News Blog

Satellite TV provider Dish Network said Tuesday that AT&T will end its agreement to bundle its TV service with AT&T's broadband and phone service at the end of the year.

AT&T and Dish have had a joint marketing deal since July 2003, which allows AT&T to package the Dish TV service with AT&T's phone and Internet packages. But AT&T has decided not to renew the agreement, and as required by the contract between the two companies, AT&T is giving Dish six months notice that the deal will expire December 31, 2008.

The move is likely a way for AT&T to negotiate a better deal with either Dish or its competitor DirecTV. In April, AT&T expanded its partnership with Dish in the old BellSouth territory. (AT&T bought BellSouth in 2006.) And it stopped marketing a similar package with DirecTV.

At the time, it looked as if AT&T had dropped DirecTV for Dish. But AT&T has always maintained that it's discussing partnerships with both companies. And now it looks like the company is free to pit one company against the other to get the best possible price.

AT&T said in a statement that it will continue to discuss options with Dish even though it has terminated the current agreement.

Video is a key part of AT&T's strategy. The company has spent millions of dollars over the past few years to upgrade its network with fiber so that it can deliver TV over its IP network. The new U-Verse service is up and running in parts of AT&T's network. But the company isn't able to deploy U-Verse everywhere, so it has been relying on deals with satellite TV providers to deliver a so-called triple-play bundle that includes TV, phone, and broadband services in a single package.

Update at 10:52 a.m. PDT: Information about monthly text messaging added

AT&T reaffirmed pricing for the iPhone 3G on Tuesday, noting that eligible customers can snag the new smartphone for a discount: $199 with an 8GB flash drive and $299 for 16GB.

AT&T will begin offering Apple's iPhone 3G at its retail stores beginning July 11 at 8 a.m. local time. AT&T is the exclusive iPhone carrier in the U.S.

Under the plan, the discounted price will be available to customers who have purchased any iPhone before July 11, who are activating a new customer line with AT&T, or who were eligible for an upgrade discount at the time of purchase. (Eligibility for an upgrade discount, the carrier said, is generally determined by amount of time remaining on a current contract and the payment history.)

To be eligible, customers must also sign a two-year contract. Apple had revealed the $199 and $299 pricing for the iPhone 3G at its Worldwide Developers Conference in June.

Those who are not eligible for an upgrade discount can buy the iPhone 3G for $399 for the 8GB model or $499 for the 16GB version. Both require a two-year contract as well.

Customers who purchase the phone without a contract will pay $599 for the 8GB version or $699 for the 16GB model.

The phones will come with the iPhone 2.0 software preloaded on the devices, which includes such business-class e-mail through Microsoft Exchange ActiveSync and the iPhone Software Development Kit for creating customized applications. AT&T will also offer its Yellowpages.com Mobile for iPhone on the devices.

There will be an activation fee of either $18 for existing customers eligible for an upgrade, or $36 for new customers.

AT&T is requiring customers to activate their phones in the stores, as the carrier looks to reduce the number of customers who may try to unlock, or hack, the phones to run on other carriers' networks.

AT&T is launching four voice and unlimited data plans for the iPhone 3G.

The AT&T Nation Unlimited plan will include unlimited anytime minutes for $129.99 a month, while the AT&T Nation 450 plan includes 450 anytime minutes and 5,000 night and weekend minutes for $69.99 a month.

The carrier is also offering its Nation 1350 plan, which includes 1,350 anytime minutes for $109.99 a month, and Nation 900 plan that includes 900 anytime minutes for $89.99 per month. Both of these plans include unlimited night and weekend minutes.

And for folks who engage in tons of text messaging, AT&T is charging $5 for every 200 text messages; $15 for every 1,500 messages; and $20 for unlimited text messages.

For more details on the device, see Crave's iPhone 3G FAQ.

It will cost you north of the border.

(Credit: Apple)

If you think AT&T's iPhone 3G service plans are expensive, just consider what Rogers is forcing on our Canadian friends.

Friday, the carrier announced its service plans for the iPhone 3G, none of which include unlimited data use. Instead, Rogers will cap data each month at a certain amount, which will range from 400MB for the cheapest service plan ($60 Canadian or $59.23 U.S.) to 2GB for the most expensive plan ($115 Canadian or $113.64 U.S.).

Though 2GB is a lot of data, we're not sure how a customer is supposed to know what 2GB even means in real-world use. True, you can track your data use on the iPhone, but it's not like tracking calling minutes.

In its press release, Rogers does provide a convenient chart to gauge your data usage--apparently, 2G amounts to 16,000 Web pages (who knew?)--but we don't approve of such an arrangement at all. The iPhone's Web browser is one of its top attractions, particularly on a 3G network, and asking users to limit their data certainly isn't putting the "Internet in your pocket." Rogers is offering unlimited Wi-Fi access at all Rogers and Fido hotspots, but that in itself is limiting if you have to be in one place.

What's more, the data restrictions aren't the half of it. While AT&T's cheapest iPhone 3G service plan ($69 per month) includes 450 anytime minutes, the cheapest Rogers plan (the one with 400MB of data) only gets 150 anytime minutes. Ouch. Similarly Rogers' most expensive plan includes only 800 anytime minutes while AT&T's priciest plan ($129 per month) includes unlimited anytime minutes. Double ouch.

Come on, Rogers, you have to give your customers a little more. Especially when your contracts run three years.

In Friday's edition of the Daily Debrief, CNET News.com's Tom Krazit and I talk about the July 11 release of the iPhone 3G. Apple has been notoriously tight-lipped about the details, but Tom says there are a few known factors. For one, every customer will have to sign a two-year contract with AT&T and will have to activate the phone upon purchase in the store. Secondly--and this comes as no surprise--the lines are going to be crazy!

That said, there's a lot we still don't know. There has been great speculation over what time the phone will go on sale. Last year, it was a coordinated release at 6 p.m. in each of the United States' time zones. This year, however, given the time needed to activate the phone and the worldwide release, there's speculation they'll go on sale earlier in the day. Also unknown is how many iPhones have been manufactured and how many each customer will be able to purchase. Stay tuned!

Correction: This story misstated a quote from Tom Tauke, executive vice president of public affairs and policy for Verizon. Tauke said that it was in the best interest for the FCC to make a decision on the Comcast/BitTorrent case. He did not say that it was in the best interest for the FCC to make a decision against Comcast.

LAS VEGAS--Executives from AT&T and Verizon Communications said Tuesday that it's important for the Federal Communications Commission to take action in the Comcast debate over slowing down certain forms of peer-to-peer traffic in order to prove that legislation is not necessary when it comes to Net neutrality.

Jim Cicconi of AT&T (left) and Tom Tauke of Verizon (right) appeared on a panel together at the NxtComm trade show Tuesday.

(Credit: Marguerite Reardon/CNET Networks)

Comcast, the largest cable provider in the U.S., has been under fire for months after it was discovered the company had been slowing down peer-to-peer traffic on its network. The company claimed it had singled out peer-to-peer, file-sharing traffic, because it was eating up an inordinate amount of bandwidth, which caused degradation across the rest of its customers.

Consumer groups were incensed by the tactic, and the blogosphere filled with criticism. And as a result the FCC has been examining whether Comcast violated any of the agency's Net neutrality principles. A hearing was held earlier this year, and the FCC is expected to make a ruling on the matter sometime this summer.

Jim Cicconi, senior executive and vice president for legislative affairs for AT&T, and Tom Tauke, executive vice president of public affairs and policy for Verizon, told an audience at the NxtComm trade show here that it's important for the FCC to make a decision in this case to show that the agency's Net neutrality principles are enough to keep service providers honest.

"It's in the best interest of the industry for the FCC to make a judgment on the Comcast/BitTorrent case," Tauke said. "None of us want to be in a world where there is a sense that nobody is watching what is going on. We have the FCC and the Federal Trade Commission, which have authority to enforce some policies in this area. And if they do their jobs properly, they can make positive contributions on how the Internet develops."

Cicconi agreed, saying that the FCC has the opportunity to prove to Net neutrality supporters and Congress that it can enforce its own policies and keep the Internet open.

"The Comcast case has brought the debate over Net neutrality into specifics," Cicconi said. He added that this is important because up until now the discussion has centered on hypothetical problems. And creating new laws to deal with problems that haven't yet occurred could be disastrous for the industry.

LAS VEGAS--Executives from AT&T and Verizon Communications defended early termination fees for wireless customers Tuesday, but said they wouldn't oppose Federal Communications Commission rules that required these fees to be "reasonable."

Jim Cicconi, AT&T senior executive and vice president for legislative affairs for AT&T, and Tom Tauke, executive vice president of public affairs and policy for Verizon, said following a panel discussion at the NxtComm tradeshow here, that their companies are justified in charging early termination fees for wireless contracts, which often top out at $200.

The battle over early termination fees is heating up as wireless operators face multimillion-dollar class action suits from consumers who say these fees are unfair and deter competition. So far, wireless operators seem to have the upper hand in the battle, as a California state jury ruled in favor of Sprint Nextel last week in the first of these class action lawsuits.

But now, the FCC is considering taking jurisdiction over early termination fees. And the agency is considering a proposal from Chairman Kevin Martin that would require consumers be given a 30-day grace period to cancel their contracts without penalty. After those 30 days, early termination charges would then be prorated or reduced over the duration of the contract. Martin also proposes that fees should be based on the cost of the phone and that they should be "reasonable."

Cicconi and Tauke said that they are confident they could reasonably justify the cost of their fees, despite criticism from consumer advocates who say these fees are not used to recover costs but are merely used to deter customers from switching services. One industry expert who testified at a recent FCC hearing said that the early termination fees wireless operators charge are roughly 12 times higher than the cost of the actual phone subsidy they claim to be recovering.

"The fact is that it costs us hundreds of dollars more than the fees we charge to acquire a customer," Tauke said.

The executives also argued that consumers have many choices when it comes to the phones they buy and the services they subscribe to. Both carriers offer some phones at full price and allow customers to subscribe to month-to-month contracts, they said.

While AT&T and Verizon Wireless might offer some phones at full retail price in exchange for month-to-month service contracts, most of the hottest and most popular phones are not offered in this way. For example, the new 3G version of Apple's iPhone offered exclusively on AT&T's network can only be bought for the subsidized price of $199. AT&T also requires new iPhone users to sign up for a two-year contract. The previous version of the iPhone, which was not subsidized by AT&T, also required customers to sign up for a two-year contract with AT&T.

When asked why AT&T isn't giving consumers the choice of buying the new iPhone for the unsubsidized retail price without the constraints of a contract, AT&T's Cicconi had this to say: "Apple is providing the iPhone on these terms and conditions that it negotiated with AT&T. And if customers don't want to accept these terms, they can buy other devices."

While that's true, consumers still have no other way to buy this particularly innovative phone without agreeing to strict contractual terms from AT&T. This is despite the fact that AT&T said it has found its iPhone users to be among its most loyal customers.

"People have a choice," Cicconi continued. "They make decisions based on a lot of factors, like features and functionality of the phone and the terms and conditions under which that device is offered. Why should the government intercede on a deal that was struck between AT&T and Apple? I don't think the FCC should single out any one device in making policy."

Verizon's Tauke chimed in by saying that other industries also require term contracts.

"My gym requires me to have a year contract," he said. "The lawn service that cuts my grass has a one-year contract. Tivo requires a year service. This isn't unusual, and it's questionable that any government should regulate fees on any service."

This might be true, but there are many goods and services, particularly utility services, which don't require contracts. I've never had to sign a contract to get water or electricity. And I never signed a contract for my landline telephone service. I'm interested to hear what readers think about this issue. So please share your thoughts in the "Talk Back" section below.

LAS VEGAS--Mobility will be the key driver of growth for phone companies in the coming years as they expand their businesses to include new services like TV and broadband, AT&T CEO Randall Stephenson told attendees at an industry trade show here Tuesday.

AT&T CEO Randall Stephenson

(Credit: Marguerite Reardon/CNET Networks)

AT&T and the entire telecom industry have been transforming themselves over the past few years as traditional phone business slowly dies. No longer are these companies simply offering telephony, but they also offer TV, high-speed Internet, and wireless services. But it will be the mobilization of new services that will drive growth for companies in the next few years, Stephenson predicted during his keynote speech at the NxtComm trade show.

He used Monday's U.S. Open final as a perfect example of how mobility is changing usage. Stephenson said that he wasn't able to watch Tiger Woods clinch the U.S. Open golf title on his big screen TV at home, so he watched it on his mobile handset that uses the MediaFlo mobile broadcast TV service offered through AT&T.

He also made historical references to the Sony Walkman cassette player that essentially changed the music industry and made LP records obsolete. The same thing has happened to music yet again with devices like the iPod and now the iPhone, which allow people to take their digitized music on the go and even allow them to get their music wirelessly.

When devices and services are mobilized, Stephenson said, usage of all services shoots up. As an example, he said that even as AT&T's traditional phone business declines, voice minutes are growing 10 percent every year.

"As we mobilize services more things accelerate," he said. "We stimulate economic growth and drive prosperity on a global scale."

And as AT&T and other phone companies grow their video and broadband services, mobility will once again accelerate the market.

Today, roughly 2 billion people connect to the Internet. And by 2011 that number is expected to increase by another billion with most of these new broadband users coming from the developing world. But unlike the first 2 billion Internet users, these new users will access the Net from mobile devices, like Apple's new iPhone, Stephenson said.

With about 80 percent of the world's population living within range of a cell phone network, Stephenson believes the industry is poised for tremendous growth that will impact economies throughout the world.

"These are exciting times to be in this business and the industry," he said. "We are on the verge of an innovation explosion."

But he said that the industry must work through the challenges of a complex ecosystem to ensure the industry can deliver on its promise.

"The opportunity is fleeting in this business," he said. "Markets are moving fast. And not one us has the time for misfires or missed deadlines."

T-Mobile is gearing up to offer a 3G iPhone in Germany for only 1 euro, provided users sign up for its monthly 69-euro service plan, according to a Reuters report on Monday.

That translates into an iPhone purchase of roughly $1.55, and a monthly service plan of $107.

Under T-Mobile's offering, the telecom provider will sell the phones with 8GB of memory, while a 16GB phone will go for 19.95 euros, or nearly $31.

T-Mobile's announcement of its 3G iPhone offering comes a week after Apple rolled out the latest version of its popular cell phone.

T-Mobile in Germany is underwriting the deeply discounted phone with the help of a renegotiated contract with Apple, which no longer requires the carrier to share some of the revenues generated via iPhone calls with Apple, according to the report.

This move has yet to be seen in the U.S., where AT&T is the exclusive carrier of the iPhone. However, AT&T no longer has to share its revenue with Apple.

Whether AT&T will eventually drop the current 8GB iPhone price of $199 and 16GB iPhone price of $299 to just a couple bucks has yet to be seen.

A newly negotiated deal with Apple could hurt exclusive U.S. iPhone carrier AT&T in the short term, but the cell phone carrier sees a big upside for the future.

Following the much-anticipated launch of the iPhone 3G at an Apple event in San Francisco on Monday, AT&T announced that it had struck a new deal with Apple. The new arrangement between AT&T and Apple is similar to other contracts AT&T has negotiated with other smartphone manufacturers such as Research In Motion and Samsung.

(Credit: Apple)

Since the first iPhone was launched last summer, AT&T and Apple have shared ongoing revenue from iPhone users. But now AT&T will pay the upfront cost for the iPhone 3G and subsidize the total cost of the phone by making customers agree to a two-year service contract.

The arrangement will benefit consumers by allowing the new iPhone to be sold at a much lower price point. The 8GB version will cost only $199 and the 16GB version will sell for $299 with AT&T's subsidy. This puts the iPhone on par with other smartphones such as RIM's BlackBerry and Samsung's BlackJack.

But the new deal comes at a price. AT&T executives said on a conference call with analysts and investors on Monday that the arrangement will put pressure on the company's profit margins and dilute earnings for the next year and a half. That said, the company believes that the new price point and improved Web surfing experience of the iPhone on AT&T's 3G wireless network will drive sales of the iPhone and get more customers using its data services.

"Less than 20 percent of our customers have integrated devices," Ralph de la Vega, the head of AT&T's mobile business, said during the conference call. "And at the $199 price point we could have mass adoption and put the iPhone in the hands of people who have never surfed the Web on a phone."

What's more, AT&T sees iPhone users as highly valuable customers. Executives said that they are willing to make upfront sacrifices to get these customers on their network.

Specifically, iPhone users typically generate more revenue than basic AT&T cellular customers because they use more data services, de la Vega said. And with the new 3G capability and more applications coming to the phone, executives expect that to increase. iPhone users are also more willing to recommend the device to friends and family. And the churn or rate at which they drop the iPhone and the AT&T service is very low compared with customers using other devices.

"The 2G iPhone experience helped us understand what the customer characteristics are likely to be," Rick Lindner, CFO of AT&T, said during the conference call. "These are high value customers."

As a result of the new arrangement, iPhone users will subscribe to the same kind of voice data plans already offered to other AT&T smartphone customers. This means that as part of the two-year contract commitment, customers will be required to have at least a $39.99 voice plan. And they will choose from one of two data packages. Consumers will get the full smartphone data package for an additional $30 extra a month. Business users who want corporate e-mail can select a data plan for an additional $45 a month.

Update 3:59 p.m. PDT: The new AT&T iPhone 3G data pricing means that consumers will now pay $10 more a month for data service. The original iPhone data plan, launched a year ago, costs $20 a month. An iPhone 3G must be activated in either an AT&T or Apple store, and customers must agree to the two-year service contract with AT&T, de la Vega said.