Wireless

AT&T has resumed selling iPhones through its Web site to New York City customers, with no indication as to what prompted the halt.

Over the holiday weekend, New Yorkers who tried to order an iPhone through AT&T's Web site were left out in the cold. Making matters worse, explanations ranged from network congestion problems to online fraud to this fine example of corporate-speak: "We periodically modify our promotions and distribution channels."

But at some point on Monday, sales could once again be processed for New York City ZIP codes through AT&T's site. An AT&T representative did not immediately respond to a request for clarification on what knocked out online iPhone sales for Gothamites.

Update at 1:50 p.m. PST December 28: AT&T has resumed sales.

AT&T has stopped selling the Apple iPhone in the New York metropolitan area through its Web site, perhaps due to data congestion, credit card fraud, or routine sales strategy changes, depending on whom you believe.

Online sales of the phone were apparently suspended Sunday. Prospective customers attempting to buy an iPhone through the Web site and using a New York area ZIP code get a message saying, "We're sorry, there are no Packages & Deals available at this time. Please check back later." However, changing ZIP codes to other U.S. metro areas yields a bevy of iPhone choices.

An AT&T representative's statement to CNET suggested that the move to not offer any iPhones online to buyers in the Big Apple was a routine strategic decision.

"We periodically modify our promotions and distribution channels," said Fletcher Cook, an AT&T spokesman.

However, customer service representatives, who are likely not authorized to comment officially for the company, painted divergent pictures.

One customer service representative hinted that data congestion may be the reason for the suspension, telling The Consumerist that "New York is not ready for the iPhone. You don't have enough towers to handle the phone."

In light of AT&T's tarnished reputation for its 3G service, this is certainly a plausible explanation. For more than a year, iPhone users have complained about dropped calls and poor service on the 3G network. The problems appear to be particularly acute in densely populated urban areas, such as New York and San Francisco.

However, another representative suggested that credit card fraud is responsible. Sales were suspended due to "increased fraudulent activity in that area when ordering the iPhone," the other representative told the Gearlog blog. However, the iPhone is apparently still for sale at Apple stores in the New York area.

No word on what the nature of the alleged fraud may be, but as others have certainly pondered, isn't online fraud as likely to happen in Dallas, Seattle, or San Francisco?

New data on the top 10 mobile phones puts Apple on top due to the sheer number of iPhone owners. But both Research In Motion and LG actually control more market share because they sell multiple, popular models.

Nielsen's data on the top 10 phones in use in the U.S. from January through October shows Apple with 4 percent market share, RIM with 6.3 percent, and LG with 6.4 percent. But the trio lead a very fragmented market. In fact, the top 10 phones account for just over 20 percent of the total devices in use.

With an estimated 271 million U.S. mobile subscribers at the end of 2008, accounting for about 88 percent of the U.S. population, even 1 percent market share is significant.

RIM BlackBerry devices and LG handsets--voluminous in offering compared with the singular iPhone also have the benefit of longer time on the market and of promotion by the carriers that don't have the iPhone. LG is the No. 3 handset maker behind Nokia and Samsung. RIM and Apple have nowhere the number of models offered by the top three handset makers, yet they enjoy a stronger market share.

The Nielsen data shows both the opportunity and the challenge of creating the next big thing in mobile devices. Just a few years ago, Motorola's Razr was the belle of the ball, and RIM was firmly fixed as an enterprise device. However, the convergence of voice, e-mail, and browsing, as well as new 3G networks, brought the smartphone to the forefront and helped push both RIM and Apple to the top.

All hope is not lost for currently less popular handset makers, as the market can very quickly change dramatically.

Indeed, there is a big challenge under way from Android-based phones such as the Droid that could thrust laggards such as Motorola back into the spotlight, provided that Google doesn't stomp all over the developer community that has been building up around the new mobile operating system.

And mobile phones are not just for those on the run. Nielsen's Convergence Audit (PDF), an annual survey on voice, video, and data products, "shows a rise in households who have 'cut the cord' by trading their traditional landlines for wireless cellular services and an increase in mobile media device usage among a diverse set of households."

In the second quarter, the report said, 21 percent of households were using wireless cellular service only--compared with 18 percent a year earlier. "This increase comes from...households who have dropped their landlines as well as from young adults that started new households with just a wireless phone service," the report said.

Odds are that these percentages will continue to climb as young mobile users reach adulthood and as adults look to their mobile devices to do more than just make calls.

The quality and speed of the browser is an essential feature for smartphones these days. And it's here that the BlackBerry Storm 2 has some catching up to do vis-a-vis rivals such as the iPhone 3GS.

The Storm 2 is an underrated smartphone in many respects. The interface is clean and easy to navigate, the standard software feature set competitive, and the ability to integrate all email accounts into one screen convenient.

But unbelievably--to me, at least--RIM failed to improve the browser on the Storm 2. Or let me put it this way: RIM failed to make perceptible improvements. (See RIM statement below.)

This is no small oversight. The key reason why the Motorola Droid has been a hit is because it couples a big screen with a high-quality, fast browser--making it the only premium smartphone to date in the U.S. to approach the status of the iPhone.

Which brings us to the gold standard of smartphone browsers: the Safari browser on the iPhone 3GS. This is nothing short of phenomenal. It's the closest a smartphone user can get to the full-fledged browsing on a laptop.

And the browser will only become more important as the smartphone screen size creep continues, from the 3.5-inch diagonal screen on the iPhone 3GS to the 3.7-inch screen on the Droid to the 4.1-inch display on the Toshiba TG01 (sold in Europe).

So, what was RIM thinking? The Storm 2's browser (like its predecessor's--which I had previously been using) can be glacially slow when loading Web sites. So slow that many Storm users opt for downloading the Opera Mini or Bolt browsers. But these browsers have shortcomings of their own, so they don't necessarily serve as satisfactory replacements for the Storm's built-in browser. (The Bolt browser does not zoom and Opera Mini--though blazingly fast--has trouble rendering some Web sites.)

As shown in the embedded videos, which demonstrate the load times for the CNET News page and the zoom features of the two phones, respectively, the iPhone 3GS (bottom) beats the Storm handily.

It is important to note that the Storm 2's built-in browser will speed up significantly if you turn off (uncheck) "Support javascript" in the "Browser Configuration" settings. And in the side-by-side page load-time comparisons with the iPhone 3GS (embedded videos), support for javascript is turned off.

But RIM needs to hurry up and match the competition. A fast, high-quality browser is ... Read more

Many people I know are frightfully attached to their iPhones. They treat them as if they were a peculiar and exotic lover, one they can hardly believe they have managed to seduce.

The finely calibrated minds at Strand Consult have taken this analysis to a particularly simple conclusion: iPhone users are, the consultants say, really quite nuts.

The Strand thinkers released an opinion entitled "How will psychologists describe the iPhone syndrome in the future?." It focuses on the sorts of people who buy into Apple's great success.

Here's a flavor of the somewhat-skeptical nature of Strand's feelings: "Apple has launched a beautiful phone with a fantastic user interface that has had a number of technological shortcomings that many iPhone users have accepted and defended, despite those shortcomings resulting in limitations in iPhone users' daily lives."

The consultants' likening of iPhone buyers to kidnapped hostages may raise more than the eyebrows of many an Apple fanboy (fanperson?). Indeed, it already has the Mac world aflutter.

Is this evidence of an iPhone hypnotising a user?

(Credit: CC Gonzalo Baeza Hernandez/Flickr)

"When we examine the iPhone users' arguments defending the iPhone, it reminds us of the famous Stockholm Syndrome--a term invented by psychologists after a hostage drama in Stockholm. Here, hostages reacted to the psychological pressure they were experiencing by defending the people that had held them hostage for six days," Strand declared.

The implication is surely that Apple has mugged millions of people with its beauty, dragged them off to a very dark cellar in some barren land, turned them into slightly bonkers Barbarellas, and then recruited them as soldiers for the cause.

This is the sort of thing of which the Church of Scientology is normally accused. But for some strange reason, it's a rather chilling but pleasant shower to read something that isn't mere worship.

Strand claims that it closely analyzes the financials of mobile operators. And if you also happen to order its wonderfully free report "The Moment of Truth, a portrait of the iPhone," you will discover the 10 great myths about the iPhone. Here are just two: it doesn't attract new business for operators, and it is not a technologically advanced mobile phone.

I know you'll be rushing to read these fine tracts, and I feel sure that a couple of you might wish to drop Strand Consult a note. To encourage you a little, I'll warn you that Strand also seems to believe that some of you Apple customers are, well, liars.

The consultants put it quite sweetly: "In reality, the iPhone is surrounded by a multitude of people, media, and companies that are happy to bend the truth to defend the product they have purchased from Apple."

Apple customers are liars? The media too? Surely not.

AT&T 3G wireless customers in San Francisco had problems making calls, sending and receiving text messages, and accessing data on Friday evening.

AT&T spokesman Mark Siegel said that starting at about 4 p.m. PT on Friday afternoon, AT&T experienced a hardware issue in San Francisco that disrupted its 3G wireless network within the city. The hardware issue, which he did not elaborate on, was fixed by around 6:15 p.m. PT. And the 3G network has been working fine ever since, he said.

The problem did not affect AT&T's older and slower networks that use 2.5G EDGE or GSM technologies. This means that even though 3G service was disrupted, most customers' devices were able to switch to the slower networks to make calls and to send and receive data. Still, Siegel noted that AT&T detected that customers were having trouble accessing the 3G network, and the company quickly figured out the problem and resolved the issue within hours.

Even though their phones were likely switching over to AT&T's slower technology, many AT&T customers still noticed the issues, with many people reporting having problems with their 3G service on Twitter. Some of these customers said they were unable to access voice, data, or SMS messages at all.

Truth be told, the service disruption in San Francisco was not a really big deal. It affected a handful of customers. But at this point, any network problems, particularly in tech-savvy areas of the country such as San Francisco, only flames the fire of criticism that is heating up around AT&T's 3G service.

The disruption comes at a time when AT&T's reputation for 3G service is already tarnished. For more than a year, iPhone users have complained about dropped calls and poor service on the 3G network. The problems appear to be particularly acute in densely populated urban areas, such as New York and San Francisco.

Last week, Ralph de la Vega, head of AT&T's wireless business, admitted that AT&T is having problems in these cities. He said the company is working on resolving the issues.

De la Vega also admitted that AT&T is struggling to keep up with demand for data on its 3G network. And he alluded to adopting new "incentives" to encourage wireless customers to use less data.

Verizon Wireless, AT&T's biggest competitor, sees AT&T's problems as a golden marketing opportunity. And the carrier started running advertisements recently that highlight AT&T's lack of 3G coverage in some parts of the country. AT&T sued Verizon last month over the ads, accusing Verizon of misleading consumers.

AT&T has dropped its lawsuit, but the publicity around the tiff has likely not endeared AT&T to its customers, nor has it painted the company in a favorable light to anyone considering becoming an AT&T customer.

Meanwhile, AT&T claims in its own ads that it has the fastest 3G wireless network, a notion Verizon disputes. Earlier this year, Verizon also filed a lawsuit against AT&T claiming that the company was not being truthful in its advertising. But Verizon has also decided to dismiss its complaint.

The biggest problem for AT&T is that it is the only carrier in the United States that offers the most data-friendly and data-hungry mobile phone on the market: the iPhone. Analysts say users of the Apple smartphone consume five to seven times more data per month than other wireless subscribers.

AT&T has been upgrading its network to add capacity to keep up with demand, but for many consumers, the upgrades have not solved their service problems. AT&T recognizes more needs to be done. It has launched a new application for the iPhone that lets users report service problems. And the company is urging the Federal Communications Commission to find more wireless spectrum to auction off. But these solutions will take years to implement.

In the meantime, AT&T is faced with a major dilemma. It must continue to market the iPhone and all its bandwidth-hungry applications in order to continue growing its subscriber base, but it also needs to curb data usage until its network can handle the additional load.

In short, AT&T is in an impossible situation. If it backs off on its marketing, it risks losing Wall Street's confidence. If it continues to add new iPhone users, and its service suffers for it, it risks alienating its customers. And then the company may find itself spending the next several years repairing a severely damaged reputation.

It's no secret that Windows Mobile has hit a rough patch as the iPhone and Android-based smartphones have take center stage. Recent statistics from AdMob shows that Windows Mobile market share of Web surfing was way down during the past 12 months--more than 70 percent year over year.

Any number of people postulate that Windows Mobile will be dead, some say as soon as 2011, unless Microsoft figures out a way to not only make the operating system better but to convince users that they should care.

On the New York Times Bits blog, Steve Lohr wrote earlier Thursday on analyst Mark Anderson's comments suggesting that Microsoft abandon their consumer efforts entirely--that the company has lost the battle for consumers:

Except for gaming, it is 'game over' for Microsoft in the consumer market. It's time to declare Microsoft a loser in phones. Just get out of Dodge.

I'm not a huge fan of Windows Mobile, but Microsoft certainly can't give up on smartphones and really has no alternative but to make a big move in the mobile operating system space. And Windows Mobile is not nearly as bad as many people think--if you don't believe me, check out these results from mobile blog jkOntheRun.

I recently toyed with Windows Mobile phones at both Verizon and AT&T stores and I could absolutely see the appeal of the common desktop functional paradigm if I were a Windows user. But consumers are fickle and don't want to add an OS decision into their buying process. They just want the phone and its applications to work and be easy to use.

There remains a huge opportunity for Microsoft to take its dominant position and make Windows Mobile truly great, even if it means walking away from the status quo. And while that's not typically the Microsoft way, the company has shown with Bing that it can make those kinds of decisions (as well as less-positive choices.)

There are two very simple moves Microsoft could make that would not only shake up the whole market, but also build a path for the future:

... Read more

Correction made December 9 at 7:51 p.m. PDT: An earlier version of this story incorrectly stated that AT&T had announced a tiered pricing plan. The company is considering incentives to curb heavy wireless data usage.

AT&T wants its iPhone users to use less wireless data, and it may consider new pricing models to curb users' data usage as it tries to keep up with growing demand.

At an investor conference in New York on Wednesday, Ralph de la Vega, AT&T's head of wireless, said the wireless operator is considering incentives to get consumers to reduce their data usage.

De la Vega said 3 percent of smartphone users are consuming 40 percent of the network capacity.

"We're going to try to focus on making sure we give incentives to those small percentages to either reduce or modify their usage so they don't crowd out the other customers in those same cell sites," said de la Vega according to a transcript of the conference. "And you'll see us address that more in detail."

He went on to say that most consumers aren't aware which applications use a lot of bandwidth and which do not. For example, email does not consume a lot of bandwidth, whereas streaming video and audio do consume a great deal of bandwidth.

"What's driving usage on the network and driving these high usage situations are things like video, or audio that keeps playing around the clock," he said, according to the transcript provided by AT&T. "And so we've got to get to those customers and have them recognize that they need to change their pattern, or there will be other things that they are going to have to do to reduce their usage."

AT&T has been struggling to keep up with demand for wireless-data usage on its network. The iPhone, launched more than two years ago, has revolutionized mobile Web usage. The device, which was built more for accessing the Net than making calls, can access more than 100,000 applications, many of which use the mobile Internet.

iPhone users on average consume five to seven times more data per month than average wireless subscribers, according to analyst firm Sanford Bernstein. And all this usage is clogging the network, causing many iPhone users, especially in large cities such as New York and San Francisco, to experience dropped calls, slow 3G service, and issues connecting to the network at all.

AT&T has been reluctant to admit that there is a problem, but recently, the company has acknowledged that problems exist. According to The Wall Street Journal, de la Vega admitted that New York and San Francisco have been experiencing service issues. And the company recently launched an iPhone application that allows users to report service problems.

AT&T has been upgrading its network to the next generation of 3G wireless service to increase network capacity. But now the company is saying it needs to actually curb usage in order to get a handle on demand.

De la Vega didn't provide specifics about how the company would actually get consumers to use less data. But he said that a usage-based pricing model may be considered in the future.

"I think longer-term, there's got to be some sort of a pricing scheme that addresses the usage," he said. "But that's going to be determined by industry competitive factors, regulatory factors and customer [successes]."

The idea is that usage based pricing may actually deter consumers from using high-bandwidth applications. Unlike voice service, which is already tiered, wireless-data service is charged at an all-you-can-eat flat rate. iPhone users select a voice plan, then pay an extra $30 a month for unlimited data usage. By contrast, AT&T has limited the amount of data that its wireless-data card users can consume each month to 5GB. After that limit has been reached, customers who use the AT&T network to access the Net from their laptops get charged more based on their usage.

But asking iPhone users and other smartphone subscribers to cut back on their data usage may be somewhat unrealistic, and it could actually stifle innovation and development of the mobile Internet.

AT&T seems to realize that this is not a long-term solution. And not only is the carrier upgrading its network, but it's also asking the Federal Communications Commission to find more spectrum to auction off that can be used for wireless-data services. Jim Cicconi, senior executive vice president of external and legislative affairs for AT&T, said in a separate interview with CNET on Wednesday that something needs to be done to deal with the flood of wireless-data traffic.

Cicconi and AT&T's CEO Randall Stephenson met with FCC staff members earlier this week to discuss the spectrum issue.

"Clearly, there is a looming crisis that needs to be addressed when it comes to spectrum availability," Cicconi said in an interview at his office in Washington, D.C. "Wireless-data usage is growing far faster than anyone had expected. And if we don't do something soon, we will run out very fast. And then we will have to start telling wireless customers that they can't do all the things they want to do with their devices."

FCC Chairman Julius Genachowski has made freeing up more spectrum a top priority. And he has already proposed that the FCC look into taking some spectrum away from TV broadcasters to give to wireless operators to deliver more wireless-broadband services.

Naturally, the TV broadcasters oppose such a proposal.

Verizon Wireless, AT&T's main competitor, has already amended wireless-data pricing for its low-end phones in an effort to squeeze out more revenue from users. But drastic changes in data pricing could scare off some customers and curb smartphone adoption altogether.