AT&T: The Monster That Apple Built

It’s 4:00 AM and AT&T is keeping me awake.

I’ve repeatedly joked that AT&T must have a department in which everyone arrives in the morning, grabs a $10 cup of imported coffee, sits down at a massive $400,000 conference table and asks the question: “Just how can we screw our customers today?” I imagine this to be the  soul purpose of the department and based on everything I’ve seen, it is likely the most prolific organization within AT&T. I also imagine them to be the the highest paid employees of AT&T. I call it Department FU. This fantasy is the only way I can reconcile the anti-consumer related conduct and behavior of the company.

Anyone who knows me knows that I energetically support capitalism. I believe in the free market, free enterprise, supply-side economics, etc. If you want to shake my beliefs however, all you have to do is point to AT&T. AT&T exemplifies everything that makes some people hate corporations. It seems to be philosophically devoid of all professional morality except the most basic forms of business ethics. It stands as a monument to the profit motive run amok.

I’ve never understood Apple’s relationship with AT&T. It’s always been something akin to Camelot having an exclusive trade agreement with Darth Vader’s Empire. It is a testament to Apple that the quality and appeal of her products can overcome the “relationship” AT&T has with its customers.  Apple’s iPhone and iPad are wildly successful products, in spite of being tied to a company that shafts the consumer at every opportunity. AT&T treats is customers with sheer condescension, and its customers look upon it with scorn in return. To AT&T, innovation and “customer service” mean sending text messages to customer phones to remind them that their bill is 24 hours past due, sending bills by email, and sending email to remind them that they can view their bills online, and lest I forget, the utterly disingenuous “Thank You For Being a Loyal AT&T Customer” that you are forced to endure each time you speak with a “Customer Support” representative.

Consider that with Apple’s recent release of iOS 4.3, official tethering is finally brought to the iPhone. Tethering, if you don’t know, simply allows you to share your Internet connection with another device. You essentially use your phone like a modem. For instance if I have Internet access on my mobile phone, I could “tether” it to another device such as my laptop or iPad, and use the Internet connection that way. This capability has been around for mobile devices for so long it couldn’t possibly be a more mundane expectation.

Except with AT&T.

Not only have iPhone customers been denied tethering since the introduction of the iPhone, but it’s been available via “jail broken” (hacked) iPhones since the beginning. Some suggest that this is due to AT&T attempting to better manage their network resources. That is pretty much the standard excuse given by every major Internet Service Provider every time they raise prices and reduce services. It’s a constant refrain, and it’s becoming quite annoying.

No one is asking to utilize any more bandwidth than they already contracted for. I suspect the real reason AT&T customers were denied tethering is that Department FU needed more time to come up with a new way to charge more, while delivering less, and they were quite successful. With the advent of iOS 4.3, tethering is available, for an extra $20 per month.

Understand that if I tether a device to my phone, this does nothing more than effectively change which screen I’m watching. If I tether my phone to my iPad and read an email for instance, AT&T feels I should pay more for the privilege. Never mind that the act of tethering has absolutely nothing to do with AT&T. It is a function of the phone that I OWN and whatever device I have tethered to it. Tethering uses no additional bandwidth. AT&T simply knows they can get away with charging more. How Apple can condone this I cannot fathom. This is like AT&T charging an extra $240 per year because your phone is bluetooth capable.

Folks, don’t pay them for this. Get a WiFi hotspot from Clear or Sprint instead. iPhone users have made AT&T rich enough.

I should mention that when I got my first iPhone, I got “unlimited” data. Unfortunately it seems AT&T’s definition of “unlimited” means that there is no limit to the ways they will find to limit you. Every conceivable limit will be explored. If you happen to opt into the $240/year tethering program for instance, they completely take away your unlimited plan and slap a cap on your data, on top of charging you the extra $240 per year.

That’s AT&T customer service for you. Instead of thanking people for being loyal AT&T customers, they should say, “Thanks for being an AT&T beeyatch.” The constant goal is to charge more while providing less. Yes, that’s right, there’s absolutely no difference in being jacked by AT&T or the Government. The result is the same. You will pay more and more for less and less.

AT&T is flying high these days, mostly due to the success of the iPhone. That’s why I call it the monster that Apple built. They’re totally flush with cash. Why wouldn’t they be? Their entire business model is predicated upon making you pay for something you might use whether you use it or not. If you take your iPhone, smash it with a hammer, and meltdown the pieces, you will still owe AT&T $140 next month, even if you haven’t made a single call, sent a single text, or received a single bit of data over their network. To be fair, this isn’t different than any other mobile carrier out there, except maybe for Sprint.

Sprint seems to be experimenting with the bizarre concept of giving you more when you pay more. Those Sprint plans are very seductive when compared with AT&T, not to mention we’re talking 4G speeds for data. At a glance, all things being equal, an Android phone with comparable service on Sprint would cost me about $400 to $500 less per year than the iPhone on AT&T. It’s like getting a new phone for free every year. And, “UNLIMITED” means “UNLIMITED” on Sprint.  It’s just that, it’s well, Android. Sigh. Still, no matter how great the iPhone is, it’s becoming progressively more difficult to justify the higher ongoing costs. It’s like a corporate luxury tax. I’m surprised the government hasn’t figured it out and jumped on the bandwagon with iPhone class taxes.

One of the most creative Department FU inventions  has to do with with AT&T’s 3G MicroCell. You see for all their big talk concerning how much of the country they cover, it is astounding how many large pockets of no coverage at all you can find on AT&T’s network. This leaves many people who want iPhones out. One solution to this is to purchase a MicroCell. The MicroCell is essentially like having a mini-cell tower in your home. Your phone connects to it rather than a cell tower, and since it’s close by, you get 5 bars. You use your existing minutes to pay for the calls, or you can purchase an unlimited microcell calling plan. Well isn’t that lovely. Those high paid folks in Department FU took an AT&T weakness and turned it into a revenue stream. See why they are so highly paid? AT&T found a way to charge you for them not covering your area. They even charge you to use YOUR broadband connection and equipment.

We haven’t even talked about the cost of text messaging. AT&T charges $0.20 per text message. A text message, aka an SMS message, can contain 140 bytes of data. (SMS uses 7 bit, not 8 bit bytes.) I pay Time Warner Cable about $50 per month for unlimited data. I figure I download in the range of about 250GB per month. That’s 262,144,000 bytes for $50 per month. AT&T charges .20 for every 140 bytes. Based on that rate, to transfer that same 250GB I got for $50 from Time Warner would cost $374,491 if done over AT&T’s mobile SMS network. No wonder they’re rolling in dough. Do you see how they can play with the costs of data if there are no rules? This is why Net Neutrality is so vital to the future of the Internet.

( Space scientist says texting is 4 times more expensive than receiving data from space. )

( Sending a text message is 200 times more expensive than getting it hand delivered to your door. )

What is AT&T doing with all this money? Innovating new ways to provide consumers with higher speeds and lower costs? Oh ho ho noooooo. They’re buying up the competition and eradicating consumer choice. On March 20th, it was announced that AT&T is gobbling up T-Mobile USA for $39 billion in cash and stock. At first I noticed that many iPhone and T-Mobile users around the web were elated. T-Mobile users figured the iPhone would become available to them and AT&T users figured that more coverage areas and T-Mobile’s faster 4G data rates would become available to them. Not so. Not for a very long time. What is likely to come about is higher prices for both groups of people. Someone has to pay, and it certainly won’t be Department FU. (Not to mention the T-Mobile girl that makes fun of AT&T will be gone. I like her.)

It’s an overall loss for consumers. There’s less choice obviously, i.e. fewer places that we can escape AT&T to, and T-Mobile folks who had lower prices for voice and data will now have the privilege to, (say it with me), pay more for less. T-Mobile is effectively GONE. We are down to 3 players now. AT&T, Verizon, and Sprint. In fact, the merger creates less competition for all 3 and puts the two larger players, AT&T and Verizon in a position to force Sprint out of the market. Many feel we are now waiting to see which player buys Sprint. Sprint is of course not happy.

Sprint’s response:

The combination of AT&T and T-Mobile USA, if approved by the Department of Justice (DOJ) and Federal Communications Commission (FCC), would alter dramatically the structure of the communications industry. AT&T and Verizon are already by far the largest wireless providers. A combined AT&T and T-Mobile would be almost three times the size of Sprint, the third largest wireless competitor. If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies that control almost 80% of the US wireless post-paid market, as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete. The DOJ and the FCC must decide if this transaction is in the best interest of consumers and the US economy overall, and determine if innovation and robust competition would be impacted adversely and by this dramatic change in the structure of the industry.

I completely agree with Sprint. While the Obama Administration has proven to be very good at irrational moves such as suing states that are fighting back against foreign drug traffickers, they have proven to be completely ineffectual at protecting the interests of consumers as big ISPs take ownership of the Internet step by step. I fully expect the DOJ and FCC to sheepishly kowtow to powerful AT&T lobbyists.

Remember all that wireless spectrum that was supposed to be freed up when we forced the old people off their free televisions an on to cable and more costly digital antennas? Well Verizon owns it. Remember all that complaining the FCC did about the imminent crisis of wireless spectrum we faced and how we had to free up the 700MHz C-block for data and new devices? Well Verizon bought the spectrum for some paltry sum like $9 billion to block Google from getting it. Last we heard anything about it was back in 2008. Shafted by the industry again. It would seem Verizon bought it simply to prevent competitors from using it.

This is a critical time for wireless broadband. We the people must educate ourselves on the issues at hand and how a merger of AT&T and T-Mobile can effect consumers in technologically damaging and financially costly ways while providing nothing but higher profits for AT&T. Wireless broadband is poised to be a big boon to all kinds of new business and jobs in this country, but it’s looking like it’s going to be so wrapped up in a chokehold by the likes of AT&T and Verizon that the only people who will benefit will be those companies.

You must look at your cell phone bills and ask yourselves if you really want more costly and complex bills when you are given nothing in return? Is that what you want? More 2 year contracts, artificially limited bandwidth, fuzzy definitions of “unlimited,” etc. If not, you are going to have to actually do something like write a letter this time. Maybe 2 or 3 letters to your legislators. Let them know you care about this issue and it’s bigger than just a political football to be tossed around by lobbyists with deep pockets.

The first thing you need to make them understand is that Net Neutrality is vital. It is said you can tell more about someone by looking at their enemies than their friends. Well the broadband cartel of the big Cable and the big Telcos are the enemies of Net Neutrality along with, sadly, Republican legislators who have turned our technological future into a vehicle for meaningless irrelevant ideological political pontificating.

The next thing you can do is stop rewarding AT&T and Verizon with more business. They may unfortunately be the only places you can get an iPhone right now, but you at least shouldn’t buy their other products like tethering. Instead reward Sprint for at least attempting to give you unlimited data by looking into their 4G hotspots, or Clear’s.

Demand of your legislators that instead of handing your technology future over to big ISPs that they do what they are supposed to do and REPRESENT YOU. They need to be reminded what “Representative” means. When some pompous arrogant self-important twerp like lifelong CALIFORNIA Senator Barbara Boxer insists on being called “Senator,” you need to remind her that above all else she is a “Representative,” i.e. an EMPLOYEE of the people and we can damn well call her anything we like, including and especially “Former Representative Boxer” if she doesn’t get off her overpaid useless ass and do something about Net Neutrality.

Republicans, you need to let your representatives know that the free market is only free when there is competition. When there is no competition, when big ISPs are allowed to form a bandwidth oligopoly, it is worse  than even evil government regulation.

Let Apple know you love your iPhone, but you don’t love AT&T or Verizon for that matter. Let them know that continuing to back the policies of these vendors makes Android phones on Sprint look very attractive. No they don’t work seamlessly with OS X, no they aren’t as sexy and well designed as the iPhone, Android is a poor copy of iOS, but when it comes down to it, giving all that up to keep at least some competition in the wireless marketplace may be what we are forced to do.

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