AT&T iPhone Whining Could Doom Exclusivity Deal

AT&T charges iPhone customers a flat rate of $30 per month for unlimited wireless data. But at a conference in New York Wednesday, Ralph de la Vega, chief executive of AT&T Mobility, said the carrier is looking at changing this in order to address service problems in dense areas of iPhone usage like San Francisco and Manhattan.

But tiered pricing isn't coming right away: AT&T first plans to "educate" customers about the amount of bandwidth they're using, apparently believing that customers will use less wireless data if they're aware of how much it costs AT&T to provide it. But given the iPhone's bandwidth intensive features, and Apple's burgeoning App Store catalog, this line of reasoning could hardly be more unrealistic.

The iPhone now does everything but tell you temperature and wind speed when holding the device up during a thunderstorm, and that capability probably isn't far off. And with Apple's introduction of video with the iPhone 3GS, and new streaming video apps arriving on the App Store each week, customers are going to be using more video and consuming more bandwidth.

As they do, AT&T's foot dragging on upgrading its network will only become more obvious. At Apple's Worldwide Developer Conference in June, executives were put in the awkward position of having to inform the audience that new iPhone 3GS features like wireless tethering and multimedia messaging wouldn't be available at launch.

Afterward, AT&T finally acknowledged this and said it would support both features by year's end. Apple has defended its carrier partner on numerous occasions, and claims to be satisfied with the partnership, but how much longer will Apple be willing to tiptoe around the issue?

Meanwhile, Verizon has to be looking at the situation like a chess match contestant who's just been granted three or four consecutive unanswered moves. Verizon already had a gift fall into its lap earlier this month when Consumer Reports ranked it first among U.S. carriers in wireless customer satisfaction, AT&T, meanwhile, was ranked dead last among the four major carriers.

But Verizon had already identified AT&T as the best angle from which to attack the iPhone. Despite the iPhone's wild popularity, Verizon has been making the case that the iPhone isn't all that it's cracked up to be. Verizon's marketing for its Droid smartphone hammers home the device's comprehensive feature set with the mantra 'Droid Does.' But there's not a whole lot the iPhone can't do -- its chief limitation is AT&T's subpar service.

Although carriers have been complaining about bandwidth consumption for years, AT&T's stated plan to "educate" customers on wireless data usage sounds ominous. And when a company starts blaming its customers, you can almost smell the desperation in the air.

In AT&T's case, executives have said losing iPhone exclusivity won't negatively impact its business, but if Apple lets other carriers sell the iPhone it's hard to imagine that the carrier won't lose a significant chunk of customers.