AT&T and the Curse of the iPhone

December 30, 2009 at 5:17 pm 2 comments

The iPhone: AT&T's treasure or curse?

If the title of this post sounds like an Indiana Jones sequel, there’s a reason. As everybody learned at the climax of “Raiders of the Lost Ark,” treasures come with a catch. Such is the case with AT&T and its exclusive offering, the iPhone. Landing the king of the smart phones and co-opting the luster of Apple is creating a mounting PR headache for the brand that used to be the largest company in the world and America’s unchallenged provider of telephone service. 

The media are rife with reports that AT&T’s network is groaning under the intense demands of iPhone usage. Dropped calls and sluggish data speeds are all-too-frequent complaints, especially in dense, urban locations such as San Francisco and New York City. AT&T’s abrupt cancellation of online sales of iPhones in NYC sparked a new round of bad press and conspiracy theories that the company was modulating demand on its infrastructure by limiting iPhone availability just in time for Christmas. 

Other hamfisted actions have battered AT&Ts public image, including: 

  • A vague comment by company president Ralph De la Vega turning into rumors of a tiered pricing program to make iPhone power users pay extra for their bandwidth consumption.
  • A lawsuit against Verizon for its commercials playing up AT&Ts patchy 3G coverage with a colored American map that invokes Bush v. Gore 2000.

AT&T is now officially denying the launch of a tiered pricing plan but is planning “incentives” for lighter iPhone use (reminiscent of incentives to pay farmers for not growing crops). As for other denials, a judge denied AT&Ts attempts to stop Verizon’s “map” ads, precipitating AT&T’s abandonment of its suit. Verizon may be upset; the suit amplified their ads and cast AT&T as litigious crybabies…with crummy coverage. (see my previous post about the attack ad/lawsuit cycle, “More Lawsuits than Brand X!”) 

AT&T can’t even catch a break as they ask customers to pinpoint dead zones with their “Mark the Spot” app. Some critics have called the program a “public relations gimmick” despite its interactivity and tacit admission that service could be better. 

Don’t take it from me or anyone else in the blogosphere that AT&T has a problem. According to Consumer Reports, AT&T ranks last in mobile phone customer satisfaction. Customers are mad enough to have mounted “Operation Chokehold,” a deliberate attempt to overload the AT&T network in protest. 

AT&T is in the midst of a PR debacle similar to the Jet Blue collapse that left travellers trapped inside terminals and grounded planes during winter storms. Perhaps AT&T doesn’t need the self-flagellation of Domino’s “Pizza Turnaround” campaign, but they do need a new level of clarity and candor. And they need to hurry. In the most dangerous and persistent rumor of all, Apple will share the iPhone with Verizon in 2010.


Entry filed under: Crisis Communications, Public Relations. Tags: , , , , , .

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2 Comments Add your own

  • 1. Dan Rice  |  December 30, 2009 at 6:59 pm

    I’m glad you mentioned the iPhone-to-Verizon rumors. I’m of the belief that no network could have withstood the built-in rabid user-base Apple brings to the table. AT&T failed to take into account the number of people who would gladly drop $175 on an early termination fee with a competing carrier to have another Apple branded device (to go along with their iMac, MacBook, Apple TV, and iPod). With AT&T claiming a 5,000% increase in data use due to iPhones, I can’t see Verizon, Sprint or T-Mobile weathering that storm.

    AT&T’s reputation could actually be helped by Verizon’s iPhone, as all that data traffic would be offloaded to a competitor’s network, freeing up resources of their own. The question will be, can Verizon anticipate the demand for the iPhone on their network and avoid AT&T’s fate?

    • 2. jasonkarpf  |  December 30, 2009 at 7:40 pm

      No question that AT&T took the plunge without realizing all the consequences–but then who would have? Any other carrier that gets the iPhone (I don’t think it will stay exclusive forever) will experience its version of AT&T woes. One more factor at that point–price wars, as carriers will have to squeeze margins while adding features and improving service to woo iPhone users away from each other.


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