It's About Time, AT&T!

By Rick Aristotle Munarriz | More Articles
October 7, 2009 | Comments (4)

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When Vonage (NYSE: VG ) introduced its Vonage Mobile application on Monday, it appeared as if the historically stingy AT&T (NYSE: T ) was turning over a new leaf.

Vonage's app for discounted international phone calls works on AT&T's network, whereas earlier VoIP-driven App Store offerings -- led by eBay's (Nasdaq: EBAY ) Skype -- worked only if the Apple (Nasdaq: AAPL ) iPhone or iPod touch owner was in an active Wi-Fi connection.

Well, AT&T now confirms that it's giving VoIP platforms the ability to use its carrier network, even if it means that Ma Bell will miss out on the juicy charges it could potentially collect if those calls were dialed directly.

Finally! AT&T has scoffed at everything from tethering to Google (Nasdaq: GOOG ) Voice for iPhone owners, leading regulators to begin digging into the strict practices of carriers with handset exclusivity deals.

In short, AT&T is playing nice before it's forced to play nice.

"Until all wireless carriers live up to the unlimited [component] of their data plans, the streaming revolution will have to wait," I wrote last week, in response to how many of the iPhone's video and audio on-demand programs are restricted to Wi-Fi connectivity.

So is AT&T turning over a new leaf, or is it about to get whacked by a falling branch?

AT&T's network has been taxed by iPhone users who go through data like offensive lineman at a buffet spread. Opening the data floodgates to new applications is the right thing to do, but rivals will have a field day if the network deteriorates further.

Verizon (NYSE: VZ ) is rolling out its clever "there's a map for that" ads, in a promotion of its seemingly wider 3G coverage area.

As VoIP apps become more popular, iPhone owners may downgrade to cheaper plans with fewer included minutes. That development could reduce the amount that AT&T is willing to pay to subsidize iPhones in the future -- if regulators don't break up exclusivity deals.

So props to AT&T for doing the right thing, but I wouldn't want to be an AT&T investor right now.

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Longtime Fool contributor Rick Munarriz wonders whether AT&T's overtaxed network is the reason his 2G iPhone turns into a paperweight when he hits Land Shark Stadium with 75,000 fellow Miami Dolphins fans. He owns no shares in any of the stocks in this article and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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Report this Comment On October 07, 2009, at 12:42 PM, TwayneN wrote:

"but I wouldn't want to be an AT&T investor right now.", or an employee, lost revenue equals lost jobs! Thousands of layoffs every year so far - more coming!
Report this Comment On October 07, 2009, at 3:38 PM, plange01 wrote:

att is aware that apple will soon be moving on.they either start making deals fast or they will fall apart fast and be sold of for nothing...
Report this Comment On October 07, 2009, at 3:53 PM, leohaas wrote:

Another important question to ask: How big is the impact on VG. Any ideas? The market seems to like it today (up almost 40%).
Report this Comment On October 07, 2009, at 6:05 PM, metalarmor wrote:

Wow! I can't believe how was everyone starts to speculate. AT&T and Apple's deal is not going to vanish over night.
@plange01: AT&T is upgrading is network massively to handle the data (and yes it will probably be comparable to VZ network by the time they are done) and they have a great balance sheet. It is almost funny to see how speculation gets under way right away with one or two news.
@TwayneN: AT&T still employees 280000+ people and they are hiring again + they just rolled out a new app on iphone for hiring purposes only.
@leohaas: I think the move by AT&T will both benefit companies like VG and Ebay (Skype). But ultimately you can expect AT&T to benefit from the phone usage as well. Good move for their churn.

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