The Twitterverse Hates AT&T

How long can AT&T (NYSE: T  ) survive as the iPhone's sole carrier? Already unhappy with Ma Bell's network performance, users are now protesting her pricing policy for Apple's (Nasdaq: AAPL  ) new 3G S handset. And they're doing it via Twitter.

As of this writing, more than 7,000 have signed a "twitition," as it's called, asking Ma Bell to offer early upgraders the same pricing as new buyers -- $199 for the 16-gigabyte model and $299 for the 32-gigabyte edition. AT&T has thus far refused, instead asking $399 and $499, respectively.

The few who are being offered new handset pricing are already near the end of their original two-year commitments. "The main factor is [how] far you are into your contract. You will likely be eligible in the latter part of it," wrote spokesperson Seth Bloom in an email to me last night. He continued:

We also look [at] such things as how promptly you pay your bill, the date of your last subsidized handset, etc.  Please note, though that all of these factors simply add up to how early (i.e. prior to the end of the contract) AT&T can give another subsidized device to the customer.

This policy explanation strikes me as fair. But as the twitition shows, many users disagree.

There are good reasons to not like AT&T as the iPhone's carrier. Dropped calls have been a problem, and sporadic service persists to this day in my area. Ma Bell's mediocre network reputation could help to explain why Apple and Microsoft (Nasdaq: MSFT  ) have each reportedly sought carrier deals with Verizon (NYSE: VZ  ) .

And what of tethering? AT&T has been promising this service -- wherein the iPhone's cellular signal would be used to connect a computer to the Web -- for months. All a spokesperson could tell me is that it's still planned. Sorry, but that's unacceptable, especially when AT&T allows customers using Nokia (NYSE: NOK  ) and Motorola (NYSE: MOT  ) handsets to tether.

Nevertheless, I have some sympathy for AT&T on the issue of pricing. A two-year contract is a two-year contract, and Ma Bell is eating a huge sum to offer the iPhone cheaply. With 3G S upgrade pricing, she's taking steps to balance profitability with customer satisfaction.

Perhaps the problem is that the iPhone sits in rarefied air, blessed with sales numbers so massive that they argue for special treatment of users. A breed apart, if you will. As an iPhone user myself, I can appreciate this feeling.

But every one of us signed contracts to get that feeling. Now, AT&T is asking us to honor our agreements. Isn't that fair?

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Fool contributor Tim Beyers had stock and options positions in Apple and a stock position in Nokia at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is going home now. Thanks for reading.


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  • Report this Comment On June 11, 2009, at 3:49 PM, jmmxjmmx wrote:

    This is so ridiculous!

    How is it that people expect something for free? Do people not realize that ATT had to pay Apple something like $400 to subsidize their original iPhone? (That is on top of the $199 they got from the user) How can they expect ATT to shell out another $400?

    If they bought a computer and 5 months later the company came out with a new model, would they expect Best Buy to give them the new model? Absurd! It is not like ATT makes money off the iPhone handsets!

    As for tethering...

    Wake up folks - the internet connection is not free! It costs $$ to build the cell towers and provide the wireless connection. A tethered computer has the ability to chew up enormous amounts of cellular bandwidth. Then, all the other people in the neighborhood loose their bandwidth. Here you see people complaining about the network responsiveness, and in the next breath they want tethering for free.

    I am certainly not a fan of ATT. But I am realistic. They are building out their network as fast as they deem possible given economic and physical constraints. Hey - I would like to fly to the moon. I also accept the physical restrictions that keep me from doing so.

    Problem is - everybody wants everything for free. It is nice wishful thinking - to get a brand new iPhone after only X months on the plan, but let's get real!

  • Report this Comment On June 11, 2009, at 10:17 PM, daveshouston wrote:

    No not ridiculous at all.

    I have an iPhone that costs me $80 per month. I have the minimum plan which gives me 450 minutes per month. Today is the June 11 and so far I've used 3 minutes of my 450. I have over 4000 rollover minutes. I'm paying for something I don't want and cant use. That's because I don't like talking on the phone. It's pretty much a waste of time.

    But I'm a heavy iPhone user. I'm on email, the web, stock quotes, and apps all day long.

    If AT&T enables laptop tethering it should allow me to access the Internet via my existing iPhone data plan which I'm already paying for. If they try to add another charge I'm going to be very resistant and really pissed.

    It should be obvious to everyone that Apple has established a one year cycle for updating the iPhone. Based on what we've seen thus far, we can expect a new iPhone model every year in June. The customers who are going to be the most eager to obtain the newest latest and greatest iPhone are the same people who were eager last year. These folks are like me. They already have an iPhone 3G. They love it. They want the newer 3GS model and they want it just as soon as it becomes available. But they won't be extorted (eg: won't pay AT&T an extra $200 for early renewal - no chance - no way - not even considered).

    AT&T is incredibly dumb if they can't figure this out. They have my monthly billing records so they should know that the telephone is the least important iPhone feature for me. The blogs and Twitter are filled with customer outrage over the upgrade policy. They need to completely rethink their entire business model.

    I think cell phone providers like AT&T are suffering from extreme greed and complete indifference to customers. They want to put a toll booth on every Internet node and every device that a customer my own. That's quite the opposite of what customers really want.

    Customers want a provider who will provide a simple pipe to the internet. They want a monthly bill with a fixed charge that's not too high (maybe $30 or $40 per month). They don't want to be charged extra for anything. Take your iPhone to Greece and Italy for a two week vacation. No extra charges for roaming. Use your laptop in tethering mode. No extra charges.

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