Living with the iPhone

It didn't take a check of other CNET stories to confirm that Apple/AT&T's registration servers have either went back to bed or checked out early on a Friday. After the cheers at 8:00 a.m. the line moved less than 20 feet within the first hour. There were at least two announcements from Apple reps (one in a utila-kilt even) that things are "a little bit slow," because of the "overwhelming demand." An insistent, we could always come back later was touted too.

At one point, I was getting discouraged. The Apple Store'ss WiFi connection was increasingly out of range as the line arced around itself. Laptop batteries were fading. Many with iPhones in line started to look antsy and bored too. A geek 2.0 shantytown was at risk of developing. Gripes about AT&T and it's 'ease' of in-store activation were heard. And yet, the line grew longer and added more people. Somehow, the line started to move - or maybe it was just my turn...

But, after 2.5 hours of waiting I was in! And yes, the white 16-gig iPhone 3G was indeed available. "Mike" my handy Apple assistant told me stories of the various difficulties that AT&T has presented to its new and existing customers. Rightly so, as I had to talk to an AT&T rep about my upgrade. Eventually, I won. But others in the store weren't so lucky. One customer apparently dropped his new iPhone 3G and returned it wanting another one. After processing that return, moments later AT&T told the customer he was no longer eligible for the 'incentive' upgrade pricing. Oops.

As for my iPhone is still begging to be connected to iTunes and I have yet to snych it yet. So, more to come. But at least I have one. And it was tax-free too.

Strangely, I found myself with 30 minutes of free time yesterday. And, instead of doing something productive, I found myself drawn to watch the latest 30-minute iPhone 3G video from Apple.

Sure, it's that same creepy guy from last year, and this time, he looks even more CGI-generated than last. I think he gained some weight too. But, the new features made up for the the excessive use of "most advanced," "incredible" and other doped-up adjectives. Those are 30 minutes down the tubes watching this man, but, the 3G iPhone does look pretty enticing. No idiotic recessed earphone jack (a 'redesign,' really?), mass-email edits, Exchange services, slick Stek Trektricorder-like GPS tracking, finally allowing legitimate third-party innovation via applications... the list does go on. The bells and whistles showcased here did partially counter the weariness I've heard some of my friends fret about the ritualized procedures (and fee increase) that AT&T seems to have imposed on the 3G iPhone launch.

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.

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.

It wasn't a whiteout, a brownout but a rather, a geek out that plagued those of us with AT&T service on iPhones or AT&T service in general. While our bars indicated full service, getting server access error messages in Safari was much more common than you would think, especially a convention full of guys on their cellphones. But with more than 100,000 folks concentrated in a relatively small area.... Service outside of the area, however, was more than fine and faster than I've experienced. SMS texting, as usual, was the reliable means of communication. What's more, voicemails I got were delayed by 12 hours or more and I wasn't the only AT&T person with these issues. Way to go AT&T.

A simple plea to AT&T: Texts ARE data!

With that said, my travels ended and I got my first AT&T invoice from my far-flung travels. I managed to stick to a lean 15 MB of data used (both downloaded and uploaded) on the iPhone. I called stateside a handful of times using the international roaming plan, which reduced the charge per minute to $1.29 from $1.69. I found myself becoming the master of keeping calls from rounding up to the next chargeable minute (my average call time to the States was 2:59). In the end, my invoice was only $30 more than it usually is, but I'm not sure if all the calls and charges have come through.

The International data plan did prove useful.

I checked my email on the road every now and then (not as frequently as the auto-check would have). Using email, I managed to send a few pictures of koalas and kangaroos I took from the iPhone's Camera Roll. It was nice to access Google Maps, which primarily worked well with one notable exception (A search for a Hungry Jack's - the local name for Burger King - led us to a dark part of Cairns and a "Hungry Joe's," we didn't stick around long enough to find out what that was). It was nice to access the weather (which, as per usual, was woefully wrong). The international data plan is advisable in Australia as our experience showed that there were not a lot of WiFi networks around (in fact, we kept finding people's mobile phones as being WiFi access points).

What the data plan did not cover was the cost of SMS text messages. I must admit, I am a SMS addict. That said, I never really thought SMS texts were considered separate from data. Okay, I may have known on some level, but somehow I fooled myself into thinking of AT&T benevolence. Well, at $.50 a message, I won't make that mistake again. Lucky for me, I didn't send that many messages, but it still cost me a good chunk of change that could have otherwise been spent on a pint or five.

Last, I still don't know if I can take these international features off of my AT&T plan. The irony is that AT&T switched from itemized paper billing invoices to simplified consolidated invoices - but this actually leaves customers like me in the dark. I still have no idea if all my calls placed have posted to my account yet.

I guess sometimes you have to be careful for what you wish for as you may get it.

And, after the week Steve Jobs promised, the $100 credit comes to fruition. And, via text. Just click this link and the rest, after entering your phone number and serial number is handled via SMS text. It's pretty fast - I got my access code within 30 seconds! Paperless (unless you want to use it at physical retail store, in which case it'll print). Slick. Now, iPod classic or Apple care? Hrmmmm.

In July, I got an invoice from AT&T that I thought was an aberration--it was slightly longer than my previous bills with my Razr, but my last invoice spanned the period where I had both phones--maybe that was it, right? Well, I just got my latest iPhone-only bill, and it turns out that the eco-unfriendly bill was not an aberration.

So, while my monthly total bill is now a noticeable $10 cheaper because I changed my data and SMS text plans, my monthly paper invoice has grown noticeably larger and heavier--89 pages in total--about 30 percent bigger than my Razr bills. (I guess I'm lucky: I've read reports of invoices being more than 300+ pages!)

I think I will switch to the paperless, online billing invoice AT&T offers, but as a lawyer, somehow I feel some need for paper invoices for evidence or record-keeping. I still feel this even though I know that electronic versions of documents and invoices are more portable and easy to keep track of--call it my inner Luddite. That aside, AT&T, I'm not sure it's necessary to track every kilobyte of data, or is it?