Apple’s Continuing Love Affair with AT&T

by Matt Klassen on February 2, 2010

Like a jilted lover drawn to the one that has hurt them time and again, Apple’s continued insistence on exclusively retaining AT&T’s 3G network for its devices seems more about a passionate and dysfunctional love affair and less about a logical and coherent business plan.

Last week I reported on the speculation that Apple, along with the unveiling of the iPad, was planning on simultaneously announcing the end of the iPhone exclusivity agreement with AT&T. As any iPhone owner has probably noticed, AT&T’s network is notoriously unstable, and has been a constant cause of frustration and anger for many users. I did note that ending this exclusivity deal may actually help AT&T get their 3G network stability issues under control and hopefully start the long road towards increasing their customer satisfaction ratings. This is why the announcement last week left many in the tech world confused and many iPhone users dismayed; for instead of announcing the end of their current relationship with AT&T, Apple revealed that the telecom giant will now serve as the exclusive 3G network carrier for all iPads.

In a report filed on the tech website Wired, MKM Partners analyst Tero Kuittinen mused over the question, ““What is this fatal attraction between Apple and AT&T?” With customer dissatisfaction reaching mutinous levels late this past year, one might have thought that Apple would look to Verizon or another major—and reliable—carrier for their new device.

There is speculation, however, that the end of the exclusivity deal is still to come, and Apple is simply using this new deal to cement their cordial relationship with AT&T. However, this sort of conjecture begs the question, why would Apple hinge the success of their newest product on a network that’s proven to be unreliable? If it’s as simple as Apple’s desire to throw AT&T a bone before the end of exclusivity, then it seems on the surface that Apple has made a serious error in judgment.

To help waylay the disgust you may be feeling, most analysts believe that the iPad will not, at least at the outset, provide much strain on AT&T’s battered 3G network. First, the iPad is not a phone, but instead a data-driven device. There will be none of the overwhelming network traffic developed by the exponential increase in texting courtesy of the iPhone, and no risk of customer complaints due to dropped-calls.

Second, most iPad users will not be continuously accessing the 3G network. With monthly purchase plans replacing any sort of contract for the iPad, users will have the option of opting into the 3G network when needed, and opting out again when a regular Wi-Fi connection will suffice. In the end, the fact that the iPad is not solely dependant on AT&T’s 3G network may be the telecom giant’s saving grace.

Further, AT&T has recently announced that it is upgrading its system to actively address the number of poor connections and dropped calls. In a recent interview, AT&T CEO of Operations John Stankey stated that his company is committed to spending two billion dollars to improve its ability to deliver wireless calls, through the addition of extra cell towers and acquiring certain other wireless assets. So while both Apple and AT&T remain confident that these improvements will deliver a reliable 3G experience, it remains to be seen whether these changes will resonate with dissatisfied AT&T customers.

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Written by: Matt Klassen. www.digitcom.ca >. Follow TheTelecomBlog.com > by: RSS >, Twitter >, Identi.ca >, or Friendfeed >

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