=?windows-1252?Q?Verizon_Wireless_FUD=3A_AT=26T=92s_Rivals_A re_Happy_to_A?==?windows-1252?Q?ttack_Over_iPhone=92s_Network_Woes?=

AT&T’s Rivals Are Happy to Attack Over iPhone’s Network Woes

http://digg.com/tech_news/AT_s_Rival...s_Network_Woes

August 29, 2008
AT&T’s Rivals Are Happy to Attack Over iPhone’s Network Woes
By LAURA M. HOLSON

Apple sold more than a million iPhone 3G cellphones its first weekend
— with some stores running out — and two million more since then,
analysts say. But its July debut has been nothing less than a public
relations headache for AT&T, with eager buyers complaining about
dropped calls and poor network connections.

Some fingers point to Apple, which has tried to deflect the
complaints. But many others point to AT&T’s cellular network. Whatever
the source of the problems, AT&T’s rivals, long irritated by all the
attention the iPhone has received, are on the attack and happy to
exploit the discontent.

“A phone is only as good as the network it’s on,” said a full-page
Verizon Wireless newspaper ad on Thursday, lobbing a shot at AT&T’s
3G, or third generation, high-speed network. A Verizon executive sent
an e-mail to Wall Street analysts last week: “So much for a ‘new’ way
of doing business at the old AT&T — your father’s phone company.”

For AT&T, the nation’s No. 1 wireless carrier, which exclusively
offers the iPhone, the situation is especially tricky because the
stakes are so high. Apple’s customers are largely forgiving of any
foibles of the iPhone’s maker. But wireless companies like AT&T and
Verizon are afforded no such a luxury. The 3G network is supposed to
make it easier to surf the Web and watch videos online. With nearly 90
percent of all Americans owning a mobile phone, there is little room
to grow and these rivals can ill afford to lose customers.

Further aggravating consumers, neither company has fully explained why
calls were dropped and the network was slow. Theories abound, which is
causing even more confusion — and finger-pointing. Is it a problem
with the phone itself? Richard Windsor of Nomura Securities surmised
in a research report that a new radio chip made by Infineon, a German
chip maker, was to blame for the iPhone’s spotty service in areas
where the cellular signal was weak.

Since Americans are not the only iPhone users complaining — consumers
in the Netherlands reported iPhone problems too — some analysts think
the iPhone is partly to blame. Apple offered a software fix to mixed
reviews — but no explanation. Most analysts put the onus on AT&T. “If
consumers are not getting the full 3G experience, that is not Apple’s
fault,” said Akshay K. Sharma, a research director of carrier network
infrastructure at the Gartner Group, a consulting firm.

Nielsen Mobile, a consulting firm, said that in tests in the 47
largest American cities, it was able to connect to 3G networks 93
percent of the time. (Its sample included all carriers.) By contrast,
in the San Francisco area, where many of the iPhone troubles have been
reported, that number was 87 percent.

Phil Marshall, of the research firm the Yankee Group, said the problem
probably lies somewhere in between, in how the iPhone interacts with
AT&T’s network and signals are transmitted and received.

AT&T’s growing pains with its 3G network might otherwise be overlooked
if not for the popularity of the iPhone. (Verizon executives conceded
they too had problems when data users increased use of their highest
speed network.) AT&T’s 3G network includes 310 cities with 100,000
people or more, but it plans to add 40 cities by the end of the year.

“It’s hard to launch an iconic device like the iPhone on a network
that it is not yet fully deployed,” said Mr. Marshall. “As they build
these networks they will need to make more improvements or the
complaints will persist.”

But there is a bigger issue at play too, Mr. Marshall said. “Both
companies are accustomed to controlling all aspects of the delivery of
its products,” he said. “It illustrates the culture clash, when you
create an environment where you share the responsibilities between
them. Then you have problems.”

Already there seem to be fissures in the relationship. Two camps are
emerging at AT&T: those who think Apple is too controlling with
information and those who think Apple can do no wrong, said two people
who have talked to AT&T executives but who declined to be named
because they were not authorized to speak on their behalf.

Jennifer Bowcock, a spokeswoman for Apple, said executives there
declined to comment about consumer complaints. Bill Hogg, president of
network services for AT&T’s wireless divisions, acknowledged the
complaints, but said, “We don’t believe macro or global issues are
causing the problems.”

He said the company had enough capacity on its 3G network to handle
all of its iPhone customers, who tend to be heavy data users. But he
too was reluctant to discuss AT&T’s relationship with Apple.

When asked if the recent software update was devised to fix poor 3G
network reception, he said, “Apple does a lot of updates.” When asked
why calls were being dropped, a publicist intervened in the interview:
“We are not going to go into the details of what customers are talking
about.”

Customers are more than happy to be heard. Benji Jasik, a product
manager at a start-up in Palo Alto, Calif., said his new iPhone
dropped calls several times on his commute between San Francisco and
Silicon Valley.

Since he downloaded the software patch, he said has had fewer dropped
calls, but network connections remain sluggish. “Everyone is
interested in figuring out if this is an AT&T or an Apple issue,” he
said. “I just want to know who to call to fix it.”

Verizon Wireless thinks that will give it the edge in getting
consumers and analysts to believe its pitch: Verizon’s 3G network is
better. For nearly a year, consumers have been gushing over the
iPhone. Now it is Verizon’s turn. Gizmodo.com, a gadget Web site, this
week posted an internal Verizon sales document entitled “3G iPhone
Myths” that gave Verizon employees talking points. Mr. Sharma, the
research director, said he recently met with Verizon executives who
chided AT&T executives for their mishandling of the iPhone imbroglio.
“They told us they’d rather miss a deadline than have a bad launch,”
he said.

In the past two weeks a Verizon corporate communications executive,
Jeffrey Nelson, has sent almost daily missives to analysts pointing
out blog posts and news articles that take aim at AT&T, Apple and the
iPhone. “Where is the recall?” said one e-mail from Aug. 19. “Where
are the refunds? Or maybe toss in a free ring tone and a couple months
of free service?”

“I get almost one a day,” said Mr. Marshall. “It’s almost like, hey,
quit spamming me.”

Verizon executives are not apologizing. “As the market matures, every
single customer is tougher to get,” said Anthony Melone, Verizon’s
chief technology officer. “This environment is really competitive.”