- October 5, 2009
- Posted by: admin
- Category: Blog
The Apple iPhone has boosted AT&T’s subscriber numbers, but network problems and a bevy of complaints from frustrated customers are likely hurting the company’s reputation.
While a recent survey by the consulting firm CFI Group found that iPhone users are the most loyal smartphone users, with 90 percent saying they’d recommend the device to a friend, half of all iPhone owners surveyed said they would like to jump ship to another provider if given the chance. 
And for the first time, AT&T has scored worse than all four major U.S. wireless operators in terms of overall customer satisfaction for smartphones. According to the survey, AT&T scored 69 out of 100 among users, and 73 among non-iPhone owners. Verizon Wireless was the most satisfying carrier with a score or 79 out of 100 among smartphone users.
Public relations and brand experts warn that if AT&T doesn’t take steps now to correct its image that it could come back to haunt the company in the future. The main issue for customers is that many users, especially those in urban areas, report poor network coverage and service. Problems with AT&T’s 3G wireless have been widely reported on blogs, Twitter feeds, and even in published reports from BusinessWeek and The New York Times.
Customers all over the country have complained about dropped calls and the inability to connect to the 3G network. CNET News writer Elinor Mills documented her frustrating experience with her iPhone in a blog post recently.
AT&T has not admitted any problem with its network. When questioned about potential problems with the AT&T network being overburdened by iPhone users, Mark Siegel, an AT&T spokesman, reiterated the company line: “We have a strong, high-quality mobile broadband network. It is the nation’s fastest 3G network, now in 350 major metropolitan areas.”
Reference:http://edition.cnn.com/2009/TECH/10/02/iphone.att.service/index.html
If the issue reside at Core network then they should opt Starent Networks soon 🙂
AT&T has an unreliable network with spotty coverage. The iPhone is propping that up with a popular brand but the simple fact is that it has poor coverage. AT&T is acceptable in urban areas but really falls apart when you are outside of town.
Verizon, despite other problems, is the brand in the US for reliable network with consistently good coverage.
I think the question ought to be “Is AT&T hurting the iPhone brand?”.
People are frustrated with the iPhone because AT&Ts network cannot cope with the demand. I am not aware of problems to such an extent in Europe with the iPhone.
The problem certainly exists in urban areas too. Apparently something like 22% of calls are dropped in New York.
Fabrice has it right. And AT&T is hurting itself further by denying there are serious problems – a big mistake when dealing in crisis communications.
AT&T’s Brand has been hurt for years. As a matter of fact they have had to change their name from Bell South Mobility, to Cingular, to AT&T Mobile in an effort to make people forget their horrible customer service.
It is amazing that they are not at the bottom in customer service of all American Companies, not just cell carriers. In fact, it is my understanding that their iPhone related customer service is far superior to the service on their other products. They have a history of bait switch tactics, providing contracts that contradict with their sales pitch, and refusing to let people out of their contract even when it is legally completed. This can be confirmed by information in their customer service manual which has been posted on the web.
The real question is, “Is AT&T’s Brand hurting Apple,” who has always been known for some of the world’s most innovative products. Apple is constantly at the top of customer service, reliability, and owner loyalty with all of their products. How is it even conceivable that one of the world’s best companies can hurt the brand of one of the world’s worst?
It is interesting that 50% of iPhone owners would jump to another carrier if possible. I would like to see how many people are not purchasing the iPhone strictly because AT&T is the sole carrier. The good news for those people is AT&T’s exclusive contract with Apple will be over soon.
Links:
* http://consumerist.com/289663/
AT&T was anyway on a downward spiral.. and I believe it was iPhone that saved AT&T from going down the drain..
AT&T gives pathetic coverage, useless service and service charges are not reasonable either.. it was loosing its market share to T-Mobile, Verizon & Sprint, and not to forget that new players like Virgin Mobile and US Cellular also dented AT&T’s customer base.. it was the hype associated with iPhone that changed the world for AT&T..
I dont remember the exact stats, but I remember reading that more than 50% of iPhone customer were changing networks (i.e. were using non-AT&T service before buying iPhone).. that helped AT&T more than anyone else.. as far as image & market value is concerned..
also worth noticing is the fact that iPhone happens to be the ONLY phone under the AT&T umbrella that doesnt have AT&T written on it.. seems there was a big time tussle between the 2 companies regarding this, where finally AT&T agreed to Apple’s demand, as it was in best interest of AT&T to not let go iPhone..
so long story cut short.. iPhone did NOT hurt AT&T image any further.. basically AT&T doesnt have what it takes to be the largest service provider in N.America and it needs to decide upon a recovery plan sooner than later..
The iPhone hurting the AT&T brand, really?
I find this interesting. People feel so much emotion about a phone company that they would be holding out this long to get the iPhone.
AT&T went first, no other carrier has iPhone, so we can’t say Verizon, T-Mobile .. would be better more able to handle the demand. With any new technology issues/kinks are a given. The applications and capabilities require lots of bandwidth, I doubt any service will get it 100% –
AT&T has other issues as do all the carriers but, I don’t think the iPhone has hurt their brand and I’m pretty sure AT&T hasn’t hurt the Apple brand.
Ali,
I have to disagree with your premise.
Not that your numbers are incorrect, but that either they are asking the wrong questions, or that they misinterpreting the results.
AT&T and Apple are great partners because they are both large enough to meet each other’s requirements. The other carriers in the US don’t have the depth and strength of AT&T.
There’s also an issue with the misconception of what the issue is and how 3G is an issue.
First, the issue of ‘dropped calls’ has nothing to do with 3G, but that there are now a larger cluster of AT&T cell phone users within a specific cell at specific times which overloads what the cells can do. This means that AT&T has to either improve their peering agreements and/or add more cells as fast as they can based on their network usage.
Second AT&T offers a 2.5G that we call 3G in the US. The US carriers do not offer 3G like the other countries around the world.
Third, I think Apple and AT&T oversold the promise of 3G. If you’re on a congested network, you will not get close to the promise speeds of the 3G network and even under congestion their edge network is not going to work well.
The question that probably wasn’t asked, is if their pains are enough to get rid of their iPhone and switch networks, or wait until AT&T can fix the issues. Its a question of do they trust AT&T to resolve these problems.
Note that part of the iPhone is that it locks new customers in to AT&T because you can not unlock your iPhone or ‘jail break’ the iPhone. Note you can pay a premium for an unlocked phone, but you may not have 3G on your carrier’s network.
The iPhone is the game changer, and by locking it in, AT&T actually improved their brand. However with two advents (Android) and (Wi-Max/LTE) you have other game changes which forces AT&T to compete to keep Apple and their customer base.
Of course since Apple doesn’t offer LTE or Wi-Max, don’t bet on Apple moving or thinking of moving until there’s enough market penetration by either competing technology.
HTH
-Mike
No. AT&T has hurt themselves.
“Public relations and brand experts warn that if AT&T doesn’t take steps now to correct its image that it could come back to haunt the company in the future.” Please. If AT&T would fix their technology problems they wouldn’t have to worry about their ‘image’.
Many are like me and want an iPhone but will not buy until Verizon offers one. I’ve used AT&T service before and it is spotty at best regardless of what kind of phone you use, smartphone or not.
Ali,
Having just witnessed my daughter experience issues with her iPhone, I think some of the issue relates to the bouncing back and forth between both Apple and AT&T – it’s a hardware issue, it’s a network issue. Makes it easy for both sides to point the finger and pass the buck.
Ultimately the issue was resolved but it took multiple conversations with both sides and trips to retail locations of both.
Jeff
iPhone hurting Att
Clearly the only reason ATT is realizing a increase in suscribers is the iPhone only network option.
The frustration factor more hurts the iPhone because be it network congestion or not excuse, it hampers the use of the reason why they are on the network to begin with, the iPhone.
Personally I think all phones should be unlocked or not dependent to a particular carrier . The consumer should be able to carry their compatible phone GSM or CDMA of their choice and use it where they want to.
Separate the phone from the service and carriers will reflect the true value of their networks and service offering.
I’ve been a customer since the Cellular One days, when it cost $150 in installation fees to have the phone installed in the car. However….
1) I think ATT underestimated the popularity of the iPhone
2) I think ATT underestimated the load the iPhones would put on the network
3) Customer service has improved significantly for ATT over the past year or two. I’ve been able to talk to people after short waits and generally get competent help without requiring escalation
4) Apple customer service is superb.
I don’t know that any of the carriers could have estimated network load better. As newer phones roll out (e.g., Pre, Droid), the carriers will benefit from ATT’s experience.
My basic answer is that no one likes the phone company, the iPhone is way cool, so ATT probably inherits a bit of shine from the phone.
The whole thing is not without its flaws. Visual voice mail is buggy, the phone requires a reboot too often, and the unremovable/unreplaceable battery just smacks of Apple’s “our way or the highway” attitude.
A few notes from the 10/22/09 Wall Street Journal follow. This may be the classic “be careful what you wish for” scenario. Even if the Marketing folks said “we’re going to add MILLIONS of customers each quarter”, who’d have believed them?
Total wireless subscribership increased two million during the quarter to 81.6 million—a larger jump than in the first two quarters of the year. There were 3.2 million new activations of Apple Inc.’s iPhone, with about 40% of them from new AT&T wireless customers.
The company has been successful in winning subscribers away from its rivals because of its exclusive arrangement with Apple to the sell the iPhone, which is scheduled to end next year. AT&T has acknowledged some difficulty with handling the explosion of traffic on its wireless network, which has faced heavy usage by iPhone customers.
I am not sure if iPhone is hurting the AT&T brand or the other way around but this partnership is definitely affecting the AT&T network. Being an AT&T non-iPhone customer, I cannot wait to break from the shackles of my ATT contract. The service is pathetic in my home and office and I cannot function productively because I use my cell phone as my primary phone for work. The number of dropped calls is not even funny. The iPhone is great and I would love to try it but as long as it’s on the ATT network, I don’t think I’ll be tempted to buy it. Would rather go with an Android phone on a different network. I believe Android is the platform of the future and would be happy to go with T-Mobile and their Android phones.
As a technology marketer, I think this is an awesome question.
Both brands are suffering from the effect of “unanticipated consequences”. I’m sure AT&T did all the standard network checks to determine bandwidth utilization and all the market projections to determine usage by daypart and network drain…blah, blah, blah.
Three factors they couldn’t anticipate
1) The explosion of social media networks and the veracity with which these issues are debated in public by some very passionate/opinionated pis*ed-off people. That magnified the problem.
2) The explosion of applications and the APPSTORE. The iPhone has created an enormous cottage industry that has attracted every weekend application developer to “get rich quick” with a new app and the promise of a million downloads.
3) The latent or untapped desire of every consumer to use data-centric apps to live a real mobile life – for the first time. iPhone enables you to simultaneously check your location, pick a restaurant, take a photo, check sports scores, read all your various email accounts whilst calling your girlfriend long-distance. At least if i believe the advertising 🙂 That ability has been like giving heroin to junkies, once you’ve had it, you aint turning that off.
Personally I think this will go down as a classic marketing case study that HBR or Kellogg students will debate for ages.
Thanks for posting this.
This is a high class problem. At this time in the market – it is all about grabbing share. AT&T is growing share in a hyper competitive market.
The iPhone enables that growth. Does this create issues on the network side – sure – but maybe Apple should adopt the same thing the Android Store does which is rank apps based on which ones are poorly written and will be inherently slow.
Also, AT&T is at its heart a Telecom company. They will fix this, you know they will – but may everyone enjoy the problems that come with the hyper growth in smart phones that AT&T has enabled in the US.
I don’t think the question is whether the iPhone is hurting AT&T’s brand, but whether the iPhone has outgrown its single carrier sales model. The widely reported problems with the iPhone on AT&T’s network is not wholly intrinsic to AT&T. As an Apple product, the iPhone naturally attracts significant media coverage any time there is an issue. In a market like the US, the volume of both users and media outlets has led to a degree of user testing and media attention that is too great for a single carrier to address. The iPhone as a device as several network issues (problems in handoff between edge and HSPA being a major concern) as well as a great degree of secrecy surrounding testing that leads to incomplete test scenarios. As a result, I believe it is AT&T’s exclusive arrangement with the iPhone that is hurting its brand, not the phone itself.
By releasing its exclusive contract with Apple and allowing another carrier in the US to carry the device (as Rogers in Canada and carriers in some European markets have done), AT&T can retain its flagship device while offloading some of the negative media focus on another carrier.
I don’t think the iPhone has hurt AT&T’s brand. Ma Bell has done that all on her own for the past 100+ years. I still have a hat with a patch on it that says “Ma Bell is a Cheap Mother” along with a cracked bell…
I have AT&T for my Blackberry – it works at least as well as the TMobile Service I used to have. My wife has an iPhone, it works well. It dropped some calls, but that was the iPhone software’s problem, not AT&T.
The carrier doesn’t matter – they all have issues, they’re all great, they all suck, one’s too expensive, one’s cheap but the customer service stinks, one has lousy coverage, one has good coverage and so on.
Fact is, no matter where you go, some are good, some are bad. It’s a RADIO signal, so you’re bound to have a problem when a butterfly floats by 🙂
What Apple DOES need to do is to stop the exclusivity. Let anyone on any network use the iPhone.
I do think that ALL CARRIERS should be required to be 100% open and transparent about the complaints and issues they have in their network, and how much capacity is being used. They shouldn’t be allowed to run over 80% capacity. When they hit that magic number, they should be required to either a) Add capacity, b) Stop adding new subscribers until they do add more capacity. There’s no way to compare one to the other because you don’t have any real data…
I’d have to agree with the main concensus that AT&T is hurting the iPhone brand.
If google can come up with a phone that will realistically compete with the iPhone for Verizon or if the iPhone is made available to Verizon through court AT&T would face going out of the wireless business or in business in general. The fact that they are clueless and more disagree they have problems is a huge insight to their true problems…manaagement of the company.
If iPhone doesn’t change its attitude of one carrier it could end up shooting itself in the foot, at least on a short term bases once things hit the fan with new developements.
I do not believe AT&T is hurting their business by offering an exclusive on the iPhone, where there ARE hurting their business is limiting the other smart devices they are putting in their lineup so as not to compete with the iPhone. It has been quite some time since AT&T came out with another killer device to add to their stock of devices. They are too worried that it will eat into the iPhone business. However, other carriers are now offering Android based phones and I believe that AT&T’s market share will be impacted unless they open up to more smart devices.
It seems to be perhaps, the otherway around. I’m holding off buying an iPhone until it works with networks like Verizon. It’s a logisitical need for me.
But I’ve talked to several people who regret getting iPhones because of problems with AT&T and are getting both other phones and other vendors.
As an Apple shareholder, it’s my hope that once the current agreement with AT&T expires, multiple vendors will be able to work with iPhones.
When that happens, I’ll be first in line.
It was with a bit of trepidation that I added the Kindle to my shopping cart. You see, I’m a book worm. I was not sure if an electronic device could replace traditional books in my heart. Twenty four hours into my kindle ownership… I think the Kindle just might.
The device itself is a gem of a piece of technology. I’m also a computer programmer and can appreciate the compact design, the low-power consumption, the innovative display, etc. That is NOT however what won me over. In fact just the opposite — my favorite part was that I forgot I was reading on the Kindle a few pages into my novel. The Kindle in fact just became a regular book in my hands.
Also, to answer a couple of critical reviews I saw — you can definitely load your own ebooks on there. I encourage you all to check out Project Gutenberg — loads of classics that are no longer in print. Classic authors like Dickens, Austen, Twain, Shakespeare are all yours for free. Treat yourself to some of the best novels of yesteryear!