Over the weekend Apple waltzed through the latest iPhone launch, while its partner AT&T tripped and stumbled like a dance-school dropout. Perhaps AT&T didn’t feel the need to smooth its moves, because in three days Apple sold over a million iPhone 3GS units worldwide anyway.
But in a surprising move, Apple two weeks ago pointed the harsh spotlight of scrutiny on its partner at the Worldwide Developers Conference by announcing that multimedia messaging and tethering on the iPhone would be immediately available for customers with several international carriers but not for AT&T customers. As if the chorus of “boos” in the audience weren’t enough, AT&T soon after came under heavy fire when customers learned about an early-adoption fee an extra $200 that iPhone 3G users would have to pay to upgrade to the latest iPhone 3GS handset.
While AT&T has addressed both the lack of MMS (it’s coming, the company says) and the early-adoption fee (AT&T later offered the fully-subsidized new-customer price to a larger number of current customers), these are just two of the company’s many missteps around the iPhone 3GS launch.
Still, it’s unlikely Apple is going to find a new dance partner in the U.S. Together, Apple and AT&T have sold more than 6 million iPhone 3G units to date, according to AT&T. With that much at stake, it’s unlikely the two will call it quits after coming so far. Our advice? It’s time for a little heart to heart. When stuff gets rocky, a common method is to look back and discuss the situation to avoid repeating mistakes. The following is our analysis of what went wrong with the iPhone launch and why (according to AT&T; Apple has not answered our requests for explanation), coupled with suggestions for how execution could have been better.
No immediate MMS or tethering support
iPhone customers have been clamoring for MMS since day one: Even cheap cellphones have carried this feature for as long as we can remember. Tethering the ability to turn a handset into a wireless modem for browsing the web on your computer has also been in high demand among iPhone owners in envy of BlackBerry users with tethering capabilities. So imagine the air of disdain exuded from iPhone users at WWDC when Phil Schiller, Apple’s VP of marketing, delivered the bad news: MMS won’t be available for AT&T subscribers until late summer; there is no official announcement about when AT&T will offer tethering, either, or how much it will cost.
AT&T’s explanation? The company declined to give the reason behind the lack of immediate support for either of these features, but a spokesman told Wired.com that the delay has nothing to do with AT&T’s network.
So what could it be? A tipster told The Boy Genius Report that MMS isn’t immediately available because AT&T must manually remove a code disabling MMS an “Opt Out MMS Code” from each account. We’re confused about this explanation, because prior to the launch of iPhone 3.0, Apple’s text-messaging app didn’t support MMS to begin with. Why insert an opt-out code at all?
This is a case where transparency could’ve helped calm the angry masses. The least AT&T can do is give customers an exact date when MMS and tethering will be available. The company should also provide a general explanation of what’s causing the delay more than “These upgrades are unrelated to our 3-G network.” Telling consumers what’s not going on is useless. Tell people what the delay is related to, and they’ll be more understanding and a little more patient.
To be fair, AT&T is making an effort to communicate with consumers via its Twitter account, YouTube channel and Facebook page. But clearly the company is glossing over topics that consumers really care about, such as MMS and tethering. Having all these outlets of communication is the perfect opportunity for AT&T to improve its customer relations, so why not start with this topic?
We all know this much: If other carriers are already providing MMS and tethering, then it’s clearly not an issue with the phone’s hardware. So the heat is on AT&T.
Early upgrade fee for iPhone 3GS
iPhone 3G owners felt insulted when they learned they had to pay an extra $200 on top of the price tag of the iPhone 3GS, bringing the total to $400 or $500 (for the 16-GB or 32-GB models, respectively). Why the hefty price? It makes sense: The iPhone 3G launched about a year ago, and customers bought the phone for subsidized prices of $200 or $300. They haven’t finished their two-year contract, so AT&T isn’t obligated to subsidize yet another iPhone for them.
But that still smacks of punishing your best customers. And it’s inconsistent, to boot. In 2008, original iPhone owners were not required to pay an extra fee to upgrade to the iPhone 3G. Thus, they felt confused and betrayed when they found out about the early-adoption fee for iPhone 3GS.
AT&T explained to Wired.com why the iPhone 3GS upgrade policy is different: Original iPhone customers bought their iPhones without an AT&T subsidy. (If you recall, the original iPhone cost $600 at launch in June 2007). Therefore, they were eligible for subsidized pricing for the iPhone 3G without paying an early-adoption fee.
Confusing, isn’t it? But AT&T didn’t make that clear at its iPhone 3GS order website, nor did Apple. This lack of transparency inspired outrage among iPhone enthusiasts, who demanded better treatment for their loyalty. In response to complaints, AT&T reduced the amount of time some iPhone 3G owners would have to wait to become eligible for subsidized pricing.
While it’s good to see AT&T listening to customers, the buyers remorse could have been mitigated had the company been clear about where the early-adoption fee came from.
Additional charges for text messaging
Owners of the original iPhone are paying at least $15 more monthly for the new iPhone 3GS, just like those who upgraded to the 3G last year. That’s because the unlimited 3G data plan costs $30 $10 more than the original iPhone’s unlimited Edge data plan. Also, original iPhone owners had an option for 200 free text messages. For the iPhone 3G and iPhone 3GS, it now costs $5 for that minimal 200 SMS plan.
The increased data fee might make sense, but why pay $5 for text messages when in the past it cost nothing? An AT&T spokesman’s explanation provided to Wired.com: “We brought the iPhone plans in line with all of our other smartphone plans. I believe that we kept the original plan grandfathered in, but were making that standardization starting with the iPhone 3G.”
That will likely translate to consumers as, “We’re ripping off other smartphone users with text messaging, so it’s only fair we do the same to iPhone owners, too.”
Our suggestion is somewhat idealistic: Get rid of those text-messaging (SMS) fees altogether. Text messages cost nearly nothing for telecom companies; text messages are indeed data, and yet we pay additional fees just to send them meaning AT&Ts unlimited data plan isn’t truly an unlimited data plan. Lump unlimited text messaging into the unlimited data plan, and you have a less expensive smartphone package. That would earn some respect from customers, wouldn’t it?
AT&T’s pre-order system
Several iPhone 3GS customers polled by Wired.com expressed regret for pre-ordering the new handset through AT&T rather than Apple. Why? See the screenshots to the right. Apple’s tracking system kept pre-order customers informed every step of the way even notifying them when iPhone 3GS units left the warehouse in Shenzhen, China. Those who ordered through Apple knew exactly what day to expect their iPhone 3GS.
AT&T pre-order customers (including myself), on the other hand, were left in the dark. AT&T’s order-tracking system didn’t offer any up-to-date information. Even a week after placing the pre-order for an iPhone 3GS, AT&T’s order status displayed the message “In Progress” for three items: Various SIM, freight and the iPhone. Finally, on June 19, the date of the iPhone 3GS’s release, the tracking system updated saying “Various SIM: Shipped”; the iPhone itself disappeared 
from the page. (I shared this experience with a couple of others.) Even after the status changed to “Shipped,” the tracking page never provided a tracking number.
Needing the new iPhone 3GS for an assignment, I was antsy about when the smartphone would arrive. I dialed AT&T’s customer service, and even a supervisor (”Pam,” who refused to disclose her last name) could not provide more detailed shipping information other than “Your order is in progress.” She admitted that “some customers will be disappointed because they won’t receive their iPhones.” Why not provide a shipping number? Any delivery service provides this basic information.
The problem with AT&T’s pre-order system is marked by a clear misunderstanding of pre-order customers. They’re obviously people who want the new iPhone first, and they want to know exactly when it will arrive. Other than that, the company clearly is not equipped with the proper tools or trained to handle an order-tracking system. In this case, AT&T would have been better off letting Apple handle all the pre-orders (they are, after all, shipping the same phone) or directing customers to the FedEx tracking website rather than AT&T’s order status site.
Activation woes
As if the aforementioned hiccups weren’t enough, some new iPhone 3GS owners were left phoneless over the weekend due to the network’s failure to activate their phones. Apple apologized to affected customers in an e-mail and issued $30 iTunes credit.
While Apple’s e-mail to the affected customers seemed to suggest the problem lay with AT&T’s network, AT&T has denied responsibility for these issues and declined to provide a technical explanation. Apple has not returned phone calls requesting comment.
Apple’s apology and issuing of iTunes credit is a testament to why the corporation consistently tops the charts in customer satisfaction surveys.
Regardless of whose fault it was, AT&T should have come forward with an apology as well, padded with a small discount from affected customers’ bills to compensate for days of having phoneless iPhones.
Any other thoughts about AT&T, Apple, the iPhone, customer service and the whole shebang? Add your suggestions in the comment section below.
Photo: John Swords/Flickr
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