For several months now, AT&T customers have been complaining about network connectivity issues. Dropped calls have been a chief complaint, along with just not being able to get a signal at all. Smartphone users have had problems loading Web pages, or downloading and viewing e-mails. It seems the main culprit is the iPhone. When AT&T took on the exclusive contract with Apple, they either didn’t know how popular it would be and how much of a strain the device would put on its network, or it went ahead and added it to their lineup knowing it wasn’t ready or able to accommodate it, but thinking they’d be able to catch up later. Whatever the case, sales of the iPhone have surpassed all expectations and put a tremendous strain on AT&T’s network, leading to all those connectivity problems. So it came as quite a surprise when Apple announced AT&T would also be the exclusive carrier for the new iPad. Now it’s not just customers worrying about that deal. The Federal Communications Commission (FCC) is expressing concern over it as well.
Most of AT&T’s problems have occurred in densely populated areas like New York City and San Francisco, where the majority of wireless customers are smartphone users, and where many of those smartphones are iPhones. In January, AT&T announced its quarterly earnings, and stated it had sold 3.1 million iPhones in the fourth quarter of 2009 alone. While this means a lot of profit for the company in phone sales and calling/data plan revenue, it also means even more strain on an already thinly stretched network.
Last December, AT&T was considering offering iPhone users incentives to reduce their data usage to help alleviate the problems caused by an overburdened network. The company also recently announced it would spend $2 billion more than initially planned to build new cell sites, and expand its network, presumably to alleviate problems caused by smartphone and iPhone sales and use, and to accommodate the iPad.
While Apple may be confident the carrier can pull it off, the FCC doesn’t sound so sure. In a blog post on its site, Phil Bellaria, Director of Scenario Planning, and John Leibovitz, Deputy Chief of the Wireless Telecommunications Bureau said:
With the iPad pointing to even greater demand for mobile broadband on the horizon, we must ensure that network congestion doesn’t choke off a service that consumers clearly find so appealing or frustrate mobile broadband’s ability to keep us competitive in the global broadband economy.
They didn’t name AT&T specifically, but being that it’s the only carrier providing service for the iPad, the implication is pretty clear. This concern, coupled with the FCC’s probe into early termination fees charged by all the major carriers, could spell some trouble for AT&T in the very near future.
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