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Some AT&T wireless customers in the Midwest and Southeast are having trouble accessing 3G and EDGE data services on certain handsets, the company confirmed Thursday.

Problems were reported as early as 6:30 a.m. EST, according to Mark Siegel, an AT&T spokesman. Siegel was not able to say how many subscribers have been affected or what exactly is causing the problem.

He also couldn't specify which specific handsets were having trouble accessing the data network. He would only say they were smartphone handsets. Some users on blogs and message boards have reported that the iPhone, Blackberry, and Palm Treo have all been affected. Siegel also said that some laptop users who have AT&T's PC wireless cards have also had trouble accessing the 3G and EDGE data networks.

The problem doesn't seem to be affecting subscribers in the Northeast or the far West, Siegel said. And the outage has not affected any voice services, so customers are still able to make and receive phone calls.

"We are working to identify the cause of the problem as quickly as we can," he said. "And we apologize for any inconvenience to customers."

The ubiquity of the cell phone has finally prompted AT&T to pull out of the pay-phone business, the company announced on Monday. By the end of 2008, AT&T says, it will have exited the business completely.

The nation's No. 1 wireless-network operator, AT&T says it expects independent operators to pick up service contracts on its pay phones, which, over the past 10 years, have shrunk in number to about 1 million nationwide from 2.6 million.

For some local operators, AT&T's exit could be good news because, in a few cities, at least, pay phones still generate revenue--though not necessarily from calls. As noted in a New York Times article published in August, New York's still-abundant pay-phone kiosks generate considerable cash from advertising, and the city gets a hefty share of it.

Since 2001, pay-phone revenues from ads have exceeded revenues from calls, of which the city gets a 10 percent cut. The city gets a bigger cut--26 percent--of the ad money. Last year, the article noted, the city took in $13.7 million of the $62 million in annual revenue from ads posted on the kiosks.

Apple is considering bidding on the government's upcoming wireless spectrum auction in January, according to a Business Week story.

The story, which cites two unnamed sources, said that "Steve Jobs & Co. have studied the implications of joining the auction, which will be held Jan. 16." But at this point at least one of Business Week's sources says that Apple is leaning away from participating in the auction, the story said.

The spectrum auction scheduled to take place in January 2008 will allocate wireless licenses for spectrum in the 700MHz band that is being vacated as a result of the switch to digital TV. The spectrum, which is considered the last band of "beach front" airwaves available, is highly valuable because it can transmit signals over long distances and through objects. Internet giant Google has already said it will likely be bidding on the spectrum.

Apple has already begun dabbling in wireless, so it's not too surprising the company would at least consider bidding in the 700MHz spectrum auction. Earlier this summer, it introduced the iPhone, which works over AT&T's cellular network and also uses Wi-Fi. Last week, it upped the ante with the new Wi-Fi-enabled iPod Touch, an iPhone without the cellular connectivity. Apple also launched a new version of iTunes that will allow iPhone and iPod Touch users to download songs over a Wi-Fi connection.

But as the Business Week story points out, the wireless communications business is risky. And at this point "Apple is leaning against participating in the auction." While Apple can certainly afford the minimum $4.6 billion necessary to bid in the auction, strategically it makes little sense for Apple to get into the low-margin wireless phone business.

"My first reaction to this is why would Apple do that to their margins," said Mike McGuire, a vice president of research at Gartner.

McGuire also said that even getting into the auction would require Apple to dedicate a lot of resources and time to an effort that is not part of the company's core business.

"There is a lot more to this than buying spectrum licenses," he said. "They'll need people to manage the bidding. Then once they get the spectrum, they'll have to acquire the expertise to do something with it. And there are regulatory issues that will have to be dealt with. So the question becomes, how much of its resources does Apple really want to devote to this?"

But the Business Week story makes the argument that Apple may be moving toward a service model. The story suggests that if Apple had its own network that it could allow users to access content from a "cloud of computing" instead of first downloading it onto a PC. So music, movies, email and all kinds of other content would be stored on the network and streamed instead of being stored on devices like the iPod.

In this scenario Apple would eventually make money on its applications, instead of selling devices. The article goes on to say that Apple may even consider offering the basic wireless access service for free, subsidizing the cost through advertising. And then it could charge for the content that it sells over this network.

This could be great for consumers, who would likely get cheaper wireless access and possibly simpler access to applications, but the Business Week article seems to assume that building a wireless network is cheap. Yes, it's true that building a wireless network is less expensive than laying new fiber in the ground, a strategy Verizon Communications has taken in building its next generation broadband network. But whether you're laying fiber or installing wireless bay stations, there are real capital and operational costs associated with building and operating a network.

Just ask EarthLink, which has been forced to scale back its municipal Wi-Fi deployments because it can't find a business model to sustain the strategy. The networks have turned out to be more expensive to build than EarthLink first anticipated.

I have little doubt that Steve Jobs has thought about the 700MHz auction. How could he not, with companies like Google making so much noise about the auction? But to actually commit money and resources into such a project seems like a long shot to me at this point.

Perhaps there will be some way for Apple to partner with a potential bidder. For instance, it's conceivable for Apple to work with Google, especially considering that Google's CEO Eric Schmidt is on Apple's board of directors.

RIM BlackBerry 8820

(Credit: Research in Motion)

After getting the green light from the FCC just a couple of weeks ago, Research in Motion today officially took the wraps off the RIM BlackBerry 8820, the company's first smart phone with integrated Wi-Fi. Available through AT&T Wireless later this summer, the 8820 supports 802.11a/b/g standards and is compliant with Wi-Fi security protocols, including WEP and WPA. In addition, the BlackBerry 8820 is the company's thinnest full QWERTY device to date (beat it, BlackBerry Curve), and has built-in GPS for out-of-the-box support for location-based services such as TeleNav GPS Navigator. Other highlights of this quad-band phone include EDGE support (no 3G, though--boo hiss!) Bluetooth 2.0, and an expansion slot that accepts both microSD and microSDHC memory cards. Those are just some quick hits. We're still trying to nail down some more details, such as pricing and exact release date, but wanted to share the good news with you in the meantime. Check back soon for updates.