AT&T responds to iPhone 3G S pricing and (lack of) features [UPDATED]

San Francisco -- AT&T looked battered and bruised coming out of today's keynote at the Apple Worldwide Developers Conference (WWDC).

Apple announced a bunch of cool features that would be built in to the new iPhone 3G S when it's available June 19 -- multimedia messaging (MMS) for sending photos, videos and location data, Internet tethering to access the 3G connection from a computer, and faster 3G broadband Internet.

Problem was none of those would be supported by AT&T, the sole U.S. carrier for Apple's smartphone, at launch.

The reality incited boos and hisses from the audience during Apple's announcement, and there was no AT&T representative at the conference to defend the company. But AT&T spokesman Steven Smith assures us that all of those features are coming in due time.

"We absolutely will offer MMS on iPhone 3G S," Smith said. "We're expecting that to be available in the late summer."

But why, as many tech bloggers have pointed out, can't they immediately offer a service that's been available on nearly every other cellphone for the past couple of years?

Smith says there's a technical limitation. AT&T must upgrade ...

... its system to support MMS. But that didn't stop 29 other wireless carriers covering 76 countries from having it ready for launch.

But what about iPhone tethering, which allows you to connect the phone to your computer to access the Internet wirelessly via Bluetooth or using the USB cable that also charges the device? Twenty-two carriers in 42 countries will offer it at launch (again, none of which are AT&T).

Smith says his company definitely plans to offer a tethering service, but it has no dates or prices to announce.

"Typically there's a monthly charge associated with that,"Mark Siegel, another AT&T spokesman, said of Internet tethering. "We have not announced what that will be."

Fine. Faster 3G Internet? AT&T this year said it will support the high-speed 7.2 wireless technology that the iPhone 3G S is built to take advantage of.

The 7.2 standard allows a theoretical download speed of up to 7.2 megabits per second. It doesn't always perform at that speed, but wow! That's like a song download every six seconds or so. Surely, that should at least be close to done? Not so fast.

"AT&T plans to begin deploying ... 7.2 later this year," Smith said. "We anticipate completing that upgraded 3G network by 2011."

The iPhone is a cornerstone of AT&T's device lineup. The company has activated 5.9 million iPhone 3Gs in the year that it's been available. That figure doesn't include those who bought the original phone. Thanks to pricey data plans, iPhone users generate 1.6 times more revenue for AT&T than the typical customer.

If the lack of support from AT&T isn't enough to deter immediate adoption of the 3G S when the phone comes out June 19, maybe the price points for existing customers will.

New and qualifying (those not currently bound by a contract) customers get the competitive 3G S prices -- $199 for the 16-gigabyte model, or $299 for the 32-gigabyte version. But an AT&T subscriber who wants to upgrade their iPhone 3G but is still under contract would have to pay $399 and $499, respectively. Consumers who want the phones without a contract, tack on an additional $200, bringing the price to $599 for the 16-gigabyte version and $699 for the 32-gigabyte model.

"You know, we really feel we've priced this at something that provides our customers with great value," Smith said. "We're certainly hopeful that our customers find that to be the case."

Do you find that to be the case?

Corrected, 8:08 a.m.: A previous version said the 7.2 3G wireless Internet technology is capable of download speeds of up to 7.2 megabytes per second. In reality, it can reach 7.2 megabits per second. Later in the story, the original version said that customers who want the phone without the contract should add $100. Fuzzy math. In fact, it's $200 more than the early upgrade price.

-- Mark Milian and Dan Fost

Comments

[Love Apple, Despise At&t]

jailbroken iphones are going to be even more popular...

tethering is a must, and it's something i Must Not pay extra for...

what's the point of paying for unlimited data if i can't have it?

[Chris Lammert]

Open letter to Apple:

"Dear Apple,

Please align the expectations of consumers and the new iPhone and OS 3.0's abilities with the capabilities of the network supporting the iPhone and new features. You are an agile and innovative company and you should expect supporting networks to keep up, otherwise don't disappoint customers and fans of Apple by creating awesome features that otherwise cannot be used "until a further date" - that has not been set.

Your loyal fan and consumer,
Chris"

Seriously though, why would Apple not expect more from AT&T? At least have a plan to roll out new features that can give consumers some information about pricing, availability and schedule.

I don't see enough value in buying an iPhone 3G S so I'll be happy to upgrade my current 3G to OS 3.0. Anyone else feel the same?

[Jerry Tsai]

AT&T wisely negotiated an exclusive contract with Apple, because it certainly doesn't engender loyalty in its customers. Its stinginess now is hurting it badly with those of us who use iPhones. Every iPhone user I know would leave for another carrier as soon as possible because of AT&T poor service and gouging.

This is obviously yet another case of management pursuing short-term results, and not acting in the best interest of long-term shareholders. Sure you might be losing quite a bit of revenue if you allowed tethering and MMS, but you would have customers who would feel the carrier WANTS us to be loyal customers as opposed to the way their treating us as cash cows. Wake up AT&T. Once the gate is open, these cows will go off to more fertile pastures.

[Steve Rhodes]

I'm the one who is of value to AT&T. If AT&T were smart, they would have made the new iPhone available to their loyal customers (well, Apple's) at launch.

The hit they may take is far less than the uproar this move caused.

They seem to have leaned nothing from Apple which while far from perfect
does try to please their customers. The experience in an Apple store and an AT&T store are night and day.

They will lose many customers (including this one) once they lose their exclusive on the iPhone.

[evie]

The whole thing is a disgrace and is something AT&T and Apple should BOTH be ashamed about. You can tell Jobs is out of the negotiating business with this nonsense. He never would have let it happen.

These moves (or lack thereof) are going to hurt sales, 100% guaranteed.

[Matt]

"Consumers who want the phones without a contract, tack on an additional $100, bringing the price to $599"
$599 - $399 = $200 last time I checked...

If they think a phone priced at $400 even AFTER you add a 2yr contract provides their customers with "great value", then they are as out of touch with consumers as I think they are. Come on, people... are you willing to sell your soul to this company for 2 years just for some techno-candy? Wait a year, Apple will _have_ to use another carrier once AT&T has alienated every existing customer.

[J Dothan]

I have the original iPhone and I am waiting for the exclusivity contract to run out. I wanted a 3G and I like the 3GS too but I hate At&t they have be aweful. My contract is up next month and then it is off to T-mobile for me to wait for the iPhone 3GS plus next year. T-mobile has the iPhone in europe and it will be good when there is choice here.

[Muliadi Jeo]

It just doesn't make sense that AT&T is going to charge their existing customer (their loyal customer) with $399 for the upgrade on the new iPhone and on the top of that sign a new 2 year contract. I remember last time that they give the iPhone previous owner the benefit of having the same upgrade price as the new iPhone owner (especially to those who purchase the iPhone at the early phase).

I think AT&T should take care their customers much better than that and encourage people to keep upgrading their phone to keep extending their contract with them. I thought the real money is from the montly service they get?

Probably better wait for the phone to crop out at eBay then :)

[Ali]

I am flat out disgusted at ATT. This is a company that tries to give the impression that it takes care of its customers. Why wouldn't Apple's 3G customers want to upgrade to the new 3G s? The first movers have always been at the forefront and have been Apples best customers. Now ATT wants to make money on them . You know what I hope Verizon will get the iphone 4G. Then I, my wife and 2 other lines will gladly leave these stingy selfish company. Enough! $200 more for an early upgrade????..without the iphone this company is bad as Sprint.

[brocephus]

AT&T is dropping the ball with the release of the new Iphone. Existing customers are pissed because of the upgrade prices and AT&T has no good excuse for not being prepared for MMS and tethering. I anticipate a lot of people jumping ship as soon as the Iphone is available with other carriers.

[Debbi]

This article is completely bias and misleading... "Twenty-two carriers in 42 countries will offer it at launch." when will they launch?, oh not until August, wow that gives them two more months to get this ready... weird how thats not mentioned in this article. As I remember the "full" pricing is slightly more than the original iphone 2G at launch, and people jumped all over that!!! For the Apple iPhone it would appear to be totally worth it.

[Slick]

I'm a loyal Mac user and have pumped 10's of thousands of dollars into Apple buying their top-of-the-line desktops since 1985. My wife and I would love to have iPhones, but will never buy one as long as it is tied to AT&T. Come on Apple, wake up and listen to the people who pay your salaries.

All we want is some choice, flexible plans that don't make us feel like we're being cheated at every turn, and above all a fair (not tied to plan extensions) upgrade path. If this was possible, we'd already be on our third pair of iPhones.

[Angry@ATT]

ATT is really trying to suck every single dollar out their customer. I am everyone of us who switched to ATT because of the iPhone will leave it just as fast when their exclusive contract ends.

For me even tomorrow is not soon enough, and I will gladly pay whatever termination fee to end my relationship with this poorly managed company!

[ad]

Please learn the difference between bits and bytes. You state:

The 7.2 standard allows a theoretical download speed of up to 7.2 megabytes per second

That should be megaBITS per second, or 8 times slower than you thought.

[Noe]

I too agree with everyone here I personly have AT&T only becuase of the iphone I would end my contract and pay any termination fees as soon as it becomes available with verizon or any other company better than AT&T they made it clear that they are a money sucking corporation that doesn't really care about their customers. Apple should really consider offering their product to other wireless providers. Variety is really key here if you want to sell a product people want. i think the new iphone is great but i am not willing to pay so much for it im just gonna wait for my contract to expire and buy the next iphone on June 2010 maybe MAYBE!! on a different company if not there is always unlocked iphone

[Dave E]

The iPhone is to AT&T what the Truck/SUV was to the big three car companies and we all know where they are now!

[Peter B]

J Dothan and others,
For what it is worth... take a vacation to Europe and buy an unlocked iPhone there... bring it here and use T-Mobile. That is the best case scenario at this point. -- otherwise you will need to jailbreak your phone and crack the radio controller software.

ad,
Absolutely... plus this is the best case scenario... In most cases between protocol overhead, signal degradation, interference, etc. you will only see half that.

> Please learn the difference between bits and bytes. You state:
>
> The 7.2 standard allows a theoretical download speed of up to 7.2 megabytes
> per second
>
> That should be megaBITS per second, or 8 times slower than you thought.

[Jared]

Glad i upgraded to the 3g last year. I guess ATT only wants my business for another year as opposed to indefinitely. One of these days this company will realize that customers aren't employees. You ought to be rewarding loyalty not kicking dirt in its face. You ought to be incentivising, in this eceonomic climate, everyone who has the disposable income to purchase this toy and can continue to pay your exorbitant rate for montly voice and data to stay with you as long as you can keep them. If they go down this path, if they try to stick me for another 200.00 to buy thisproduct, I'll wait, and then I'll go wherever the Iphone eventually goes. Between this and the fact that the features arent ready to use at launch, Apple can't be seriously considering extending exclusivity.
VIVA LA RESISTANCE

[blackberries are better]

the iphone sucks...still can't send mms or copy and paste, should have bought a blackberry. At&t is over priced I swithed to Altell with two blackberries is $40 a month cheaper than just ine on at&t their data packages are over priced. I have less dropped call now,a better signal everywhere I go. I may not have 3g, but i have signal

[sam]

7.2 mb is not the same as 7.2 megaBYTES. Please correct this idiotic statement.

[Boooo to ATT]

i'm also as loyal as an apple customer could get, and had definite plans of buying the iphone 3G s (which would make it my third iphone to date) and after reading AT&T's terrible mark-up for loyal customers, it's a no-go for me. i already have a hard time justifying the monthly bills from AT&T, but at least those prices are the same, no matter who you are: new customer, loyal customer, etc.

i sincerely hope that AT&T will have some discussions about their customers upset and will rethink this "generous offer"

[David H]

What the duce is going on here? What happened to the special pricing for current iPhone owners that was available for the 3G upgrade last year? This is bogus. Between this and AT&T telling us we'd have to pay full price to get my fiance a new iPhone after hers was stolen, I don't think I'll be signing any sort of new contract with them; I don't care how good the phone is. I'm so absolutely sick of wireless companies in this country. There is no such thing as consumer rights in the US.

[Sam Damon]

IMO, the big issue is that AT&T has not become a "Macintosh Way" company. If you don't understand what this means, find a copy of Guy Kawasaki's book. While dated, it is eerily prescient. Heck, it's still relevant today, which says much. Anyway, Apple has been trying to school AT&T, if the company would only listen.

One has to wonder what sort of trouble AT&T would be in if they DIDN'T have a lock on US iPhones? Can you say "Sprint"?

I'm not quite convinced I'd buy an iPhone 4G for use on Verizon. Sprint and T-Mobile have networks that would not work for me in my area.

[Jean S]

In Europe, sole carriers got sued and lost: Orange in France for example. That opened the door to others carriers and gave place to a legitimate competition between carriers. We should do the same here. ATT looks like they have a monopoly; I thought that was illegal...

[stevie b]

at&t sucks. they are the General Motors of the telecom business (I'm sure we'll be asked to bail them out soon). I'm sick of my iPhone experience being limited by such a crap network with such a lame dinosaur company behind it. The LEAST they could do is give us the subsidized price to make up for the fact that we won't get the features on time and their network is nothing more than string and tin cans....did I mention that I HATE AT&T????