Apple defends AT&T, says partner will fix iPhone problems

Apple executives yesterday again stuck up for their exclusive U.S. partner, AT&T, and said that they approved the carrier's solutions to long-running problems handing iPhone traffic.

During Apple's quarterly earnings conference call Monday with Wall Street analysts, Gene Munster of Piper Jaffray & Co. asked about AT&T's troubles. "AT&T has had a lot of bad press here recently and obviously that impacts your brand," Munster said. "Can you remind us what the benefits and the virtues of sticking with a single carrier in the U.S. are?"

Tim Cook, Apple 's chief operating officer, repeated what the company has said before: "AT&T is a great partner."

He also downplayed the "bad press" that Munster alluded to. "I think it is important to remember that they have more mobile broadband usage than any other carrier in the world," said Cook. "In the vast majority of locations, we think that iPhone customers are having a great experience from the research that we have done."

Many iPhone owners would disagree.

They've complained about AT&T's network since Apple unveiled the smartphone in June 2007, and ramped up their sniping after the July 2008 release of the iPhone 3G, the first model to use AT&T's faster data network. A dozen lawsuits from consumers tired of their iPhone 3G devices constantly dropping calls or having trouble connecting to AT&T's network are still pending, although they were consolidated by a federal judge last summer.

Apple's Cook admitted that AT&T service wasn't trouble-free, but said its partner is on the case. "AT&T has acknowledged that they are having some issues in a few cities and they have very detailed plans to address these," Cook said yesterday. "We have personally reviewed these plans and we have very high confidence that they will make significant progress towards fixing them."

AT&T has conceded poor network performance in Manhattan and parts of San Francisco, but has promised to deal with the problems. "You'll see this is going to be fixed. We'll do a lot better," Ralph de la Vega, CEO of AT&T Mobility and Consumer Markets, said during a December 2009 financial conference.

AT&T has taken other steps to address its service issue, including releasing an iPhone application that lets customers submit complaints of poor reception directly from their smartphones.

Many analysts believe that AT&T's exclusive contract for the iPhone will end this June, three years after the debut of the original model. Even so, Apple has continued to defend AT&T when it came under attack by Verizon, the rival most often mentioned as the likely addition to the list of carriers allowed to sell the iPhone. Apple television advertisements last November, for example, stuck up for AT&T as Verizon belittled the carrier's 3G coverage in a still-running campaign.

AT&T relies heavily on the iPhone to boost its subscriber numbers, according to Brian Marshall, an analyst with BroadPoint AmTech. Marshall estimates that the iPhone is responsible for over 90% of AT&T's net additions to its customer rolls. "The iPhone is by far the single most important driver of the postpaid subscriber addition market in the US today," Marshall said in a recently released research note to clients.

Apple sold 8.7 million iPhones in the quarter that ended Dec. 31, a 100% jump over the previous year and almost 1.4 million more units than the previous record of 7.4 million, which was set in the quarter ending Sept. 30, 2009.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld . Follow Gregg on Twitter at @gkeizer , send e-mail to or subscribe to Gregg's RSS feed .

Copyright © 2010 IDG Communications, Inc.

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