It's time for a new iPhone PR strategy at AT&T

[1]The New York Times published an article [2] last week highlighting the continued anger iPhone users have toward AT&T due to dropped calls, poor coverage and delayed messages. It's a challenge we have written about extensively. In short, data usage is growing at an exponential rate, data traffic is unpredictable in nature and the iPhone's easy-to-use interface facilitates all of that data. The problem is exacerbated by the fact that the recently introduced iPhone 3GS offers speeds averaging up to twice as fast as the iPhone 3G, enabling faster webpage rendering and quicker application launches.

I get it. And I get the fact that if any other operator were the exclusive iPhone operator, it likely would face the same problems. But consumers don't get it, and I think AT&T has missed the ball over the past six months or so in assuaging the concerns of iPhone users. These folks are spending a lot of money on their plans and are rightfully angry.

MMS on the iPhone and the confusing messaging around its availability is a prime example. In November, MMS and tethering was going to come "soon." In June, iPhone fans were disappointed to learn that MMS and tethering functionality on the new iPhone 3.0 operating system would not be enabled by AT&T at launch. At the time, AT&T wouldn't disclose why it could not immediately support the two capabilities, and an AT&T  spokesman told Wired.com that the lack of support was unrelated to AT&T's 3G network [3]. That left bloggers to spout all sorts of conspiracy theories. One guy even filed a lawsuit [4] saying AT&T and Apple misled consumers about MMS availability.

Nearly three months later, AT&T now says it will enable MMS on Sept. 25. The reason: It had to prepare its network [5]. "The unique capabilities and high usage of the iPhone's multimedia capabilities required us to work on our network MMS architecture to carry the expected record volumes of MMS traffic and ensure an excellent experience from day one," AT&T said. "We appreciate your patience as we work toward that end."

Why couldn't it say that three months ago? Customers have been steaming since June, wondering why they can't use MMS.

At least AT&T is giving a more definitive answer now about why it's postponing tethering indefinitely. "By its nature, (tethering) could exponentially increase traffic on the network, and we need to ensure that some of our current upgrades are in place before we can deliver the expanded functionality with the excellent performance that customers expect," AT&T said in a statement. "We expect to offer tethering in the future."

[6]Late last week, AT&T's spokesblogger, "Seth the Blogger Guy," who looks like he stepped out of the 70s, popped up on YouTube [6] to explain why iPhone users are experiencing poor network performance. There are lots of nifty illustrations that liken signals traveling to a cell site to a crowded highway. He went on to explain what AT&T is doing to correct the situation, including investing billions to improve the network.

"The bottom line is, we have heard you. We are on it. We will use this hard-won experience to lead the industry into the future," Seth assures iPhone users.

Of course, the video elicits anger anyway. As one commenter said, grammar errors and all: "your youtube apology is alittle late for alot of customers."

While this honesty is a step in the right direction, AT&T has a lot of work to do to change customer perception. It needs to bring in PR crisis experts. It needs to arm its employees working in the trenches. It just needs to be forthright. For too long it has been playing the role of being the only choice in town when it comes to the iPhone. But contracts are expiring and so is AT&T's exclusivity on the device.

I'm sure you've noticed it, but Verizon Wireless has begun a marketing campaign with BlackBerry that portends to how it might market an iPhone, if it indeed gets to sell it. The message: "BlackBerry runs better on America's largest 3G network." That will definitely be the marketing battle we will see from competitors.

Research firm ChangeWave [7] gets to the heart of the matter with results from a survey asking iPhone users about their complaints. "There are no indications that Apple's AT&T problem is going away. On the contrary, the better customers feel about their iPhones the worse they feel about AT&T--with nearly one-in-two 3GS owners citing AT&T-related issues as their biggest dislike. These survey results suggest Apple will be forced to deal with the issue sooner than many analysts expect," the firm said.

This all reminds me of what AT&T went through exactly 10 years ago after it introduced its Digital One Rate plans. It was the first in the industry to offer high-end, flat-rate, anywhere calling plans. The result was a flood of voice traffic on AT&T's networks across the country. Soon news articles began lambasting the operator over poor quality, dropped calls and busy signals. It took some time for the operator to recover, despite the moves it made to bolster capacity. In fact, its reputation suffered for several years as operators came to market with the same pricing plans. --Lynnette [8]