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Bandwidth hogs – iPhone and other smartphones


The way consumers use Apple's mobile phone (i.e., constantly) means big headaches for carrier AT&T. And more smartphones are on the way.

Randall Stephenson, chairman, CEO, and president of AT&T,  holds up his Apple iPhone

Randall Stephenson, chairman, CEO, and president of AT&T, holds up his Apple iPhone

At the South by Southwest music, film, and interactive fest in Texas earlier this year, the iPhone was all the rage — and not in a good way.

The device proved so popular with Internet-addicted attendees that AT&T's wireless network in the city of Austin buckled under the strain, all but shutting down both voice and data service for many customers.

iPhone users bashed the phone company on Twitter and in blogs, and AT&T (T) had to haul in extra network equipment just to ease the gridlock.

As it turns out, smartphones are double-edged swords for phone operators. They attract big-spending customers who purchase highly profitable text-messaging and unlimited-data plans.

But they also tax networks designed for simpler times. Now the wireless providers hawking those Internet-enabled mobile devices are experiencing the digital equivalent of being proprietors of an all-you-can-eat buffet: It seems like the perfect business until the sumo wrestlers show up.

No carrier is feeling the pressure more than AT&T, the exclusive U.S. provider of the iPhone. Users of Apple's device are the hungriest mobile Internet consumers of all: Not only do they send e-mail messages and access the web, they also view maps and YouTube videos and download iTunes purchases.

Independent telecom analyst Chetan Sharma estimates that the typical wireless subscriber consumes 120 megabytes each month; typical iPhone owners use four times that.

Accommodating all that data is one challenge for operators such as AT&T, but the real issue with smartphones is that their users are always moving from one location to another, tapping into the network constantly, sometimes for a few seconds, other times for hours on end. And when a big group gathers — the lunch crowd in Manhattan, say, or South by Southwest revelers — the effect can be total gridlock.

"3G networks were not designed effectively for this kind of usage," says John Donovan, AT&T's chief technology officer, referring to the current generation of broadband wireless. "We fight the day-to-day guerrilla warfare as the customers move around." Not that AT&T is complaining. "The iPhone," adds spokesman Mark Siegel, "is a problem that other carriers would love to have."

chart_att_mobileNew data guzzlers
And they soon will — sort of. AT&T is in the hot seat now, but an influx of Internet-savvy phones could easily strain other carriers' networks in the near future. By 2010, global mobile data traffic is expected to exceed 200 terabytes per month, six times last year's levels, according to Cisco Systems.

Why? One reason is that other phonemakers are catching on to the touchscreen craze that made the iPhone a hit. Users of phones with Google's Android operating system spend roughly as much time online as iPhone users, according to mobile advertising company AdMob.

To date, only two devices use the Android platform, including the HTC myTouch 3G launched by T-Mobile (DT) last month. But Android phones from Samsung, LG, and Motorola (MOT) are due in stores by early 2010. The data-oriented Palm Pre, which operates on Palm's (PALM) WebOS platform, is already on Sprint (S) and should be in Verizon stores early next year.

With all the money AT&T and other carriers are making from smartphones, why don't they simply upgrade their existing systems to handle more traffic? Because increasing wireless capacity is like adding lanes to a road; it takes months or years to get local permission to build new transmission towers.

Ultimately all carriers will move to faster next-generation networks that are designed for data traffic. But those so-called 4G systems won't be available nationwide for years.

In the meantime, carriers are likely to get pickier about the applications they'll allow on their networks. When Apple (AAPL) unveiled the latest iPhone software in June, developers collectively groaned after the company revealed that AT&T wouldn't immediately support two of the most exciting (and bandwidth-hungry) new features: MMS, which uses the text-messaging system to send media such as photos and video, and tethering, which allows a phone to share its Internet connection with a nearby computer. (AT&T says MMS will arrive at summer's end, when the network is deemed ready.)

Some carriers may try to offload data traffic. PCCW, the Hong Kong operator, has started using Wi-Fi hot spots to ease the load from smartphones and its digital TV service.

Pricing will probably change too. In private meetings, AT&T CEO Randall Stephenson has said that the most active 5% or so of data users are causing problems for the other 95%. AT&T is working on a revamped data plan whereby light data users would pay less, and heavy users would pay a premium rate — or leave.

A few carriers in Europe already have moved away from unlimited-use data plans. And once one U.S. operator makes the move, it is likely the others will follow suit — and the sumo wrestlers of wireless might have to do without the buffet.

71 Comments | Add a Comment | Email

..Another way to create high capacity / coverage networks is by massively deploying in-building solutions in densely populated areas. Solutions such as FemtoCells and DAS will allow carriers such as AT&T to build a much higher capacity networks in places it Is needed the most without the need to heavily invest in costly network / infrastructure upgrades. These solutions are deployed massively in many places in the world. Here in Israel, high capacity DAS provide sufficient coverage and capacity to almost all hi-Rise building, hospitals, universities and business campuses etc. It is done in a county in which 3G networks and high capacity data is reaching 100% coverage.

Posted By Ofer, Rosh Hayin, Israel: September 19, 2009 12:16 PM

Replying to John Fortt's response to my comment:

Actually, the carriers, developers and device manufacturers did have extensive dialog about mobile users. I covered this market back then and can point to numerous examples of services that anticipated iPhone applications with push service (which are still not available from AT&T. For example, 3G was designed after the General Magic network that AT&T invested in, which was predicated on software agents constantly interacting with servers and devices.

Cell tower density are issues handled with increased capital investment in equipment, not the design of the network protocols.

I did not say you defended AT&T, but that you failed to challenge any of their assertions. You do defend them in your comment by reiterating the argument that data-intensive mobile applications were not anticipated prior to the iPhone; that restates the AT&T claim without addressing the argument that 3G is defined for use by data-intensive mobile handsets.

Read old issues of Fortune if you doubt this:

http://money.cnn.com/magazines/fortune/fortune_archive/2000/09/04/286763/index.htm

http://money.cnn.com/magazines/fortune/fortune_archive/1999/10/25/267786/index.htm

Posted By Mitch Ratcliffe, Lakewood, WA: September 3, 2009 9:47 AM

Ridiculous claims by AT&T. The 3G networks were designed precisely to address the kind of use they say goes beyond the bounds of their network. It would be good to see the reporter challenge these arguments with the simple facts stated on the FCC's Web site, which describes 3G and why the bandwidth for it needed to be freed up for use by AT&T and others:

"Key features of 3G systems are a high degree of commonality of design worldwide, compatibility of services, use of small pocket terminals with worldwide roaming capability, Internet and other multimedia applications, and a wide range of services and terminals."

The fact that AT&T describes its top users as "problems" is outlandish. 3G networks were designed for the uses the AT&T network collapses under today. The company wasn't overwhelmed at the buffet line, it over-promises and under-delivers, always asking for more revenue *before* it will deliver better service.

From Jon Fortt: You're ignoring the fact that there are multiple choke points for data in a network, and back when these things were designed few people imagined that folks in their cars would be pinging the network for maps, GPS, stock quotes, etc. At first, much of the 3G network usage was in the data card model, where sessions mostly happened in one location, for a fixed period of time. This isn't just about the volume of data; it's also about the locations and frequency with which smartphones tap into the network, and move from tower to tower.

I'm not trying to defend AT&T, and I'm not arguing with people who demand better service. It's also true, though, that the iPhone has brought data network challenges that few anticipated a couple of years ago when these 3G networks were designed.

Posted By Mitch Ratcliffe, Lakewood, WA: September 2, 2009 4:31 PM

Crying babies …. Three simple words …

UPGRADE THE NETWORK?

iPhone usage is peanuts compared to the bandwidth a home computer uses. And AT&T expects to be able to support micro-laptops and tablets .. please !

Posted By Richard, Ponce, PR: September 1, 2009 10:27 PM

The funny thing is that this "iPhone problem" is an AT&T problem only. AT&T really don't need more cell sites – they just have to upgrade their 3G network to a newer revision, add more backbone capacity and use their carrier slots. Most people who comment on this article really don't understand the 3G technology and run around an say WIMAX WIMAX WIMAX. 3G is NOT to blame – AT&T is the guilty one.
I live in Europe in a midsize Danish town with 36.000 citizens. I use the smalles danish carrier "3" which have seven 3G sites in my hometown. The carrier usses 2 carrier slot and all cell sites are upgraded to the 21 Mbit revision 7 standard. That means that each cell tower has a capacity of aprox. 42 Mbit. There are 3 danish carriers with 3G and they all have that capacity to their disposal through out their network – you do the math. 3G capacity problem… Not in Europe. AT&T could easily avoid the problems IF the upgraded their newtork. "iPhone" is not to blame – AT&T are.

Posted By Johnny, Holstebro, Denmark: September 1, 2009 3:36 PM

Same corporate mentality as usual in my view, which is how do we do more with less. Even if iPhone launched with Verizion as should have happened, (hear that Verizon? I know, ya blew it, what's next) they would eventually run out of band width. We have technology changing rapidly with no controls for the growth in place to give service providers a chance to upgrade antiquated systems. It's kinda tough to build that new building without a road that will handle the traffic once it's open. However we keep putting Band-Aids on the cuts instead of stopping the bleeding.

Posted By G. Winslow, Las Vegas, NV: August 31, 2009 6:38 PM

Wimax is the new wave with bandwidth.. I love my connection with Clear.

Posted By Laurie Bend OR: August 31, 2009 1:20 PM

This is ridiculous,these carriers are using 20th century network technology with 21st century phones. I agree with the earlier comment, WIMAX, WIMAX, WIMAX, WIMAX, WIMAX.

Posted By Shawn, San Francisco, CA: August 31, 2009 12:56 PM

The new advertising should read: "Smart-Phone, so you don't have to be … !" Maybe people should go back to reading Magazines or News Papers or, dare I say it … Books!! .. Wow!!, imagine that? A book! Simple, cost, effective and I challenge you to glean more information from an online source. So instead of being anti-social, with your brain plugged into spam-central, get grip. Omg, what did we do before the Internet???

Posted By W. Schaefer, Rayong, Thailand (originally St. Catharines, Ontario, Canada): August 31, 2009 1:05 AM

I dont agree… I am a typical iPhone user, and I rarely go over 200MB a month…unlike her estimates

Posted By Jim Keohane, Hampton, VA: August 30, 2009 9:00 PM

The future of wireless networks: Higher costs, traffic shaping, "better speeds" with no actual changes to the physical network. Download too much on your "unlimited" connection, and expect your service to be "interrupted". I have seen it happen several times for friends on both ATT and Verizon.

Unfortunately 4G will NOT be a solution. The appetite of technology and consumers will outstrip what the services provide as long as they're allowed to keep selling their pie a thousand times over. If these companies were forced to have the network to back up a ratio of the bandwidth they allot, then they will be forced to expand to support their base instead of cutting the customer to support their current status. As it stands, they are throwing a single penny into a crowd, and telling everyone that's their penny.

Posted By Shawn, Phoenix, AZ: August 30, 2009 7:47 PM

Why can't Level 3 Communications get in on all this?: they have the best network in the world, and all they do is lose money and their stock sits in the toilet.

Posted By H. Luria, B'ham., AL: August 30, 2009 4:40 PM

Regardless if 4G is the new thing, if they get a phone that is interesting, innovative, and cool it too will strain the network. 2.8 million customers is not a lot of customers, so I would assume that the network would run very fast and smooth, add 20x that amount and then you will encounter more issues with a network.

Posted By Johnny C Minneapolis Minnesota: August 30, 2009 1:51 PM

The graph is in millions of terabytes per month. The article refers to only terabytes per month. This needs to be fixed.

Terabytes per month is far too low.

Posted By Mike, Cleveland Heights OH: August 30, 2009 12:49 PM

The four letter answer is W-I-M-A-X.
Plain and simple.

Posted By Ari Zoldan, New York, NY: August 30, 2009 7:55 AM

Our cell carriers are a great example of what you get when you don't promote competition and allow a select few organizations controlling key services to do whatever they want. We already have a severe shortage of competition and handset choices in the States, yet these carriers get to sign exclusive deals, further restricting the choice.

As much as I like Sprint, they botched their 4G network launch. They had a good three years to gain an advantage over the Verizon and AT&T but missed the opportunity. Tmobile on the other hand has barely begun building their 3G network, a good four years late.

Posted By O'Neil, DC: August 30, 2009 12:57 AM

I have been a loyal Verizon customer for many years … until I started traveling abroad. I now have 2 telephones, ATT and Verizon. I am very happy with my 4G ATT telephone. I use it primarily in Asia and don't have to worry about being charged 3 arms and 4 legs like Verizon does. Swap out my SIM card and I use my telephone locally.

Posted By Jim, Centrevill, VA: August 30, 2009 12:13 AM

It's appalling to hear the carriers complain about customers using the unlimited data plans they pay for. I have to pay extra to get an unlimited plan and if my use of that unlimited plan is taxing their network then they sold me a load of horse crap because they cant provide the service Im paying for.

Posted By Jason, Austin TX: August 29, 2009 11:08 PM

In regards to Robert's references to Korea's WiBro network. They are actually estimating 2.5 million subscribers and 65 billion KRW (Korean Won) in revenues by 2011.

There are only 6.8 billion people on earth. :)

Posted By Aaron, Onalaska, WI: August 29, 2009 11:03 PM

I love all the comments from consumers who have no idea what they are talking about and still have this fixation that broadband internet access and wireless are somehow one in the same.

All the weak signal / coverage issues you can walk down to your town hall and ask about wireless carrier network towers. MANY suburbs suffer from NIMBY (Not in my back yard) so blame your own townfolk for lack of coverage. Other parts of the country have little to no coverage due to why invest $$$$ in north dakota??

4G is a good 4 – 5 years away from having anywhere near the footprint 3G has now and if you think LTE will lead to open handsets – get real. We will never see the european business model in the states, it will need federal level mandate to deem a national adoption of a standard and while LTE will provide that – expect carriers to structure plans to prevent that.

2-3 years from now everyone will complain about bandwidth overage chares and handset costs and carriers won't be keen to sub your new device like they do now.

I'm all for innovation but many here want their cake and eat it too, there is no free lunch here. I'd love to see a national WiFi network but doubt it would ever happen in the next 10 years (if ever)

Posted By Frank Castle NY, NY: August 29, 2009 7:43 PM

65 Billion customers?! Wow, 10x the current worlds population in under 18 months. Now that is impressive. Each person in the world will either have 10 phones each… Or you ment million. :-)

Posted By Mike, Bellingham, WA: August 29, 2009 5:17 PM

That's why I use T-Mobile's network! Great customer service, only $39.99 a month for 1000 whenever minutes, unlimited nightime and weekend, and $24.99 for unlimited data and messaging – including MMS…seems overall better to me! The EDGE network operates fast enough for me, I browse the web, use apps, check maps, and watch videos on it all the time without frustration. Thank goodness for unlocking!

Posted By Kyle, Syracuse, Utah: August 29, 2009 5:11 PM

anybody worried that there will be 65 billion people on earth to subscribe to this korean service. Sounds crowded.

Posted By Mike, Wales Wisconsin: August 29, 2009 5:04 PM

I THING SINCE THEY ARE MAKING ALL THIS MONEY IN PROFIT THEY SHUOLD LOWER THE COST FOR INTERNET OR SHARE IT WITH THE FAMILY PLAN INSTEAD OF HAVING TO PAY FOR INTERNET FOR EVERY SMART PHONE.

Posted By HOUSTON TEXAS: August 29, 2009 4:54 PM

I don't have unlimited usage on my data plan now. I'm limited to 5GB/mo by Sprint and as far as I know that is the same for other carriers as well. Just last week AT&T announced plans to require data plans for all of their smartphones starting in Sept. So not only are they voluntarily adding to the load on their network they are giving people the incentive to use it more that may have said, "Nah, I dont really need a data plan, I can just use wifi."

Posted By mike, san diego, ca: August 29, 2009 4:34 PM

first off alot of carriers in the us already ditched unlimited planse ie verizon, and theres no mention of Verizon in this peice whereas they have the largest network in terms of subscribers with very little problems because they are prepared with COLTS and COWS (mobile cell sites) and prepare for events such as South by Southwest! take that!

Posted By vzdubber nj: August 29, 2009 3:23 PM

@Robert, Fort Worth
65 BILLION SUBSCRIBERS by 2011?
If thats so I think we'll have bigger problems than our wireless networks.

Posted By John, Boston MA: August 29, 2009 1:55 PM

I'm so sick and tired of hearing our US wireless carriers whine and moan over strains on their networks. The simple solution: 4G.

One thing I found really funny, the US Wireless Carriers have dragged their feet in development of 4G services and devices. "WiBro" has been available in Korea since 6/30/06. They had a rough start because of small coverage areas and lack luster devices but that has been overcome and they're estimating 65 billion subscribers by 2011.

So far in the US, all we've seen is Clearwire-XOHM and Sprint push their 4G solution, WiMAX, in limited areas with a very slow rollout and no sign of plans for 4G Phones.

Here in the DFW market, I jumped out of my area using a Baltimore zip code on Sprint.com just to get my data card updated to the 3G/4G device. I fired it up a few weeks ago and got my first taste of 4G speed. It was amazingly fast.

And how close was I to falling for the Palm Pre without knowing all the facts? Within one day of going to Best Buy and picking it up. It was only when I saw 4G working that I thought to ask the question: Is the Palm Pre ready for this new network? My answer was a NO. So my answer to Sprint was, no phone upgrade for me until plans for 4G phones start showing up.

As for the 3G service issues, AT&T brought that upon themselves by getting greedy with pushing sales and driving customers to the iPhone without also considering the ramifications of all those users on their congested 3G networks. Had AT&T made the investment in 4G prior to introducing such a bandwidth hog, they wouldn't be feeling the growing pains they see today.

Posted By Robert, Fort Worth TX: August 29, 2009 9:35 AM

Gee you think AT&T should update their equipment (towers, etc)? They took over Cingular and my service dove into the dirt. Prices haven't gone down in years where is all the money going to? Not on that equipment.

Posted By Tina, Colorado, CO: August 29, 2009 8:27 AM

Brandon….carriers have to be concerned about both speed and coverage. Certain parts of Asia and Europe have average download speeds of 20 Megs. You cant say honestly say that you would be happy with being in the middle of nowhere and speding 3 hours to check your email. There is a balance between speed and coverage that carriers need to look at and figure out what is more important for them…thats why we see up and coming carriers only have coverage in certain cities or parts of the country.

Posted By Jake, Denver, CO: August 29, 2009 1:06 AM

Asian speeds ARE more robust by far! Even S Korea – where WE have 40,000 troops protecting these putzes from their brothers and sisters – have speeds and services our pathetic capitalist clown don't even dream about…..perhaps, if they didn't have to pay Congress so much TRIBUTE for re-election?????????

Posted By Gimme a Break, L.A., CA: August 29, 2009 12:34 AM

AT&T, like it's brethren, like to behave like Congress; promise ALL the great benefits, TAX the schnell outta you, then deliver NOTHING. 4G; More of the same ol' 'Mission Accomplished!'

Posted By robert Puget Sound,WA: August 29, 2009 12:29 AM

all services like this are a joke. You get charged an arm and a leg for something, then they complain when you use them. I live in Japan and have a fiber optic 100 mps up and down line. No capping it off, nothing. In USA I had a dsl line and that speed would be for the whole building. America needs to wake up, stop putting off the problems. If you can't build a car right, stop it, fix it, then do it right, don't wait 20 years for the 'market to come back'. ATT, wake up, service has been like that for years..

Posted By Oliver Weber, Tokyo Japan: August 28, 2009 11:15 PM

too much profit for bonuses and not enough invested in making the network stronger. Instead we get way too many tv ads and stores instead of better and faster networks.

Posted By Wayne, Clearwater Fl: August 28, 2009 10:30 PM

I don't think ATT is entirely to blame for some of these issues. Had Apple rolled the iPhone out over 2 or 3 networks and not JUST ATT the bandwidth problems probably would not have shown themselves for another year or two. All that data consumption would be spread out over other carriers. But when ATT decided to try it on their own it exposed just how easy it was to overtax these networks. When ATT loses its monopoly on the iPhone I bet you see some of the problem vanish.

Posted By Frank, Denver, CO: August 28, 2009 10:29 PM

I agree! I refuse to support ATT in anyway, I will wait for Iphone Evdo Verizon! I have been a happy Verizon Customer for years, No Dropped Calls, No Loss of internet and i have coverage in buildings or spots you would NEVER Expect to have it!

Posted By Brandon, Racine, Wisconsin: August 28, 2009 9:12 PM

CARRIERS in the United States need to stop focusing on FASTER Speed and spend the next few years BUILDING a Stronger, Less Patchy Network! How about building a Stronger/Stable Network then worry about speed! So what if the speed is not BROADBAND Quality, as long as its a STRONG network that DOES not crash, thats what matters!

Posted By Brandon, Racine Wisconsin: August 28, 2009 9:10 PM

Sprint just surpassed ATT on customer service on a recent survey. I think since they are the underdog they are trying harder to win customers and provide better CS. I have Sprint and have always been happy with them.

Posted By Travis, Olathe, KS: August 28, 2009 8:41 PM

AT & T needs to invest in the benefits of a company like ISCO International to increase data transfer rates and boost their existing infrastructure.

Posted By Annapolis, MD: August 28, 2009 5:21 PM

hah i listen to sirius raido 8 hours a day on my iphone…guess that puts me in the 5% they are talking about…u offer me unlimited service i am going to use it to the fullest extent possible!

Posted By Kyle, Ofallon Mo: August 28, 2009 4:35 PM

@Nick, Milwauke

True that. I was shocked at how fast cell networks are in Asia / Pacific. On a recent trip to Australia, I used Telstra and was blown away by their networks 21mb 3G data speed. The network is so fast that carriers here would probably lobby to have such speeds deemed illegal. That company also has a 3G network spanning the entire country, rather than our patchy, works her not there, slow coverage.

Posted By Mike, NYC: August 28, 2009 4:26 PM

@Anonymous, Houston, TX,

Comcast, do not get me started on those clowns. Their customer service in the DC area is just atrocious. Unfortunately, I'm still waiting for FIOS.

Posted By Scott, DC: August 28, 2009 4:19 PM

Apple is always the good guy. Nothing is ever apples fault. Now if Microsoft had restricted their mobile to even two networks, I know exactly what some of the responses would be here.

Do no get me wrong, the Iphone is a great phone, however, I refuse to purchase one until I can use it on other carriers like Verizon, Sprint or Tmobile.

In comparison to other 3g carriers overseas that offer two-way video calls, 14.4 mb data services etc, AT&T is a bit of a joke; Particularly with their 'ground breaking' 3.6mb.

Posted By Scott, DC: August 28, 2009 4:15 PM

its not just smart phones and 3g networks…. its all phones and all networks…. recently traveled from the east coast to northern WI for a family get together – NO ONE (Sprint, ATT, Verizon) had cell service at the resort where we stayed. Do these companies expect people not to travel with their cell phones or something?? If it works where I live (and my house is actually in a small deadzone – thank you verizon) it should work wherever my life takes me. End of story.

PS – it was kind of nice not having everyone walking around with a mobile device glued to their ear or fingers – very early 90s – and kind of refreshing.

Posted By KB, Hartford, CT: August 28, 2009 4:10 PM

Sprint is truly getting a bad rap. What their service was like 3 years ago I can't imagine but I can tell you that for the money you pay Sprint is a mile ahead of ATT and Verizon. In their Pre Paid sector under Boost Mobile they are also the best bang for your money. Sprint's Simply everything plan with phones from Palm, Blackberry, HTC and Samsung will cost you no more than $99 a month, however if you would rather use their Nextel network via Boost Mobile their all you can use radio/voice/data/email is second to none at $50 a month.

I just looked at their website and noticed that Sprint enhanced its network platforms in Baltimore,Portland,Atlanta,Las Vegas, San Antonio, Austin, and at least a dozen other cities from 3G to 4G, which is a major leap in technology. I just don't understand why so many people think Sprint is a second rate company. If anything it is second to none. It has some of the best Smart phones, the Pre and Tour. It has the only 4G platform in the USA and it has the best Post-Paid and Pre-Paid plans at $99 and $50 per month respectively.

Posted By Ringo, Portland, Oregon: August 28, 2009 4:09 PM

My contract just recently ended with ATT and I decided to go for the Palm Pre and Sprint. I have had the Phone for close to a month and never been so happy with my carrier. I pay $99 per month using Sprint and like a sucker don't understand why I was paying through the roof $150 a month for the equivalent all you can use plan at ATT. Believe me ATT's network platform functions way below that of Sprint's and they have the termerity to charge 50% more. That was OK when we didn't have an alternative but now with the Palm Pre I have a better phone, better reception and faster data download speeds, 3G & 4G.

Posted By Las Vegas, Nevada: August 28, 2009 3:42 PM

AT&T is garbage, hence why everyone gets the phone unlocked.

Posted By Valencia, CA: August 28, 2009 3:33 PM

Isnt the blame for the problems just as much on Apples plate as it is on ATT? If they choose an exclusive carrier shouldn't they be ensuring the network can handle thier device? Funny how nothing is ever Apple's fault.

Posted By Mike, Chicago: August 28, 2009 3:25 PM

All i can say is Apple is a step ahead and AT&T is a step behind others

Posted By Anonymous: August 28, 2009 2:19 PM

I am so frustrated with my Iphone. It's AT&T's network that sucks. I get so aggrevated I want to sometimes throw it out the window on the freeway. I can't get service in my house. I am 15 miles from Toledo and 35 miles from downtown Detroit and I can't get service half the time. Sometimes I see "Rogers" show up in the left upper corner which I researched and found out I have bounced to the the largest service provider in Canada (Rogers Communications). At least they apparantly have a network that works! WTF Apple, get with the program and sign up some competing service providers before everyone goes back to Blackberrys. The phone is not that great to have us accept terrible service and your competitors are not standing still.

Posted By Tim in Michigan: August 28, 2009 1:46 PM

I might be one of those 5%'ers. I originally had a first gen iPhone hacked to run on t-mobile. The edge service was comparable. When my contract was up, and the 3GS was launched, I switched over to get 3G.

At the same time I moved to a new home and discovered my beloved AT&T Uverse was unavailable. The only other choice for cable and internet was Comcast – lets just say "worst customer service experience ever".

So I don't have internet, my fiancee and I use our 3GS's for almost all internet needs, and I also hacked to tether when absolutely necessary (work VPN, flash based websites, playing XBOX Live via internet sharing on my laptop and tethering on my iPhone).

I had to sign a 2 year contract. I also get raped on every single text message (the technology has been out there for years, the upkeep costs are minimal, yet i'm paying 20 cents per message or $10 for an unlimited plan?).

So my monthly bill is high, two phones with data plans. But when I look at the cost of regular internet compared to having two phones with data plans, I'm glad I get my 3-4 GB per month from my iPhone. I often even use my fiancee's phone because she's a bottom 5%'er, only uses her phone for TMZ and Facebook.. so I use some of her bandwidth (she can tether too), I pay for it after all.

Posted By Anonymous, Houston, TX: August 28, 2009 1:44 PM

@Ashish The carries should hold ALL of the blame for keeping the USA's mobile technology in the dark ages. We lag behind much of the world when it comes to our mobile infrastructure.

In fact, this may become such an important factor that it may in fact be the beginnings of the downfall of the US Empire.

Posted By Nick, Milwaukee, WI: August 28, 2009 1:44 PM

Hmm, how bout not charging for the data plan. I'd rather pay for the Verizon Mifi and use wifi on my AT&T iphone. I hate their stupid network. I have more bars in more places but I can't f**** surf the web or download a podcast half the time!!

Posted By Alex, Denver, CO: August 28, 2009 1:31 PM

The iPhone is the Joey Chestnut of bandwidth-eating competition. The unwelcome guest at any all-you-can-eat buffet.

I remember at one time (2006?), Manhattan, NYC was supposed to have such an aggressive municipal broadband program for building WiFi hot spots thoughout the city and in the subways. It was going to be such an easy plan to implement in a couple of years. I believe it was even going to be free since it would be paid by ads or something of the sort.

And then there was WiFi Salon aiming to have hot spots at all the city parks. I think that project went bust. A third-party company really should have stepped in with a paid solution just to relieve the load from AT&T. Heck, AT&T ought to do it for themselves.

Posted By iphonerulez, Brooklyn, New York: August 28, 2009 1:31 PM

AT&T may be charging you for data, but they are also subsidizing the 600$ phone for nearly a third of the shelf price. I think that ways the carrier should be spared of all the blame. Had AT&T bundled a nice SMS text plan inside the 30$ data plan it would have been great.

Mobile web applications like Pandora, youtube, shazaam, push email and IM are not only popular but they hog a lot of bandwidth. UMTS is not designed to deal with buffering audio streams and document downloads type. It was primarily intended for bursty high bandwidth traffic, crowds will tear down the 3G to 2.5G and sometimes to just plain voice. The point is that all carriers have bitten more than they can chew.

Posted By Ashish, Tempe AZ: August 28, 2009 12:59 PM

I used to have Sprint years ago, but couldn't stand the bad CS/coverage, and went with at&t. Got the iPhone, and oh boy… it all went downhill from there. I gave Sprint a second chance because of their Simply Everything plan. I've never hit any deadspots nor dropped calls. I called CS once recently to inquire about plan change and I didn't experience the hold time I used to have before switching to at&t.

Sprint is such a better company now under new leadership. Now, I just find it hard to understand why people would rather spend at least $30 more a month on at&t just for the iPhone, while sucking up the awful at&t coverage and tight restrictions everywhere in your contract (do you people actually read them?). Verizon's slight better, but still plans are expensive like at&t's.

Posted By Ivan, Chicago, IL: August 28, 2009 12:56 PM

"AT&T is working on a revamped data plan whereby light data users would pay less, and heavy users would pay a premium rate — or leave."

Should probably be rewritten to say:

"AT&T is working on a revamped data plan whereby light data users would pay a premium rate, and heavy users would pay a platinum premium rate — or leave."

As anybody who has any kind of service, especially cell, telephone, satellite, or cable service in the US knows: we ALL pay premium rates for beggar level inferior services.

Posted By Thommy, LEX, KY: August 28, 2009 12:56 PM

AT&T needs to spend more money on upgrading their 3G system instead of opening stores on every other corner. After a recent trip to New York City, I couldn't believe how many stores they have in Manhattan.

Posted By Jerod, Niagara Falls, NY: August 28, 2009 12:47 PM

Absolutely agree with Tony.

I specfically purchased an iphone because AT&T was touting mms and tethering.

Put up or shut up At&T. Can anyone there say "class action"?

Posted By denac, Tulsa, OK: August 28, 2009 12:44 PM

People. Tethering on the iPhone is so easily available if you do a little homework. Just think outside of box. A simple googling of "iphone tethering set up" will do the trick.

Posted By Anonymous: August 28, 2009 12:39 PM

"A few carriers in Europe already have moved away from unlimited-use data plans."

Was not the iPhone's initial "unlimited" data plan on AT&T capped at ~5 GB per month and then made unlimited?

A reason why AT&T and other carriers need to offer unlimited data plans is that they themselves might start offering services that would only make sense for consumers on unlimited data plans (e.g., streaming TV). Of course, they could decide not to count their data against the data quota of limited data plans (like in-network calling). But then that might raise issues related to anticompetitive behavior…

Posted By Yves, Santa Clara, CA: August 28, 2009 12:35 PM

@Andrew-
This isn't really just and AT&T problem, they are just the first to experience the strain. Unlocking the iPhone won't solve any problems, it'd be a band-aid on a virus. Makes you feel ok but realistically does nothing to solve the problem.

Its just going to be a race to make their networks more efficient and bigger. I frankly believe that there's a lot of wasted bandwidth in these networks considering how archaic they are. More towers really isn't going to solve anything either. Technology innovation is the key, not limiting data plans…

Posted By Andrew, Seattle, WA: August 28, 2009 12:23 PM

Baby if Miss. AT&T moves from an all you can eat data buffet without having delivered the tethering or MMS there's going to be a NASTY PR. insurgence. ATT really should of forecasted from the beginning that if this phone was going to be all that they should of started to beef up their networks. I'm sure Apple shared with them the road map of where this device was projected to go in next few years. It just baffles me that there was no one in that damn company who thought ahead.

Posted By Sw Citizen, Houston Texas: August 28, 2009 12:19 PM

I think Tony nails it below. AT&T has gladly taken in the mandatory data plan fees, and the huge customer turnover they picked up because of the iPhone, and all the carriers have soaked up profits while charging the equivalent of thousand of dollars/megabyte on SMS texting.

Upgrade your networks now, telcos! It's less about building more towers than it is about adding backhaul capacity in existing ones – and they know how to do that.

Posted By TimB, Houston, TX: August 28, 2009 12:17 PM

The only problem with their suggested solution is that data consumption will only rise and it is a false idea that 5% of the users are the problem. Are they suggesting that their networks can support only 5% of what they sell? If that was the case then why are they pushing wireless air cards which use the same network as the iPhone and smartphones? Too long has the phone company been able to charge their customers for time and bandwidth that was not used. In other words build a network with technology that can be always on. If they don't other solutions will display their networks.

Posted By lovranching, Oakhurst,ca: August 28, 2009 11:51 AM

Instead of alienating their most profitable customers they should update their data networks. Or better yet have the iPhone and similar devices completely unlocked so I can move my account to a company that instead of whining about how their hottest device clogs their tubes I can move it to another. This would get true price competition as well as create more robust infrastructure.

Posted By andrew chicago il: August 28, 2009 11:44 AM

Maybe AT&T will come to grips with the fact that their network is 2nd rate in many areas of the country. It would make sense for them to invest in the future; but they are very short term oriented.

Posted By Greg, Marblehead, MA: August 28, 2009 11:35 AM

It's true – some of the most popular iPhone Apps are huge bandwidth hogs. But Apps like MadLipz and iSoundz can be run with no network usage at all! Pick your Apps wisely!

Posted By Jose, Raleigh, NC: August 28, 2009 11:28 AM

AT&T knew full-well, long before the first iPhone was sold what the potential bandwidth impact would be (taking into consideration of app-store, text messaging, and internet use). MMS was not included in the iPhone becuase of cost model, rather because AT&T knew it would seriously overload their already weak implementation of their 3G network.

Shame on AT&T for misleading its customers for SO MANY YEARS that their network could handle it's millions of subscribers with both breads of smart-phones and non-smartphones.

Every smartphone and iphone customer should read this article and the hundres others like it, then follow-up with AT&T on a Class-Action to recoup some of the ridiculous fees AT&T charges for "PREMIUM 3G Service".

I was in South Dakota for Stugis bike fest August 2009 -there was Zero AT&T 3G service. My buddy's Palm Pre (on Sprint) worked flawlessly.

It's time for AT&T to pony up their profits and seriously step up to the commitment they promised their customers for so long.

Gig's up AT&T -time to come clean.

Posted By Tony, Jacksonville FL: August 28, 2009 11:27 AM

I feel so bad for AT&T. They charge $30+ a month for data, and they advertise 3g video all over the place – and then a few stupid overcharged users have the temerity to actually use their phones for data and video, not just voice! But wait: why, then, are they advertising and charging for a service if they cannot deliver it?

Regarding unlimited vs metered use, this is at least the fourth time in the last few years that it comes up. Only before it used to be broadband providers that wanted to implement metered access, and now it's cell service. Nothing ever came out of it, and it's not going to this time.

Posted By Abe, NYC: August 28, 2009 11:18 AM

Why don't you mention that Sprint has already moved into 4G. Portland, Atlanta, Las Vegas, Baltimore plus 10 cities in Texas, which include San Antonio & Austin. On Sept. 1st they should also be in Washington, two cities in N.C., Boise, Idaho and so forth. You should also note that Sprint's 'Simply Everything Plan,' which I use, is only $99/month, no extra fees, while ATT & Verizon shaft the public $150 & $160 for the same plan. Believe me I have rarely had any problems with Sprint and their customer service, contrary to rumours, is phenomenal.

Posted By San Diego, CA: August 28, 2009 11:02 AM
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Jon fortt

Jon Fortt
A senior writer for Fortune, Jon Fortt focuses on technology and innovation in Silicon Valley – a subject he's been reporting on since his days as a rookie reporter for the Lexington (Ky.) Herald-Leader. Before joining Fortune in 2007, Jon had reporting and editing stints at Business 2.0 magazine, and the San Jose (Calif.) Mercury News, Silicon Valley's hometown newspaper.
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