AT&T chief: iPhone won't be exclusive forever
PASADENA, Calif.--It's not realistic to believe AT&T will have an exclusive on the iPhone forever, CEO Randall Stephenson said Thursday.
"There will be a day when you are not exclusive with the iPhone," Stephenson said, speaking at Fortune's Brainstorm: Tech conference here. However, he declined to get into details on the company's negotiations with Apple.
AT&T CEO Randall Stephenson at the Fortune Brainstorm conference
(Credit: Fortune)The issue of whether--and more likely when--AT&T loses the exclusive on the iPhone has become a major issue for the company and its investors.
"On balance, I think it works really, really well--maybe as well as any strategic partnership we have," Stephenson said.
Asked by Fortune's Stephanie Mehta whether he is completely satisfied with the nature of the relationship, Stephenson quipped: "I don't know if I could get my wife to say that about me, so I don't think I could say that about a business partner."
AT&T's earnings report early Thursday showed the company taking a hit from the expense of the new iPhone 3GS. "I'd like to pay less for the handset, go figure," he said.
But, he said, it's an investment that ultimately yields customers who spend more each month and who are much less likely to change cell phone service providers.
Stephenson again acknowledged issues with the quality of the company's wireless network but said that all carriers have areas with weak service.
"There's no greater cause of churn than network quality," he said, adding that "we have the lowest churn in the company's history."
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina. 
I'll be excited for the day the iPhone isn't tied to AT&T because a good phone should be on a network with at least decent service.
Of course the problem there is that T-Mobile will have to have a 3G network rolled out and stronger than AT&T's..
Instead of T-Mobile picking up iPhone, I am hoping Vodafone comes to its senses and forces Verizon to convert to GSM network (or LTE - compatible with GSM) soon.
You can wonder all you want, but where there is smoke there is fire. Most of the Customer Service problems don't come from the reps themselves, and as you suggest, you treat them nicely, they go out of their way to help you. The problem is that AT&T is a 9-headed hydra where none of them really speak well to each other.
Listening to my co-worker who manages the phones at my company deal with the inane and byzantine situations to get simple things done. It took 3 months to port my personal phone number to our company account. Mine was one of several lost in that miasma. Others went over in a matter of days.
Folks like Verizon can do this in a matter of HOURS!
As for actual coverage (the truly annoying dropped calls aside) they are at least as good as any other mobile company. For what it's worth, everyone I've asked who has had multiple services and travels with some frequency has told me they prefer AT&T.
AT&T's customer service and quaility right now is HORRIBLE, period and done with. I mean, I am in an area where I should be getting exceptional service, yet in my home I can get NO phone signal or very little, maybe one bar.
Ok, that comment was perfect.
On the surface, sticking with AT&T seems a more natural fit with Apple's way of doing things ("we're happy making products for a percentage of the market, don't care about making everyone happy, this keeps it simple"). But they might surprise me.
Another factor: given Verizon's approach to their own app store, I'm not so sure they would agree to give Apple complete control over the pipe, as AT&T has.
I hope the exclusivity does end soon, so the network isn't the reason people choose one phone over the other. But I'm not holding my breath.
However at the end of the day, I want to buy my phone from my phone vendor and then pick whatever company has the best service for my needs. We don't live in that world becasue the FCC botched wireless.
I personally dont really like the idea of Verizon with an iPhone, although it would be a step forward. In many aspects they are just as bad or worse than AT&T. They have high prices, bad customer service, and restrictive practices. If Verizon was my only other option, I would probably stick with AT&T and save myself from paying an ETF to switch to another greedy corporation.
Ideally, I would love the iPhone to be unlocked and sold on any carrier (on a GSM network at least). I dont see why carriers couldnt continue subsidizing phones in return for 2 year contracts without having to have an exclusivity deal. I mean the whole point of subsidizing a phone is to lock people in to contracts, which is fine. So instead of competing by getting exclusive contracts for phones in order to sell these contracts, these carriers should be competing based on the price they are willing to subsidize these handsets or how much better the services they offer are. It would definitely be a way better situation for consumers, and I seriously hope that the DOJ inquiry will lead to the banning of this anti-competitive practice of exclusivity agreements. I mean if the we were to believe the carriers that these exclusivity agreements actually benefit the consumer and make the marketplace more competitive, then can someone explain to me why the US lags behind most of the world (even developing countries) in wireless technology, and why we pay more for this garbage???
It's been long said the biggest roadblock to the iPhone from realizing all of its potential has been its connection to AT&T.
Suppose it happens- say Verizon or Sprint gets the iPhone and the service *still* is poor. It could be completely unrelated to the phone itself and be just Cellular Service Provider issues, but will the general public be smart enough to know that? Will they know it's the CSP and not the device itself? That could be dangerous to Apple as well.
The fact is, AT&T coverage is very good in some places, not good in others. Verizon coverage is very good in some places, not good in others. Ending the exclusive will allow people to choose, and result in a greater number of satisfied customers. That is, of course, assuming Verizon gives Apple the same control over the pipe that AT&T did, and I'm not sure that's a safe assumption. Back in 2006, Apple offered Verizon the exclusive, and they turned it down, primarily because they wouldn't give up control over the pipe -- so Apple turned to Cingular, which was bought by AT&T. Nobody knows whether Verizon is any more willing today to give up control of the pipe. They seem to be almost as arrogant as Apple, but without a trump in their hand.
What is the #1 complaint about the iPhone currently? The carrier.
If we have another carrier offering it, how many will flee to that new service, even though it may be just as bad? Apple wins, AT&T does not.
Then, after people discover that new carrier isn't any better (because overall, cell providers are rather poor), people may mistakenly blame the phone for issue and not the carrier. Carriers: pass, Apple loses.
I didn't say it was fair, only one very real possible scenario.
Mind you, I plan on buying an iPhone shortly myself from AT&T- my Touch's screen just cracked. :/
In the meantime, SBC being the biggest and healthiest of the Baby Bells then went and bought the old AT&T (the long distance company and former parent, and separate from old AT&T Wireless which it spun off several years before) and Cingular-partner BellSouth, then SBC rebranded its new, bigger self as "the new AT&T". It then took its Cingular subsidiary and rebranded that to the AT&T name (AT&T Mobility, I think) to connect the proverbial corporate identity dots. All of this enterprise incest took place before the iPhone and Apple showed up on the scene.
The point being that any quality problems with the current AT&T Mobility had to spawn from the old Cingular group. Those guys may have changed names, but they NEVER lost their authority or control over the wireless side of the "new AT&T" house.
Right. The issues are not with the carrier's actual signal service. Though each person may find he or she has better service with one carrier in a paticular area. IMO the complaints about AT&T are mostly related to company image, the way they operate business. It was the wrong move to assume the AT&T name in the Cingular merging.
AT&T was notorious when I lived in Los Angeles for many spots on the major freeways where calls would ALWAYS drop. They just did not have coverage.
I've spots in Tucson where I am now in urban busy areas where I don't have coverage and where coverage is very very weak.
When I lived in Arcata (Northern California) AT&T would give me full bars but then drop from full bars to nothing and hang up ALWAYS from my home -- i.e. I could not expect a 10 minute+ call to ever work.
In East Texas where I lived I would have twenty minute calls where the signal would start at three bars and with me not moving, would regularly drop to zero bars and hang up.
These were different handsets. Eventually I got another carrier... but am now back due to the iPhone.
Don't expect me to stay with AT&T. Too little confidence in their network.
Like U-verse too.
Probably the most accurate statement here. Each carrier has pros & cons - options are a good thing.
In reference to the comment about customer service. I can't remember ever calling customer service when I wasn't agitated due to a problem. I think that is reasonable and to be expected by those in the customer service industry. Especially when your company's service is so poor.
If the huge subsidy is the only reason Apple is sticking with AT&T (and that's a big 'if'), it's an extremely short-sighted decision. But I tend to think that there's more to the story -- for instance, maybe Verizon is playing hardball, or maybe there are issues with CDMA we don't know about.
Seems to me that Apple would be better off settling for the lower subsidies that would come from non-exclusivity, and make it up in volume.
Even if Apple was perfectly happy with their arrangement with AT&T, it stands to reason that in order to fully take advantage of all market possibilities for their iPhone franchise they need to have their phones available to multiple carriers. They see that there are potential buyers that simply WON'T buy iPhones because they're limited to AT&T as a carrier option. That's significant profit potential that they're cutting themselves off from. It's not the churn that matters, but the expansion of the consumer base that most important, both for market control and for happy shareholders.
In the reality of the corporate universe, it IS all about the Benjamins. Even Cupertino isn't immune to that.
On another note, how did we all get so pathetically tethered to our cell phones? We are everything we dreaded we would become- automatons who dress alike, look alike, and now even carry the same things in our pockets- cell phones, smartphones, and prob even the same brand of condoms.
On another note, how did we all get so pathetically tethered to our cell phones? We are everything we dreaded we would become- automatons who dress alike, look alike, and now even carry the same things in our pockets- cell phones, smartphones, and prob even the same brand of condoms.
I am with AT&T right now, but my crackberry don't have a data service, because it's like $50 bucks and I already pay comcast $50 bucks for internet, I am not going to pay this again. I heard that the iPhone gets a special data plan, we shall see :- ) maybe on a family plan, you save money!
I've never been with Sprint (but my friend has it and likes it) and I never been with T-Mobile, (but my friends works there as a router guy) and he tells me that T-Mobile expects loyalty from their employees and they work them like Microsoft, but they do have the G1 and G2, which on one else has.
So we shall see!
The iPhone is sweet, can't wait to switch to that.
- by handicappedpets July 23, 2009 12:34 PM PDT
- I LOVE my Iphone and I find ATT service to be 'adequate' but will not upgrade to the 3GS until they implement TETHERING - the ability to connect my computer to the internet through my cellphone. Tethering ability is built into the IPhone but ATT won't turn it on in the US. The reason I will not upgrade is that if another company offers the IPhone and turns on the tethering, I'm jumping and I don't want to be in a 2 year contract.
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- by codynews July 23, 2009 2:05 PM PDT
- handi: What's funny is I'm teathering RIGHT NOW. You can tether on the iphone. Mine isn't even jailbroken. I installed a small simple app that added it as an option:
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- by codynews July 23, 2009 3:17 PM PDT
- Oh, and I have the regular 3G (not S). Not sure why people think you can't tether.
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- by ZeTron57 July 24, 2009 9:36 AM PDT
- @ cody news - have you got your data bill yet??
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Works great