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iPhone taking control away from AT&T, says research group

updated 04:00 pm EST, Fri December 11, 2009

May set stage for larger conflict

The iPhone is effectively stealing control of subscribers away from AT&T, says iSuppli. The research group notes that as cellphone carriers have grown, they have been able to depend less and less on money from voice. As a result they have increasingly turned towards data, selling not only bandwidth but services such as games, ringtones and video.

Because of iTunes and the App Store, however, iPhone owners are said to be more attached to Apple than AT&T, splitting off money the carrier would normally depend on. Apple has seen high profits, but AT&T may now lack the money to keep up with network upgrades, which are increasingly important because of the unlimited data available for the iPhone. The carrier has threatened to curb mobile data because of bandwidth constraints.

The dilemma may mark the beginning of a much larger conflict between carriers and phone makers. Nokia, Google, Microsoft and Research in Motion have all launched their own App Store equivalents, which could further divert money away from carriers. "Regardless of who wins, this battle will alter the balance of power in the mobile value chain," says principal iSuppli analyst Jagdish Rebello.




by MacNN Staff

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  1. Flying Meat

    Joined: Dec 1969

    +2

    Oh, woe is AT&T!

    I can't imagine how they can complain about my $90+ dollars a month. What the heck?!

    Perhaps they should get out'a the voice business and turn to data only. Charge $50 dollars a month and throw in the phone calls for free. Seems like it's all data after it leaves my phone anyway.

    Rather hard to believe they can't manage a profit AND grow their network support. Something is reeeeaaally fishy here.

  1. c4rlob

    Joined: Dec 1969

    +2

    If AT&T wants control back...

    iTunes and Apple are taking control of subscribers because Apple and iTunes give customers what they want. Perhaps AT&T should worry less about penalizing customers and find ways to reward customers. There are so many features I would LOVE to see that AT&T is uniquely positioned to provide if they were serious about innovation - things like better management and access to voicemail as downloadable audio files, or MMS management and conversion to useful text files, etc. Stop worrying and start working AT&T.

  1. nmancer61

    Joined: Dec 1969

    +2

    AT&T and the reset of the network oligopolies

    Innovate!!!
    Those slow moving dinosaurs couldn't innovate if their life depended on it.
    Case in point ... iphone!
    What a beautiful device. I think it's insult to have the name phone as part of its name.
    Being a phone is a minor and almost insignificant feature of the device!

    I am sure all the carriers have invested billions in flubbed projects, hamstrung partnerships and other business arrangements to build applications and devices that run on their networks.
    All the time upping the customer's bill and letting the networks age all the while to fund their next set of rounds of network application or device failures.
    These SOB's should worry about creating the fastest, best QOS networks in the industrialized world, not applications and devices that use them.

    Yes, just imagine what it would be like to buy plumbing and lighting fixtures from the utilities company!
    We would all probably still be crapping in a dimly lit out house with the innovative choice of two colors (black or white) for the out house!

    These infrastructure provider's shouldn't be selling anything EXCEPT THE BEST NETWORKS POSSIBLE!

  1. Constable Odo

    Joined: Dec 1969

    +1

    Won't most of AT&T's problems go away

    when LTE and WIMAX takes over? Those technologies are built for high data usage, so won't the bottleneck go away. Also, once AT&T loses it's exclusive contract, a lot of people will go to the other carriers and then AT&T won't be overburdened with iPhone usage. I think AT&T should be relatively happy for being able to build up its infrastructure with all those iPhone contracts. Then when Apple moves on, AT&T should be able to use that infrastructure with other lower usage smartphones.

    There really ought to be some companies out there that would be able to set up lots of WiFi hotspots throughout larger cities to take away some of that 3G bandwidth overload. People would then be able to pay fees for unlimited monthly usage of those WiFi areas.

    I can understand AT&T running up against physical restraints like not being able to put up but so many repeater towers in a city full of tall buildings, but to complain they're not getting enough money doesn't make much sense. My problem is I don't know where their data bottleneck is. Is it that their equipment can't push data through fast enough and the technology hasn't been invented to solve that problem? I just don't understand. If that's the case, then AT&T should just let the Apple and the iPhone go elsewhere. But I hear that if Apple leaves, AT&T's business will collapse or something to that effect.

  1. AdamC

    Joined: Dec 1969

    0

    Are analysts credible

    Are these guys bought, er, credible?

  1. mytdave

    Joined: Dec 1969

    +1

    Hogwash

    Research groups/analysts - yawn. Just a moment ago I commented about agreeing w/ an analyst, then I read this.

    AT&T has plenty of money coming in, thanks to smart-phones, particularly the iPhone. Are these new devices slamming their network? Sure. They underestimated. But so what? Their revenues increased, and not just a little bit. Adjust. Deal with it. Improve.

    Taking money away? Nonsense. An "app store" didn't even exist before, so there wasn't a revenue stream among the providers to be taken away.

    AT&T needs to be smarter about this. I don't think they see the handwriting on the wall... AT&T: EVENTUALLY EVERYTHING WILL BE ONLY DATA. You need to focus on transitioning to be a cellular internet service provider, and quick. Scale back the cost of voice calls and increase the cost of data service. In other words, rebalance your service plans. You don't want to increase the total price your customers pay, or they'll flee - but you need to charge them for the services they use.

    For example, I have a 1st gen iPhone. I now use data services more than voice calls. Data likely costs more to support on the cellular network than voice does, but I only pay $20/mo. for dump trucks full of bandwidth, which rocks!

    So... what AT&T should do is cut the price of my voice minutes in half, and charge me double for the data bandwidth. I keep the same number of minutes at a lower price (which I rarely use up) and my data plan becomes $40, BUT my TOTAL BILL remains the SAME. This directs the money to where the support costs are.

    The reason this makes sense is that some day traditional cellular voice calls will be gone (transition to VoIP is already under way) and data is all that will remain. If AT&T (and others) are still charging only $20-30 for data plans and think they're going to make money on voice plans, they're going to lose 70% of their revenue, then they will be in trouble. It's time to start lowering prices on voice and raising them on data or the cell companies will be hosed.

    Sprint seems to avoid the whole problem by having flat rate "everything" plans. That's not a bad idea, that way they don't have to worry about their customers' shifting usage patters.

  1. LouZer

    Joined: Dec 1969

    +2

    Um...

    Technically apple has taken the control. And this isn't news. This is how it gas been sine the iPhone was released.

  1. Fast iBook

    Joined: Dec 1969

    -1

    Hum...

    So, me & my woman paying 174 bucks a month somehow isnt enough to pay for equipment upgrades..? Multiply that number (low end, most people have more than 2 iPhones on their family plan acct) by 1 million.... you get 2,088,000,000 a year from 1 million iPhone enabled accounts (there are more, again just doing a low end estimate)....... S0 2.088 billion a year from iPhone users alone isn't enough for equipment upgrades? The times are changing, carrier specific content is still important, but not vital. As end users move toward things like the app store, att could roll out mobile tv for it, and charge for that, like $10 a month. Most iPhone users would get it, and bingo, even more money than the waning carrier content market!

    Even if it's 1 billion, that's enough to expand and strengthen coverage at least once nationally. I think people need to get off att's back. They are rolling out both higher freq and 850 mhz equipment at the same time, which will give better signal strength AND higher data rates at the -same time-... For those who keep saying "att needs to improve their network"... THEY ARE!! :

    - A

  1. localnet

    Joined: Dec 1969

    -1

    They make a couple BILLION a year?

    A couple billion a year off of the iPhone, probably more. And then they have the land line business, they get $79 a month out of me for that and then another $486 a month for a T-1 line into my house and the $154 for the two iPhones we own adds up to over $8,628.00 a year just out of my little house. Hmmmm, not making enough money? And I don't even get cell coverage, well I do, if you stand real still in the corner of my kitchen next to the coffee maker or out in my driveway in a certain spot and hope the wind is not blowing. Live outside of Ann Arbor MI, you would think we could at least get a solid 3 bars at least on the phones.

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