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AT&T Mobility, for Better and for Worse

By Jeff Kagan
Feb 16, 2012 5:00 AM PT

This week I'll share my perspective on what AT&T Mobility is doing so right and so wrong. My Pick of the Week is some good news from Alcatel-Lucent -- finally -- and a problem that Ericsson is trying to understand.

AT&T Mobility, for Better and for Worse

Every day, I get calls from reporters looking for comments on stories it are writing about AT&T. I'm sometimes asked whether I love or hate AT&T. After giving that question some thought, let me set the record straight: a little of both.

I have been a fan of AT&T for many years -- in fact, even before it was AT&T. I am talking about SBC, BellSouth and Cingular. However, that does not mean it does everything right. During the smartphone explosion of the last few years, AT&T Mobility has done quite a bit right but has also had its challenges.

The Apple iPhone and other smartphones played a big part in AT&T's successes and problems in recent years. When Apple decided to expand and open its doors to Verizon Wireless, Sprint Nextel and C Spire, I expected the pressure to be taken off of AT&T so quality would improve -- but I expected that it would be hurt as well. It has held up pretty darn well so far.

David Christopher, AT&T Mobility chief marketing officer, says many predicted it would suffer. However, one year after Verizon got the iPhone, and several months after Sprint and C Spire began offering it, AT&T is still outselling everyone. Kudos, David.

These are the numbers. During the fourth quarter of 2011, AT&T sold 7.6 million iPhones. Verizon sold 4.3 million, and Sprint sold 1.8 million. Looking at those numbers, you can see AT&T is doing well.

Why? The answer is simple. It's all about the brand, handset selection and connectivity.

Building the brand takes years of good, hard work. AT&T has worked hard to build the brand. Of course, tearing it down can happen in an instant -- and AT&T has done its fair share of damaging its own brand as well.

One thing I have always been confused about is why AT&T keeps shooting itself in the foot. This is a problem it could solve, easily -- but it has not done so over the years.

Prepaid Lower on AT&T's Totem Pole

I just heard a startling story from a neighbor who was a happy prepaid AT&T Mobility customer until recently. Apparently AT&T does something unfair to its prepaid customers. To make matters worse, it's secretive about it.

As you know, there are postpaid and prepaid services. This neighbor has a friend who lives nearby who is also an AT&T Mobility customer. They both upgraded their phones to the iPhone.

The only difference is one is prepaid and the other is postpaid. You would think the experience would be the same, right? It's not.

The prepaid customer has experienced a serious data speed slowdown. The postpaid customer hasn't.

AT&T is giving a preference to one customer type over another. While this may not be illegal, it is wrong. Not disclosing the practice to customers is another problem.

AT&T should be honest with its customers. Not being honest creates anger and distrust. This tears down the value of its brand and damages relationships with customers.

So AT&T has shot itself in the brand-foot once again. Ouch.

Choosing the Best Network for You

Choosing the best wireless network for you simply means finding the best connection wherever you spend time. That is the most important point, period. Without a good connection, your wireless phone is just a paperweight.

Like you, I have read countless stories over the years about quality problems with AT&T Mobility. They tend to create a sour image of the company. I have to say much of this is earned. Even Consumer Reports says it has the worst quality of all major carriers in the United States.

However, while that may all be true, I don't think it really matters as much as you would think. If AT&T is so bad, why is it continuing to be in the No. 1 or 2 spot, competing with Verizon Wireless, year after year?

Connectivity is the No. 1 most important key -- and AT&T has connectivity.

As a tech analyst and consultant over the last 25 years, I have followed and worked with just about all the companies in the wireless space. I have used phones from them all and compare them wherever I go.

Over years of using wireless devices and networks, I've discovered they all have different strengths and weaknesses. I have determined that the first reason people choose AT&T is connectivity. It provides its customers with better connections in the places where they spend most of their time.

The best carrier isn't the same for everyone. You are the only one who can test this for yourself. Don't listen to all the marketing and advertising. You have to decide if there are strong signals where you spend time.

AT&T Mobility, Verizon Wireless, Sprint Nextel, T-Mobile, and C Spire all offer good connections and service. However, they are not all the same. Some are stronger, and others are weaker for every customer.

In fact, any company that resells one of the big networks has the same connections as the big networks. So, for example, Tracfone resells the AT&T network and it works just as well as an AT&T phone.

For many reasons, people complain about AT&T Mobility. However, this company still has good quality connections and is still one of the fastest-growing wireless companies, second only to Verizon Wireless.

That's why I have always used and liked the service, even though there are lots of chinks in AT&T's armor.

So, your job is simple. Find the best network connection where you spend time. Don't pay attention to advertising and marketing. Make sure you have signals everywhere you spend time.

Don't assume, because once you pass your grace period you are stuck with the phone and service for a couple of years. So test, test, test!

To answer the question whether I love or hate AT&T, the answer is, "yes." AT&T could be a great network and a great company. It comes close in many ways, but it just keeps getting in its own way.

Any way you slice it, AT&T Mobility is still competing with Verizon Wireless for the No 1 spot and still outselling all the others with the iPhone -- so it must be doing something right.
Jeff Kagan's Pick of the Week

My Pick of the Week is Alcatel-Lucent, which just reported its first full-year profit in its history as a combined company. Atta boy, Alcatel-Lucent! Not only that, but it posted a positive cash flow in the fourth quarter. It took a while, but at least it looks like it is headed in the right direction. Let's hope it stays on that path.

Ericsson is another story. I received an interesting call from a market research firm it hired to uncover its growing problem. Ericsson once was a strong player in the telecom and wireless marketplace, but in recent years it has struggled.

As I explained to the researcher, Ericsson has serious problems. Of course, it is not alone. Others, like RIM and Nokia, face similar troubles. However, the problems are solvable.

This is a good first step. Until now, I would say Ericsson was in a state of denial. Admitting there is a problem is the first step.

Once you recognize there is a problem, then you have to understand it and develop solutions.

The changes in the wireless industry over the last four years have been quick and severe.

The problem is the Wave that Ericsson originally rode has passed it by. It must understand the next Wave and be prepared to successfully jump on and ride it.

It must understand the new and continually changing marketplace -- the new expectations of the customer and the investor. Ericsson must speak the new language.

The new industry Wave was created by companies like Google with Android and Apple with iOS. This new Wave is already being successfully ridden by companies like Samsung, LG and HTC. That has to be Ericsson's target. Either that or create its own Wave, which is much more difficult.

I was brutally honest in the interview. I wanted to help Ericsson -- to let it know the problem it finds itself in. If Ericsson can understand the changing industry and the next Wave, it can jump on and ride it as a player and a competitor. If.

That is its challenge. Some companies are doing this successfully right now. If Ericsson does not, it will continue to struggle. It will be interesting to see what happens next.

E-Commerce Times columnist Jeff Kagan is a tech analyst and consultant who enjoys sharing his colorful perspectives on the changing industry he's been watching for 25 years. Email him at

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