[Infowarrior] - Customers Angered as iPhones Overload AT&T

[Richard Forno]

September 3, 2009
Customers Angered as iPhones Overload AT&T
By JENNA WORTHAM

http://www.nytimes.com/2009/09/03/technology/companies/03att.html?_r=1&pagewanted=print
Slim and sleek as it is, the iPhone is really the Hummer of cellphones.

It’s a data guzzler. Owners use them like minicomputers, which they  
are, and use them a lot. Not only do iPhone owners download  
applications, stream music and videos and browse the Web at higher  
rates than the average smartphone user, but the average iPhone owner  
can also use 10 times the network capacity used by the average  
smartphone user.

“They don’t even realize how much data they’re using,” said Gene  
Munster, a senior securities analyst with Piper Jaffray.

The result is dropped calls, spotty service, delayed text and voice  
messages and glacial download speeds as AT&T’s cellular network  
strains to meet the demand. Another result is outraged customers.

Cellphone owners using other carriers may gloat now, but the problems  
of AT&T and the iPhone portend their future. Other networks could be  
stressed as well as more sophisticated phones encouraging such intense  
use become popular, analysts say.

Taylor Sbicca, a 27-year-old systems administrator in San Francisco,  
checks his iPhone 10 to 15 times a day. But he is not making calls. He  
checks the scores of last night’s baseball game and updates his  
Twitter stream. He checks the local weather report to see if he needs  
a coat before heading out to dinner — then he picks a restaurant on  
Yelp and maps the quickest way to get there.

Or at least, he tries to.

“It’s so slow, it feels like I’m on a dial-up modem,” he said. Shazam,  
an application that identifies songs being played on the radio or TV,  
takes so long to load that the tune may be over by the time the app is  
ready to hear it. On numerous occasions, Mr. Sbicca says, he missed  
invitations to meet friends because his text messages had been delayed.

And picking up a cell signal in his apartment? “You hit the dial  
button and the phone just sits there, saying it’s connecting for 30  
seconds,” he said.

More than 20 million other smartphone users are on the AT&T network,  
but other phones do not drain the network the way the nine million  
iPhones users do. Indeed, that is why the howls of protest are more  
numerous in the dense urban areas with higher concentrations of iPhone  
owners.

“It’s almost worthless to try and get on 3G during peak times in those  
cities,” Mr. Munster said, referring to the 3G network. “When too many  
users get in the area, the call drops.” The problems seem particularly  
pronounced in New York and San Francisco, where Mr. Munster estimates  
AT&T’s network shoulders as much as 20 percent of all the iPhone users  
in the United States.

Owners of the iPhone 3GS, the newest model, “have probably increased  
their usage by about 100 percent,” said Chetan Sharma, an independent  
wireless analyst. “It’s faster so they are using it more on a daily  
basis.”

Mr. Sharma compares the problem to water flowing through a pipe. “It  
can only funnel so much at a given time,” he said. “It comes down to  
peak capacity loads, or spikes in data usage. That’s why you see these  
problems at conferences or in large cities with high concentration of  
iPhone users.”

When thousands of iPhone owners descended on Austin, Tex., in March  
during South by Southwest, an annual technology and music conference,  
attendees were unable to send text messages, check their e-mail or  
make calls until AT&T installed temporary cell sites to amplify the  
service.

AT&T’s right to be the exclusive carrier for iPhone in the United  
States has been a golden ticket for the wireless company. The average  
iPhone owner pays AT&T $2,000 during his two-year contract — roughly  
twice the amount of the average mobile phone customer.

But at the same time the iPhone has become an Achilles’ heel for the  
company.

“It’s been a challenging year for us,” said John Donovan, the chief  
technology officer of AT&T. “Overnight we’re seeing a radical shift in  
how people are using their phones,” he said. “There’s just no parallel  
for the demand.”

AT&T says that the majority of the nearly $18 billion it will spend  
this year on its networks will be diverted into upgrades and  
expansions to meet the surging demands on the 3G network. The company  
intends to erect an additional 2,100 cell towers to fill out patchy  
coverage, upgrade existing cell sites by adding fiber optic  
connectivity to deliver data faster and add other technology to  
provide stronger cell signals.

As fast as AT&T wants to go, many cities require lengthy filing  
processes to erect new cell towers. Even after towers are installed,  
it can take several months for software upgrades to begin operating at  
faster speeds.

The company has also delayed bandwidth-heavy features like multimedia  
messaging, or text messages containing pictures, audio or video. It is  
also postponing “tethering,” which allows the iPhone to share its  
Internet connection with a computer, a standard feature on many rival  
smartphones. AT&T says it has no intention of capping how much data  
iPhone owners use.

The upgrades are expected to be completed by next year and the company  
has said it is already seeing improvements.

But AT&T faces another cost — to its reputation. AT&T’s deal with  
Apple is said to expire as early as next year, at which point other  
carriers in the United States would be able to sell the popular Apple  
phones. Indeed, a recent survey by Pricegrabber.com found that 34  
percent of respondents pinpointed AT&T as the primary reason for not  
buying an iPhone.

“It’s a P.R. nightmare,” said Craig Moffett, a senior analyst with  
Sanford C. Bernstein & Company.

AT&T might be in the spotlight now, analysts say, but other carriers  
will face similar problems as they sell more smartphones, laptop cards  
and eventually tablets that encourage high data usage.

Globally, mobile data traffic is expected to double every year through  
2013, according to Cisco Systems, which makes network gear. “Whether  
an iPhone, a Storm or a Gphone, the world is changing.” Mr. Munster  
said. “We’re just starting to scratch the surface of these issues that  
AT&T is facing.”

In preparation for the next wave of smartphones and data demands, all  
the carriers are rushing to introduce the next-generation of wireless  
networks, called 4G.

Analysts expect that in a year or so, AT&T’s network will have  
improved significantly — but it may not be soon enough for some iPhone  
owners paying for the higher-priced data plans, like Mr. Sbicca, who  
says he plans to switch carriers as soon as the iPhone becomes  
available on other networks.

“What good is having all those applications if you don’t have the  
speed to run them?” he said. “It’s not exactly rocket science here.  
It’s pretty standard stuff to be able to make a phone call.”