AT&T boasts of billions spent on network improvements

Some see letter to customers as plea to stay put when iPhone exclusive deal ends

A letter sent Wednesday to AT&T customers and a news release issued today describing nationwide wireless network improvements are stoking speculation that the carrier is nearing the final days of its exclusive deal for the Apple iPhone in the U.S. and wants to keep its customers.

An AT&T spokesman labeled that speculation "ridiculous" and said the letter was only designed to tell customers what's being done to improve network service and seek customer feedback. He declined any comment on when iPhone exclusivity will end.

All of the network improvements mentioned in the letter, including $US19 billion spent in 2010 on new cell towers, preparations for faster LTE and more, have been repeatedly described by AT&T in earlier news releases and TV ads. The letter also urges customers to contact AT&T with "any needs or questions" and never mentions the iPhone exclusive or references the widely reported rumor that Verizon Wireless will start selling the iPhone sometime in 2011.

While inviting feedback, the letter concludes: "Your satisfaction is always our number one goal."

The company statement released today adds specifics, specifying that AT&T invested $US8.2 billion in network improvements in the first six months of the year, adding 600 new cell towers and sites, among other improvements. Average national mobile network speeds in the first six months were up more than 25 per cent, the carrier added.

Several analysts and bloggers said the letter almost sounds like AT&T is beseeching customers to stay with AT&T once the exclusive for the iPhone ends.

However, the carrier said in a quarterly filing with the SEC in August that it didn't expect any material negative impact from the end of exclusive deals to carry handsets including the iPhone.

AT&T also explained that more than 80 per cent of its contract customers have family or business plans that are subject to lower turnover.

One analyst, Phillip Redman at Gartner, interpreted the letter as typical customer outreach employed by all the carriers who are constantly worried about losing customers. Redman agreed that the end of the iPhone exclusive deal predicted for next year "isn't the end of the world for AT&T, as everyone is locked in a contract."

As for the letter itself, "all the carriers do these things all the time," he said. "It's very low cost and gives the illusion of customer service."

Redman added that "the history of wireless includes users churning from one provider to another" a practice unlikely to end soon. "So far, no carrier has come up with a sure fire way to lock their customers in, hence the 12% to 15% annual churn of post-paid subscribers every year."

Rumors about the end of the AT&T exclusive for the iPhone have come in waves since the iPhone was first introduced in 2007 and AT&T was named as the exclusive U.S. carrier.

Most recently, blogger Steve Cheney at TechCrunch put it bluntly : "I am going to go on record to say Verizon will be selling an iPhone this coming January."

Cheney cited sources who had assured him that Apple has submitted an order for millions of Qualcomm CDMA chipsets for a Verizon iPhone run due in December. He postulated that a CDMA-based iPhone would sell up to three million units in the first few weeks. (Verizon is a CDMA-based carrier, as is Sprint. AT&T is a GSM-centered carrier, as is T-Mobile.)

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Matt Hamblen

Computerworld (US)
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