because Vodafone (NYSE: VOD  ) and Telecom Italia (NYSE: TI  ) both offer the iPhone in Italy. Exclusive deals, like the one Apple signed with France Telecom (NYSE: FTE  ) , are the exception now, rather than the norm. The rub? Apple really doesn't care who sells the iPhone, or whose network you choose.

AT&T, on the other hand, has a vested interest in keeping iPhoners on its networks, whatever form they take. It's only the way to get a slice of the revenue that comes with added services.

Brrrriiiing! It's related Foolishness calling:

Contributor Tim Beyers didn't own shares in any of the companies mentioned at the time of publication. When not typing up articles for, you'll find him picking growth stocks as a member of the Rule Breakers team.

Apple is a Stock Advisor selection. France Telecom is an Income Investor recommendation. Try either of these market-beating services free for 30 days. There's no obligation to subscribe.

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  • Report this Comment On July 21, 2008, at 6:24 PM, ascari6 wrote:

    You miss the point, T is not cut out or disintermediated from anything; before you leave a store you sign a contract that sends iphone users' cash to T for the next two years. Make all the 'rebellious' calls or use free wi-fi if you want (or can find it) the data plan forces the user to pay a large monthly fee for the priviledge.

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