iPhone 4S: At&t Killer

Imminently, Apple has announcedwill be announcing the new iPhone. It may be the iPhone 5 or  is the iPhone 4S or both, but either way, here’s why I think it’s really bad news for At&t:

1. It’s seems confirmed that Sprint will get some version of the new iPhone giving At&t customers yet another carrier option to defect to, one with both a pretty good network and very good prices/customer service. Also, there are many folks with families or corporations still on Sprint who would jump at the chance to switch back to Sprint.

2.  The myth about At&t’s service getting better once some of its traffic was offloaded to Verizon iPhones has been disproven.  Those of us still on At&t can attest that the network is still awful in every way – voice, data, coverage, etc.

3. Many people, like myself who bought the iPhone 4 on At&t as soon as it came out were tempted by the Verizon iPhone launch but decided to wait for the next generation phone – we all initially thought it would arrive in June, but kept waiting for “fall”, all hoping for September. We’ve held on this long and are itching to rid ourselves of the At&t shackles. See here for evidence of people planning to switch.

4. The onerous contract termination penalties for leaving At&t ($325) have abated some, as they decrease by $10 each month, so those who bought the iPhone when it first came out will only owe $175 in termination vs. $245 in February.  This will be a nice cushion of revenue for At&t but one time only….

5. International Roaming – One big knock on the Verizon iPhone is that it is CDMA only.  This means that  it won’t work in most of the world, which uses GSM network technology.  The strong rumor and likelihood is that all the new iPhones will be dual-mode and thus Verizon and Sprint subscribers will be able to roam internationally too. Another barrier down.

6. Sprint’s entry into the iPhone arena with more competitive pricing and simpler plans (e.g. unlimited data) will put pressure on At&t to match this pricing structure and reduce their monthly revenues.

7. I don’t think that any of these dynamics will help At&t defend their anti-trust case to purchase T-Mobile:

- Sprint will show that a smaller carrier can compete and doesn’t need to merge for the sake of spectrum or otherwise.

- At&t will have lower data growth hence less ability to show that they need to acquire T-Mobile for more spectrum/bandwidth.

- It will be even clearer that At&t’s goals are to limit competition.

In summary, At&t’s absurd ad slogan/tagline will take on new meaning:

“Rethink Possible” can now mean:

1. Did you think it was possible to blow a 4 year head-start with an exclusive for the most transformative mobile device of all time?

2. Did you think it was possible to continue to have the worst network in the most important cities in the US for 4 years despite every opportunity to improve?

3. Did you think it was possible to get people to pay $100+ per month for “mobile phone” service yet to not be able to place or hold a phone call at all in major metro areas like NY or SF?

4. Did you think it was possible to put up every obstacle to keep people from switching away from your service (e.g. absurdly high termination fees) and yet still lose millions of long-term subscribers?

At&t, Rethink Possible.

Related articles

• Apple iPhone 5/iPhone 4S: What IntoMobile expects (intomobile.com)

3 Reasons the Att network won’t get better when users move to Verizon

Image via Wikipedia

To follow-up on my post on whether or not to get the Verizon iPhone,  a few people suggested to me that they would be sticking with At&t and were excited/hopeful that the network quality would improve when users leave for Verizon.  Here are 3 reasons why I believe this not to be true:

1. One reason why the experience on At&t is so poor is due to coverage.  At&t simply doesn’t have towers or coverage in certain spots, astonishing but true in major metro areas like NY or SF.  Users leaving for Verizon won’t have any impact on this at all.

2. This is the most important reason.  At&t encourages the common misconception that their network difficulties are about bandwidth.  The common refrain is that iPhone users are consuming a ton of data, and the wireless towers and backhaul links can’t handle all of that traffic.  According to many sources though, this is not the case.  Articles from Business Insider and Ars Technica explain the details, but At&t’s problems are largely about signaling architecture.  This won’t change at all until At&t has a new 4G LTE network running.

3. At&t’s network has never been good, even when they had millions fewer iPhone users.  They simply don’t view network quality as a core differentiator.  Reducing the iPhone users on their network won’t change this. If anything, they’ll see it as a reason to cut back on network quality/expenditures.  Despite their [many] other faults, Verizon has positioned their network quality as their core differentiator and they are willing to invest and work to maintain this advantage.

As to whether or not Verizon’s network will get worse, there’s certainly a chance it will, but I wouldn’t see it as a guarantee either.  Aside from Verizon’s aforementioned commitment to their network and probably better-architected network/signaling, many carriers in both Europe and Asia support the iPhone and its data-hungry users quite well. There’s no reason to think that Verizon will be more like At&t and less like the majority.

Sorry to be the bearer of bad news on this….

Related Articles

• Lessons from AT&T might help Verizon survive iPhone (macworld.com)

Should you buy the Verizon iPhone?

Last week, after much anticipation, Verizon announced that they will offer the iPhone 4 on February 10th.  Now the question is:  should you buy it?

Here is a summary of some things you should think about when deciding whether or not to buy one:

For people who don’t already have an iPhone

For those that don’t have an iPhone, here are the set of questions you should ask yourself:

1. Do you have a contract obligation to Verizon or another wireless carrier?

• If you have time remaining on a contract with Verizon,  you will have to pay the full (unsubsidized) price for the iPhone, this is $649.99 for the 16GB model and $749.99 for the 32GB model.
• If you have time remaining on a contract with another carrier, you’ll need to pay their termination penalty (it will vary depending on the carrier and when you signed your contract but could be as high as $325).
• If you don’t have a contract obligation, you’ll be able to purchase the phone for either $199.99 for the 16GB model, and $299.99 for the 32GB model, with a new 2 year agreement.

2. Do you want a smartphone?

• There are lots of great things about a smartphone but not everyone might want one.  The major downsides are the increased costs, both upfront and monthly (estimate about $80-$100/month for a smartphone).  Also some people find the notion of being connected all the time and everywhere to be a burden rather than a blessing.  If you can afford a smartphone and think the benefits outweigh the costs, then proceed.

3. Is the iPhone the best smartphone option for you?

• In general, I feel that the iPhone is the best overall smartphone available. Android phones are catching up and have some of their own benefits, but for most people, I think the iPhone is still a better option.
• Do you send a lot of e-mails from your phone? If your number one objective with a smartphone is to send (not just read) e-mails, a Blackberry or other smartphone with a keyboard might be best for you.  The soft keyboard on the iPhone can be fast or even faster for some people but most agree that if doing a lot of typing, a physical keyboard is probably best.

For iPhone Owners suffering on At&t

1. Do you hate your At&t coverage for your iPhone?

• This largely depends on where you live. If you live in New York or San Francisco, your answer is probably yes.  If you live elsewhere and are happy with At&t’s network, there is probably no reason to switch.

2. Are you under contract with At&t?

• If you’re still under contract, you’ll have to pay a termination penalty.  If you bought the iPhone 4 for At&t, it will be $325 minus $10 for each month you’ve been under contract, pretty significant. At&t is projected to earn a huge sum from these termination fees, as much as $400 million or more.
• Lifehacker has a comprehensive post on how to minimize/eliminate or counterbalance any termination penalty.
• If you hate your service badly enough, it may be worth paying the termination penalty….

For everyone

1. Will the iPhone be better on Verizon than on At&t?

• I can unequivocally say that At&t’s network, at the very least in New York and San Francisco is ATROCIOUS and I feel very strongly that the iPhone on Verizon will be a much better experience.   A very underreported fact: Aside from Verzion’s generally better network coverage, the fact that voice and data are routed separately means that Verzion can (and does) prioritize voice/phone call traffic and therefore even if a massive influx of iPhone users slows down their data network, your phone should still work as a phone….
• Three minor downsides to a Verizon iPhone vs. At&t’s – if these are important to you:
  • You won’t be able to use voice and data at the same time   i.e. make a phone call and look at the web/maps, etc. at the same time – see above for why this is also a positive.
  • You won’t be able to use your iPhone in most countries outside the US while traveling.  While this seems like a big deal, the roaming charges for doing this on At&t make it a prohibitive practice for anyone paying their own way.
  • At&t’s 3G data network is theoretically faster than Verizon’s. However this is in laboratory conditions.  In real life, data speed relies on actual network coverage and congestion, both of which are not At&t’s strong suits.
• Hardware – the hardware is mostly the same. However, I would guess that the antenna “problem” has been fixed and hopefully the proximity sensor problem has been fixed as well.
• One positive difference (for now) for Verizon is that they will offer an option to use the phone as a Wifi hotspot, or to share the 3G data connection with multiple devices – e.g. multiple laptops, iPad, etc.  Verizon has yet to announce pricing on this, but note that both At&t and Verizon usually charge extra to “tether” your phone altogether, i.e. to use your phone’s data connection for your laptop or other devices.
• Price – Verizon has yet to announce pricing for the monthly service on the iPhone. It seems unlikely that their plans will differ significantly from their other smartphone plans, but these tend to be a bit more expensive than At&t’s plans and there is a good chance this will be the case with the iPhone pricing as well. At&t might reduce their prices to compete even further. You should also think about any corporate or family discounts that you have.

2. Is it better to wait for the next version of the iPhone?

• This is a tough question to answer.  There is generally a new iPhone released every year around June/July and there is no reason to think there won’t be one released this year.  It’s unclear what the features of the new phone might have but Apple usually doesn’t disappoint. There is no consensus on what features a new iPhone will have, but here are some that people have guessed:
  • 4G capabilities  - this would mean that the phone could run on Verizon (maybe and At&t’s) newest/fastest 4G network.
  • Global roaming – as mentioned above, the current Verizon iPhone will be limited mostly to the US.
  • Faster processor/more memory – the performance of the phone could become as powerful as some laptop computers.
  • Compatibility on Verizon & At&t
  • Launch on other networks like Sprint and T-Mobile.
• A big “however” though, is that it’s not out of the question that the new iPhone will come out first on At&t in June/July and it could be months later before a Verizon version comes out.

Bottom line recommendations:

• If you’ve been waiting to buy an iPhone until Verizon offered it, go ahead and buy it, I think you’ll be very happy!
• If you’re on At&t and have been praying for the day you could switch, I would ask yourself if you can do 6 more months in At&t’s maximum security prison.  No is a perfectly acceptable answer.  I’m trying to summon the courage to wait myself.  Every time I decide I’m going to wait, At&t drops another call…

Other Sources of Info

At&t vs. Verizon iPhone comparison from Engadget

Lifehacker on the differences b/t At&t and Verizon

Verizon’s FAQ about the iPhone

Consumer Reports Recommends Waiting

Crunchgear comments on Consumer Reports opinion

Techcrunch’s Bottom Line Recommendation

Related Articles

• Consumer Reports Cautions Against Verizon iPhone 4 (informationweek.com)
• Verizon iPhone Vs. AT&T iPhone (lockergnome.com)
• Will the iPhone Crush Verizon’s Network? [IPhone] (gizmodo.com)

How to be a Great Wireless Carrier

Wow, so turns out that regular blogging is even harder than regular flossing….  Has been over a year since my first and only post, embarrassing. Will endeavor to actually write down ideas instead of just ruminating….

So, this is a post I’ve been wanting to write for a long time. Not to continue the theme of the only other post on my blog, but…. I am really frustrated with wireless carriers. At&t in particular is doing an unbelievably bad job.

At&t’s network to support the iPhone is awful. Awful enough to prompt a CNET columnist write to write an article about removing the phone from iPhone.  Awful enough for a [albeit crazy] person to threaten to shoot it with his gun in the Apple Store.. Awful enough that 30% of calls being dropped is considered normal???

I have given up on relying on my iPhone as a phone, I have landline alternatives at work and at home and I try to travel with people, like my wife who have working phone service. This is both pathetic and a testament to how amazing a device the iPhone is that it made me completely overlook the fact that it’s most core function doesn’t really work that well.

At&t’s defense has been that they didn’t expect that there would be so much uptake and usage (!?!?) of the iPhone and particularly its data capabilities in cities like New York and San Francisco. Let’s analyze this for a minute – Even if I were to suspend disbelief that one could have dismissed the gargantuan hype surrounding the launches of each iPhone and the corollary obvious conclusions that early adopters, hipsters and Apple fanboys would buy and use these things like crazy in places like SF and NY, the iPhone has been out for almost 2.5 years – hello???

It’s become abundantly clear that At&t (and probably most of the carriers) never intended their “3G” wireless networks to be used the way they advertised them.  After all, before the iPhone, data usage was primarily about push text e-mail on Blackberries and the occasional download of a ringtone or a game.  While carriers would tout the revenue from text messaging as data revenues to justify the exorbitant cost of their “next-generation” networks, text messages (SMS) actually use the plain old voice network.

So At&t was hoping they could trick enough people into paying $30 or more per month for data plans that they wouldn’t really use.  When the usage spiked from iPhone users and made the experience of using voice or data terrible, their response was generally “Gee…”.  Maybe that’s what the G in 3G stands for.  There has been no discernible upgrade to the network in the last 2.5 years, if anything things are getting worse.  Just try using the phone at any gathering of people like a sporting event or concert in any major metropolitan area.

I think that there are a few problems across the wireless ecosystem that are making the wireless carriers behave badly:

1. Dinner Party Conversation /Steve Jobs Envy: executives at wireless carriers (and many other types of companies, like handset manufacturers), yearn for the cult worship and adulation heaped upon Steve Jobs and his ilk. They don’t want to be in the “plumbing” business, but they want to be media companies, to hobnob with musicians, etc. Therefore, there are huge budgets to create media platforms, their own app stores, and other absurdities so that they can have something cool to talk about at dinner parties.

2. Fear of Commoditization: I think that wireless executives wake up with cold sweats in the middle of the night from nightmares where their companies have turned into public utilities like Electric companies and are highly regulated, etc.

3. Paternalism: there is a pervasive attitude amongst carriers that they know what people want and need with regards to their mobile devices and services.

So what should the wireless carriers do?

Focus on being a wireless carrier – Until they have excelled and perfected the core parts of their business, they should refrain from being in any other businesses, i.e. you are not a media company, not a hardware company, not a software merchant, etc.  Apple, Amazon, GE and others have earned the right to diversify by excelling at their core businesses and leveraging their core success into ancillary industries. Carriers have not.

Focus means:

1. Build, maintain and service the best and fastest network around.  People will switch carriers for better service (given other issues below being resolved).  This is a must.  It is not cheap but everything else is meaningless without it. Verizon has done the best job at this amongst the carriers, yet it can do better and it has failed at the other aspects thusfar.

2. Create very simple and flexible processes to get devices launched on your network.  Consumers want the latest devices, make it happen by being easy to work with and NOT insisting on controlling any UI, software, etc. Don’t block applications, don’t get involved with software on the handsets at all…..

3. Pricing/billing – make it simple, create very few plans with simple features that don’t aim to cheat your subscribers out of money through overage, etc.  Be transparent and innovative – try to eliminate contract requirements or be totally clear by renting handsets like cable companies do with set-top boxes.  Make the bills so simple that they are actually correct. Stop adding bogus surcharges that masquerade as taxes.

4. Prioritize customer service – If you do #1-#3, this should be easy as you won’t have a lot of issues. But also start in the stores – compare the average employee in an Apple store to one in an At&t store. Take pride in smart, kickass customer service and retail employees. And don’t outsource this to non-company owned/managed stores/call-centers – this is your business.

Now you might ask where all the money would come from to do this. Here are the answers:

1. Stop spending so many wasteful dollars on marketing.  If you do these steps above, customers will migrate to you in droves, you won’t need to market…. At&t spent $4 billion to change their name to Cingular and then another $2 billion to change it back (that’s not even counting the rest of the At&t brand mess).  Both Verizon & At&t spent over $2 billion in 2008 on advertising.   Unbelievable, right? Top 5 advertisers in the US. Think of how much better that money could be deployed….

2. Stop spending money on wasteful lobbying and legislation to try to obtain competitive advantages – instead, try competing!

3. The efficiency gain from focusing on the four items listed above will make it much cheaper to attract, retain and service customers.

In fairness, some carriers have tried to do some of this:

- Sprint has tried to simplify pricing/billing and open its network a bit.

- T-mobile has been the best about opening its network to devices.

- Verizon has put a lot of effort into their network.

But for the most part, they’re doing most of the wrong things and not enough of the right things. I think it’s abundantly clear that the first carrier to pursue these strategies will reap massive rewards in market share and profitability. Oh – and they’ll definitely get one new customer.

Lots of wireless news even in the last couple of days:

- At&t will allow Skype and other VoIP apps to run over the wireless network on iPhones, not just over WiFi.

My reaction: Wow – so you’re going to address the absurd device inconsistencies regarding one specific type of app, congrats! More telling is the reason given by At&t, ““Today’s decision was made after evaluating our customers’ expectations and use of the device compared to dozens of others we offer.” (via VentureBeat)  You mean when making this initial decision, you thought that people would want these apps blocked? Does that sound logical?

- Verizon will launch Android Phones soon and even allow Google Voice to run on them!

My reaction: this could actually be good news, Verizon trying to show-up At&t by (ironically) being MORE open.  I’ll believe it when I see it though, somehow I foresee a Verizon-skinned Android with VCast and other nonsense all over the place.

So, in conclusion, the wireless carrier industry is still a mess, but hopefully getting better? At a glacial pace… I hope one of them or more wakes up soon.