AT&T (NYSE: T) made a few new enemies last week. Today, a company spokesman hit back against the critics.
Apple (Nasdaq: AAPL) iPhones got the FaceTime video chat application some two years ago, with the launch of the iPhone 4. The app always worked over Wi-Fi connections, but beta versions of iOS 6 have expanded it to working across 3G mobile data connections as well. That's a significant upgrade to one of Apple's most popular tools. When the final release of iOS 6 hits handsets and iPads later this year, the mobile FaceTime feature could make or break the buy-in decision for many consumers.
But Ma Bell requires you to sign up for a shared data plan before enjoying FaceTime over 3G networks.
This move wasn't welcome at all. Mobile enthusiast site Boy Genius Report compares this to leasing a car where the bank decides how fast you can go or where you can park. DailyTech calls the limits "mind-boggling," and points out that Microsoft's (Nasdaq: MSFT) Skype app is allowed to do video calls over AT&T's regular 3G connections. Ars Technica did the math and found out that many users will end up paying more for a shared plan than separate unshared accounts.
Crucially, several of these critics wonder if the new rules don't run afoul of the FCC's network neutrality policies.
So here comes AT&T's damage control squad. In an official blog post, AT&T explains that everything is kosher:
- The service plan requirement doesn't violate any FCC rules, which only require the carrier not to stop customers from installing communications apps on their own.
- Indeed, we should thank AT&T for preinstalling FaceTime on its iPhones, even if that gives the company the power to limit what you can do with it.
The article doesn't address accusations that AT&T is forcing people to use the new and more lucrative data plans. But ignoring the critics doesn't make their slams any less valid, and AT&T may end up losing customers over this blunder.
With iPhones available from nearly every network that matters nowadays, consumers aren't locked into Ma Bell's policies. Rival Sprint Nextel (NYSE: S) has committed to supporting FaceTime over its unlimited 3G and 4G data plans, and the jury is still out on Verizon (NYSE: VZ).
The coming couple of quarters will show whether AT&T stumbled on a profit center -- or a new way to lose revenue and alienate customers.
Apple may need to step in and demand better support from its favorite network. In our latest premium research report, our analysts have dissected Cupertino from every angle, giving you the opportunities and pitfalls that Apple will face. For less than the cost of a decent pizza, you, too, can gain an investing edge. Get this premium report on Apple.
