Apple and AT&T's Hate-Hate Relationship

When Apple announced a software "fix" for the iPhone 4's "death grip" issue, it seemed to us that by saying customers were just in an area of low signal strength, at least in the U.S., they were throwing AT&T under the bus. Thus, we come to Wired's article on the contentious relationship between Apple and AT&T, which is less about being BFFs and more about being married to each other but on the brink of divorce.

The article, called Bad Connection: Inside the iPhone Network Meltdown, goes into much detail, some of it humorous (such as Apple's view of suits, and we don't mean lawsuits), but all of it interesting. A few key bullet points:

1) It's all about the iPhone. Within just a few months of the original iPhone's introduction, running on EDGE no less, iPhone customers were already using about 15 times more data than the average smartphone customer, and 50 percent more than AT&T had projected.

2) Seeing the bandwidth-sucking iPhone becoming a problem AT&T tried to work with Apple, as it had with other handset manufacturers, to reduce the iPhone's data use. Things like YouTube only on wi-fi, or other such measures.
“They tried to have that conversation with us a number of times,” says someone from Apple who was in the meetings. “We consistently said ‘No, we are not going to mess up the consumer experience on the iPhone to make your network tenable.’ They’d always end up saying, ‘We’re going to have to escalate this to senior AT&T executives,’ and we always said, ‘Fine, we’ll escalate it to Steve and see who wins.’ I think history has demonstrated how that turned out.”
3) AT&T has spent nearly $37 billion for new equipment and increased capacity, and expects to invest approximately $13.5 billion in 2010. However, despite improvements to the AT&T network, it remains a struggle to make a call in many areas of the country, particularly high density areas such as New York City or San Francisco.

4) The issues are not all about AT&T, either. The iPhone's baseband firmware was buggy, and by choosing Infineon's radio, whose hardware was used widely in Europe, but rarely in the U.S., "where cell towers are placed farther apart and reception is therefore less forgiving." The choice of the Infineon chipset was questioned by many, long ago, once a teardown took place and the hardware was revealed.

5) Apple saw the deal as less of a partnership than AT&T did. "We’d say, ‘Let’s resolve these issues together,’ and they’d say, ‘No, you resolve them. They’re not our problem. They’re your problem.’”

6) Steve Jobs has discussed ditching AT&T at least six times. Not surprising, however Verizon was Apple's first choice and they wouldn't agree to Apple's hardline terms. However, every time the discussion has arisen, the problems involved were so much of an issue that it was dropped (although the first time, Apple even went so far as to discuss things with Qualcomm, which supplies the chips for Verizon phones, which run on CDMA, as opposed to GSM, technology).

So the two companies were tied together by the success of the iPhone despite the fact that they frustrated each other. Divorce, at least in terms of exclusivity, will come, and perhaps as soon as Q1 2011, many say.

Bottom line is that the iPhone stretched AT&T's network to its limits. It's been said by many that if Verizon had the iPhone, its network would bend under the weighty iPhone data needs, as well, particularly if it had been subjected to those needs in the timeframe of the first iPhone version.

It is, as we have said previously, simply that those who provide the media and content want us to use more bandwidth; those who supply the infrastructure that is used to transmit the data want us to use less. Unfortunately, they can't have it both ways, at least without contentious partnerships like the AT&T / Apple one.
Tags:  Apple, iPhone, ATT, Verizon