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way, AT&T (NYSE: T  ) blew it Friday when it said it would provide free Wi-Fi service to iPhone subscribers -- then rescinded the offer minutes later.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 Fool.com, you'll find him picking growth stocks as a member of the Rule Breakers team.

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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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