For AT&T, Good News Comes with a Caveat

Carl Weinschenk
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Making the iPhone work for Business

Flurry, a firm that offers analytic, deployment and monetization tools to developers, has identified the top paid and free iPhone business applications available at the App Store.

It certainly is an interesting - and potentially dangerous - time to be AT&T. Take your pick of news about the company: It finished last in Consumer Report's assessment of major wireless carriers, it is reporting record sales of the Apple iPhone 4S and its acquisition of T-Mobile has about as much life in it as Herman Cain's run for the Republican presidential nomination.

eWeek and other sites are reporting on what is superficially - more about that later - good news for the carrier on its iPhone 4S sales. The story quotes CFO John Stevens' comments at the UBS 39th Annual Global Media and Communications Conference this week in New York City. Stevens said that the carrier could sell 9 million smartphones during the current quarter, which began Oct. 1 for the company. So far, he said, about 100,000 devices have been sold each day.

The Consumer Reports' ratings suggest, however, that a good portion of those new owners and, of course, the same percentage of older customers will end up peeved at the carrier. The online poll, which attracted about 66,000 responses, is aptly summed up by this paragraph from CR press release:

Of the four major U.S. national cell-phone standard service providers, Verizon and Sprint were the better-rated carriers. Verizon had an edge over Sprint in texting and in knowledgeable support staff, but Sprint rated better in value. T-Mobile was below Verizon and Sprint but continued to rate significantly better than the higher-priced carrier AT&T, which recently withdrew its application to the FCC to merge with its better rival.

On the T-Mobile acquisition front, AT&T seems to be facing nearly overwhelming odds. Despite criticism of the FCC's reasoning and a public position that it is not abandoning the deal, the acquisition appears from all reports increasingly unlikely.

The good news about iPhone sales is, of course, good news for AT&T. But digging a bit deeper reveals the problem: The CR survey shows that the carrier's network already is not performing up to its competitors. Wild success in the iPhone business only will exacerbate whatever are its problems.

The carrier knows this, and the T-Mobile deal was intended to address some of those issues. While that ship hasn't sailed, the crew clearly is about to remove the gangplank. And, unlike Verizon Wireless - which announced an innovative deal with cable operators this week - AT&T doesn't seem to have an ace in the hole. Its problems may continue to be worse than those the entire wireless industry is facing.

It may not be an exaggeration to say that AT&T would have been better off with more modest success until it sorted out its problems. Indeed, with the acquisition strategy likely hitting a dead end, it remains to be seen if it has the will and the means to handle its problems by doing the harder work of upgrading its existing networks.

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