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Wow. Wired report says Apple knew in 2007 that AT&T couldn't support iPhone features yet didn't warn customers

By | July 20, 2010, 6:22pm PDT

Summary: Wired reports that Apple was warned by AT&T that it couldn’t support the iPhone features advertised but Apple refused moderate changes…

Wired has a story about the “showdown” between AT&T and Apple over network issues.

Fred Vogelstein reports:Bad Connection: Inside the iPhone Network Meltdown | Magazine

Almost as soon as the first iPhone was introduced in 2007, the carrier realized it might run short of bandwidth. Within just a few months, the first wave of iPhone customers was already sucking down about 15 times more data than the average smartphone customer and 50 percent more than AT&T had itself projected.

In a bid to avert the looming problem, a team headed by senior vice president Kris Rinne met with Apple to ask for help.

…would Apple take measures to help throttle back the traffic? Perhaps Apple could restrict its YouTube app to run only over Wi-Fi. Maybe the iPhone could feature a smaller, lower-resolution videostream or cut off YouTube videos after one minute.

… It didn’t make sense to build phones and offer features that carriers couldn’t support.

But in meetings with Apple engineers and marketers over the subsequent year, Rinne and other AT&T executives discovered that Apple … wasn’t interested in cooperating, especially if it meant hobbling what had quickly become its marquee product.

…says someone from Apple who was in the meetings. “We consistently said ‘No, we are not going to mess up the consumer experience on the iPhone to make your network tenable.’

They’d always end up saying, ‘We’re going to have to escalate this to senior AT&T executives,’ and we always said, ‘Fine, we’ll escalate it to Steve and see who wins.’ I think history has demonstrated how that turned out.”

Just as Rinne and her colleagues predicted, AT&T’s network proved unable to cope with the deluge of data traffic generated by the iPhone, particularly in cities like San Francisco and New York.

I don’t get it.

This is a story about Apple heroically standing up to AT&T yet the result is an iPhone that can’t deliver on the services advertised by Apple.

How is this a victory for Apple? AT&T said it can’t support the services. Yet Apple refused to tell its customers that they would face problems on the AT&T network.

Sure enough, the network couldn’t cope but it was AT&T that received the blame — not Apple. Wired says that the Twitter hashtag #ATTFail was used 5,000 times over 6 months.

If you watched any of the millions of ads that Apple aired over the past three years you only got to see the AT&T logo for a micro-second at the very end. It was always Apple that was touting the services — not AT&T.

Apple is clearly to blame here since it sold a product that couldn’t work as advertised even though it was warned by AT&T! But Apple refused to back down on its advertising.

I can see why Apple refused. Once the phone is sold Apple had its money from the customerplus a $200 bounty from AT&T for every new subscriber. AT&T was then left holding the bag trying to support Apple’s advertising — which Apple knew couldn’t be fulfilled. Apple point-blank refused modest changes such as limiting YouTube videos.

There are no winners here but only losers: the iPhone customers who were wowed by Steve Jobs’ master salesman act and bought a product that failed as a phone and as a mobile data device.

(I have had an iPhone since day one. It’s a fantastic device except for the phone part and the “i” part.)


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Tom Foremski reports on the business and culture of Silicon Valley at the intersection of technology and media.

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Tom Foremski

Tom Foremski is the editor and publisher of Silicon Valley Watcher and Silicon Valley Watch. Tibco Software is an advertiser.

Biography

Tom Foremski

In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to make a living as a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley.

Tom arrived in San Francisco in 1984, and has covered US technology markets for leading computer journals around the world.

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RE: Wow. Wired report shows Apple knowingly engaged in false iPhone advertising
JACOBSONR 14th Oct
Good day to confirm this comment I would appreciate T h e b e s t o f Z D N e t d e l i v e r e d your website very nice to everyone Yes, Oracle is the only one with shared-disk architecture, but that is there advantage. It means you can add or remove nodes and the database lives on. In a shared nothing architecture, if you lose a node, you lose the system. I'm sure Oracle appreciates EMC highlighting their advantage.I also desire to signal in your RSS feeds. Thank you as soon as once again and maintain up the great operate Awesome post! Thank you very much || thanks for nice content this is really benefit to me.
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Can Apple be sued for this?
Uralbas 20th Jul 2010
A lawyer would probably answer this correctly. If it is possible many would probably sign up. That would bring some justice to Apple's predatory practices.
@Uralbas Clearly ATT is the one marketing its coverage and capabilities, not Apple. No question the Iphone has been widely accepted and in high demand by the American consumer despite the well publicized deficiencies associated with ATT. Apple provides Phone, ATT provides service and I have no doubt that is what the contract between the two provides. Apple has provided a Phone that works in accordance with the contract, ATT has not provided service in all areas to the satisfaction of some consumers. The article should be critical of ATT's knowledge and failure to warn its consumers, not spinning this as an Apple misrepresentation. Why didn't ATT let Apple out its contract, why didn't ATT tell consumers its system is sub par when they buy the Iphone-or any other.

Apple is secretive and maybe arrogant relative to antenna gate and some of its practices, but the deficiencies of ATT are not Apples. This is not an example for a predatory practice of apple.
@speeb

No, this really is both Apple's and AT&T's fault. AT&T won't, possibly even couldn't drop it's biggest cash cow. Apple won't let AT&T limit the phone. Which is fair enough, before the iPhone, data used for phones was in the area of megabytes a month. Now it's in gigabytes. From single digits to triple digits, one phone and one carrier have driven the industry. But it was too soon, the network wasn't ready for it and both of them knew it, only one was willing to try deal with it.

Apple is at fault for not limiting their phone, if AT&T can prove in court that they tried to limit the phone, it really is all on Apple.
@kenosha7777
Your post have been very helpful! replica hermes
False advertising and deception from Apple are like the sun rising in the east.
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Gee - Not Apple!
jpr75_z 20th Jul 2010
This is no surprise. And though Apple is in the spotlight lately for being the greedy, thoughtless, arrogant corporate pig, they are no different from their competition. Well.. maybe they do take the prize for arrogance and self importance.
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You've never heard of Larry Ellison, have you?
matthew_maurice 20th Jul 2010
@jpr75_z
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Wow, could you be any more provincial? I am very happy with my iPhone, and all it's features work very well, thank you very much. I can't speak to the problems in New York City or the Bay Area because I don't live there, but neither do 95% of Americans. Not to mention all the people in other countries that you are apparently not aware of, where wireless networks tend to be better. But I guess the rest of us should have to suffer with crippled phones because a bunch of nuts who don't want any cell towers to be built in their city can't get good service.
@lumpy_blumpkin

"Not to mention all the people in other countries that you are apparently not aware of, where wireless networks tend to be better."

Come to Australia then, where all the carriers are somehow bad.

Telstra, the main carrier, have the best network both speed and coverage wise (it's 850MHz HSPA like AT&T's and they have somehow managed to not botch it on the scale AT&T apparently have), but they charge you an arm and a leg for access to it.

Then you have Optus and it's subsidiary Virgin, who have some of the best prices, but as a convenient side effect have one of the worst HSPA networks in the country because it's so congested. Some nights in many areas you're lucky to get faster than dialup internet speeds (over HSPA, mind you). You're even luckier if you can avoid internet dropouts.

Vodafone is also a cheaper network, but their network too is congested as hell. I can't tell you much more beyond that as they're the only carrier I've not personally experienced.

Then there's 3, who have recently begun a Merger with Vodafone. Usually they're good, but they virtually no coverage outside of the metropolitan areas (Sydney, Melbourne, etc.)

So, your choices in Australia are Expensive and Fast, Cheap and Slow, Cheap and Slow with the benefit of native European Roaming, or Middle of the Road and Virtually No Coverage.
@douglasac10

I'm with 3, have been for a few years and will be for another one.

They used to be pretty good, cheap, fast. But now they're not so cheap, can be fairly underhanded in the way they do their deals, and have an annoying habit of switching you to roaming in the middle of capital cities. Melbourne is my main.

This is weird, but a Motorola Razr V3 with Telstra has been the best phone so far. Other phones have better antennas with more memory and faster processor, but coverage is nowhere near the level of that phone.

Telstra really is king of Aus.
Apple did it again when they rushed to release iOS 4 and enticed iPhone 3G owners to update although they knew the problems of slow down, crashes, etc would be prevalent, all to meet Job's artificial deadline. I think the trouble caused to iPhone 3G users is as bad as the knowingly inferior antena design.
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Don't you have better things to do, like maybe defragging and scanning for malware.

Give us a freaking break. oh wait... it's ZDNET, I forgot.
Apple competes with design and not function. Who cares if it works well. It looks cool and tells the world that you can afford to own it. Users have voted with their wallets.
Your title seems disingenuous at best; false at worst.

[WOW - Kinda got into a rant below. Have worked with computers since 1979. Have owned and provided tech support for Apples, MACs and PCs. Exclusively PC owner (while supporting MACs at work) since about 1987, until 9 months ago when I bought a 3rd Gen iTouch (32GB). Have had a Sprint MiFi Card for almost 3 years, which I use as an active trader when away from home. As a sales manager for 13 years who flew almost 5 million miles, I have also had much first-hand experience with the world of telecommunications.]

We are missing the background story above. I am not a fanboy, but let's remember how poorly AT&T wireless was doing in 2005-2007, how much churn and how poorly their network was regarded. Many were STUNNED when Apple selected them as the only carrier for the iPhone. There must have been some major incentives thrown at Apple to get them to commit to a three to five year exclusive deal. I bet in addition to monetary incentives for Apple, ATT&T made promises regarding network performance.

Then, a year or more after the contracts are signed, one of the partners comes looking for a handout. The AT&T suggestions in your story show naivete or disregard for the customer experience on the part of AT&T. Considering how many years you have dealt with, or heard about AT&T, which do you think it was? Yeah, me too:, "customer experience be damned." But Apple is MAINLY about the customer experience, thus the impasse.

Remember, many of these are/were still the same executives who rode the TDMA (time division multiple access) cellular network long past its prime. They probably agreed to network performance benchmarks on a wing and a prayer. Or worse, maybe it was not even in writing. AT&T was the NETWORK provider, and Apple was the telephone supplier, like Rim, Palm or Nokia. Think of asking Rim to disable some of the BlackBerry features. Ludicrous. So please do not demonize Apple (again I am NOT a FANBOY - I liked Woz and Open Architecture, not Jobs and Closed). Apple provided the appliance, and it was up to AT&T to provide the bandwidth. Of course Apple said no dice to crippling the customer experience. The appliance could do all the things they advertised - just not where (even now) the AT&T network sucks.

I would like to have an iPhone. I decided I wanted one when I saw my 17 month old grandson scoot across the floor to grab his mother's iPhone and shake it to hear the choo choo sounds. The look of joy on his face was priceless. However, I knew I would suffer an aneurysm if I had to deal with AT&T again, so knowing how well MiFi worked, and seeing Skype was available on the Touch, I bought that instead. What a delight. I'll just bet that in a year or two, when the iPhone is no longer exclusive, AT&T will suffer a mass exodus to whomever the carrier is that has promised Apple heavy incentives to be the next exclusive carrier. Please let it be Verizon! I HOPE it is NOT Sprint.

Final thought: I wonder is there enough of the old guard left at AT&T that ... no - Do senior execs at AT&T still think they are THE telephone company?
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Well said!
zkiwi 20th Jul 2010
Far more rational and far far more thought out that the Wired "shock horror" story and standard zdnet rant without thinking.
@Geek10 --- Too bad there are not more rational people, looking at the total picture as you are doing...
Well Said !
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Great Context; More Would Help
WaltFrench@... 21st Jul 2010
@Geek10 said, ?Think of asking Rim to disable some of the BlackBerry features. Ludicrous.?

Thank you for the back-story; I think it's highly relevant. So I was with your post right up until this. Unfortunately, the reason it's ludicrous is that AT&T wouldn't ask RIM, they would tell them.

The phone manufacturers have long had to go thru the carriers for every little feature, including how prominent the carrier logo is. How the phone will transmit photos thru Verizon's metered mechanisms?only. Obviously, the hardware guys want to throw in all the bells and whistles; that's how they build their brand and boost margins. Unfortunately, that's at odds with the carriers' desire to create artificial scarcity that they can charge top dollar for.

And of course, Apple DID approach Verizon first, and their ?we'll design the phone; you provide the net? approach got them tossed out. I've been told that the Verizon people who nixed the deal have been fired, but it was for following the corporate policy too tightly.

@Geek10 also said, ??disingenuous at best; false at worst.?
Tom, did you consider, when you suggested the headline to your editor, whether the as-yet-totally-secret contract between AT&T and Apple had an explicit non-disparagement clause? As in, Apple would not say bad things about AT&T's network and vice-versa. Right. Didn't think so.

I guess we'll see every ZDNet page with a big red CAUTION!!! Opinions expressed here may not make any sense. May take partial factoids and blow them out of proportion without checking with ANY source. Your universe may vary.
@Geek10

I made the same point above, but..

No network was ready for the iPhone. Apple shouldn't have even tried getting unlimited plans out of AT&T, who shouldn't have let Apple on their networks.

It's just that sort of phone, industry defining but absolutely terrible till the industry stablilises and standardises.
@Geek10

I do have to agree with the poster below, RIM with their BB's and Storms don't need to disable features. They don't put a major drain on the network, the iPhone however is designed around the internet. Bad idea for when transferring a few kb was a big deal over a mobile internet connection.
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Wow, you really don't get it.
Falkirk 20th Jul 2010
"I don?t get it."

Truer words were never spake.

There's no false advertising here. (And yes, I am a lawyer, but so what? Doesn't mean I know every facet of the law.) "Apple is clearly to blame here since it sold a product that couldn?t work as advertised even though it was warned by AT&T!" No, they're not "clearly to blame" and no, Apple didn't sell a "product that couldn't work as advertised". For proof, let's turn to exhibit "A" - the rest of the world. Are any of the other Apple carrier's exhibiting the incompetence that AT&T is? Isn't Apple delivering exactly what they promised over there?

And how about in the U.S? Apple is doing exactly what they said they'd do. Selling a phone, an iPod and ?an internet communicator? that drew on an unlimited AT&T data plan. Its AT&T, and only AT&T, that isn't holding up its end of the bargain.

If AT&T, had it?s way we?d be watching one minute long YouTube videos on WiFi only, and no tethering or MMS until a year after it was available. Oh wait, those last two things really happened. And they really happened only on AT&T - not on any other worldwide carrier associated with the iPhone.

Perhaps Apple should be engaged in a more cooperative relationship with AT&T. But there?s no false advertising going on here. Apple is talking the talk and walking the walk. And AT&T has Apple?s footprints all over their back because they didn?t believe that when Apple said ?unlimited data? they meant ?unlimited data?.
@Falkirk

I'm in Aus, and here we have 250MB data plans for the iPhone. 1GB for some carriers, but it'll cost you.

AT&T give you how much?

Other iPhone carriers won't give you unlimited data, and neither should AT&T.
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Wow, indeed
paferg 20th Jul 2010
Do you guys just sit around over at ZDNet HQ pulling your hair out, thinking about what else you can possibly say to bash Apple today, given that you've said it all again and again and Apple is selling more than ever?

This article is a complete waste of bits and time. The iPhone does and always has worked fine as a phone, and as a data device. Does it have problems? Sure, but so does every other smartphone (I mean, in the real world, not the imaginary one many Android devotees live in, where merely publishing a barely-working beta version of a feature counts as blinding innovation). Lame-ass jokes and unsupportable innuendo aside, the iPhone works great for virtually everyone who has one. Despite its problems, AT&T's network has not gone down in flames, and AT&T has profited handsomely from its arrangement with Apple.

Setting aside your opinion about whether limiting video streaming is a "modest" change: if Apple actually had limited video streaming, you guys would have chalked that up next to cut and paste and MMS as another reason why the first iPhone sucked. Apple can do no right to you guys, and yet you're astonished when the world doesn't abandon Apple products as a result of your silly rants.

Oh, but you did it on the head when you said "There are no winners here but only losers" -- I think that every time I read the blogs here at trusty ZDNet.
@paferg

They've bashed MSFT for years, it's Apples turn. :P

It's not AT&T's financial gain now which is the issue, it's when Apple's contract expires with AT&T. What happens then? That's the main question here.

Apple has emerged virtually unscathed, as per usual, with AT&T copping most of the flack. But Android, released not that long ago, is already outselling the iPhone. So Apple have lost some reputation points with their customers. What happens when people's contracts start expiring and they can ditch their phone? Will they?

2 years ago we would have said no way in virtual hell. Now? It's an entirely different story and completely up for grabs at this point in time.
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It's AT&T's fault.
taylor@... Updated - 20th Jul 2010
AT&T could have eradicated the unlimited data plan early on just as it did this year prior to the iPhone 4 for that very reason. They saw background streaming and freaked. But instead AT&T forced people on to unlimited data plans that they didn't want or need. After all it was only 3% of the iPhone users that were sucking down all of this data (AT&T's words.) No, this is a story of AT&T greed and AT&T marketing. Apple delivering a gangbuster product that brought AT&T MILLIONS of new customers is not to blame.
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Another bad article from ZDNet?
karlospam 21st Jul 2010
When YouTube on my laptop pauses to load more data at the Internet peak (8pm) I don't blame my computer, I don't blame my OS, I don't blame YouTube, I know it is my ISP network overloading.
But not ZDNet; ZDNet would blame your laptop manufacturer because they knew that the network would not hold up and that YouTube would pause every 30s; they knew! and they did not tell you! they did not force YouTube to quit after 30s! they did not force your to watch YouTube on QCIF format!
Same for Game Publishers: how dare they sell you games that require a short lag time, then they know the network will fail. They should force people to play pong!

But it has become fashion to blame Apple so let's blame Apple.
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Just like ANY marriage...
Wolfie2K3 21st Jul 2010
@karlospam
...It takes TWO to tango.

On the one hand, AT&T severely underestimated the 'worst case' in the worst case scenario when it came to the network load.

On the other hand, Apple should have known that Apple's network sucked and had issues. It wasn't as developed as it could have been from day 1...

So... What have we learned? Epic iFAIL on BOTH Apple and AT&T. Apple for not checking out their partner's network capabilities independently before they put pen to contract. And to AT&T for knowing their network sucked eggs and signing a contract knowing they couldn't deliver enough bandwidth to go around.

Like it or not, Apple had other options. They chose NOT to exercise any of them.
@Wolfie2K3 Like it or not, Apple had other options. Like T-Mobile who's service is worse than AT&T's (at least in my neck of the woods), Verizon who initially rejected the iPhone, or Sprint who likes to tack on unwarranted and unauthorized charges on one's account that takes MONTHS to get straight? I can't say for certain if Jobs went to Sprint or T-Mobile but it is known that he initially went to VZW first and they rejected it. AT&T ran with it and has been doing well (in my experience) with it ever since. From my point of view neither one is an epic fail... just as from my point of view this article is entirely worthless click bait...
@Wolfie2K3

No, NO NETWORK AT THE TIME WAS READY FOR THE iPHONE!!

We're talking kb of data transferred, not MB. AT&T customers are going through GB of data a month, the iPhone is designed around the internet. It was much too soon for that phone to be unleashed, and Apple knew that.
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Why do you still own an iPhone?
JC123456789 21st Jul 2010
The way I see it, AT&T is at fault because they underestimated demand. They had clearly expected an increase in usage, they miscalculated and then expected apple to cripple their product to accommodate their screwup.

This blog post is stupid.
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Rehashed OTHER people's articles
iPhoned 21st Jul 2010
WHY do allegedly reputable sites/sites of publications RECYCLE other sites stories? Come up with something original for a change. The world already has AP and Reuters if you don't have idiots of your own to write an extended headline and call it an article
Wow. Yet another ZDNet "click bait" article using the word Apple and having something negative about them in the headline. Imagine that.
Article's point is ridiculous. Phone producers make phones/PDAs that can do what they say. ATT sells them and says they can do what the say. ATT knows they have network problems and seek more customers for their service adding to the apparent capacity issues in areas their capacity is already stretched.

All cell phones sold through ATT to its customers have problems in ATT's problem areas. Is the author suggesting the other phone manufacturers should put a warning on their devices or market them with *** depending on which carrier buys and resells them to the ultimate consumer? What a putz, write an article that makes sense.
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Apple
Cyberjester 27th Jul 2010
The only company with a fan club instead of a customer base.

Why Apple is so big, because they can do no wrong.
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