We all know the problems AT&T has experienced with its network over the past couple of years due to unprecedented data demand. The company has made some notable progress over the past year, and provided lots of details on the investments it has made to analysts and the media.
However, I think AT&T has done a remarkably poor job of communicating to its customers and the market in general the causes of the problem, what it's doing about it, and the roadmap to its getting better. To my knowledge, AT&T has not sent one letter to its customers concerning the issue, nor has the company addressed it head-on in any major national advertising. On a tactical level, I have found that customer service agents have been given reasonable latitude in providing credits to customers who call in to complain.
In many ways, AT&T has sold itself short, given the unprecedented demand on its network and the substantial investment it is making, on multiple fronts, to improve the situation.
Great companies in times of crisis communicate with their customers and to the public--acknowledging responsibility and outlining when and how things will get better.
Dear Valued Customer:
We know that many of you, especially iPhone customers, have experienced some problems with our network. There have been issues with dropped calls, network unavailability, poor signal strength and slow data speeds. The problem has been especially acute in certain metropolitan areas, where we have higher than average demand for data service over our network.
First off, let us apologize for any poor experience you have had. We have experienced unprecedented demand for data on our network--to the tune of some 5,000% growth over the past three years. iPhone users consume more than ten times the average data on our network compared to the typical customer. And the network is used very differently than in the past--much more indoors, for example.
Nobody could have accurately predicted the incredible success of the iPhone, the App Store, and the unique and different ways our network is being used by these exciting applications. We did, initially, under-invest in our 3G network compared to some of our competitors, and did not adequately plan for capacity in some markets. We also could have done a better job of communicating the issue to our customers.
To be fair, our partners bear some of the responsibility as well. Apple keeps things pretty close to the vest, which means that we are not always given the same advanced roadmap as with some of our other partners--making it difficult to plan in the same way. Additionally, the iPhone is not as bandwidth-efficient as some other smartphones, and some design elements of previous versions of the iPhone have affected the network performance you have experienced. And some of those applications we all love simply use a lot of capacity and tax our network in all sorts of different ways.
Now, let us tell you what we have done to improve the situation, and plan to do, in order to deliver the best network experience of any wireless carrier in the United States. First off, we have invested more than $10 billion in our mobile network over the past two years and plan to invest an even higher percentage of our gross profits in the network this year. This capital expenditure is being used to attack the problem on multiple fronts: expanding 3G coverage, building thousands of new cell sites, and expanding capacity by installing fiber-optic backhaul at our existing sites. We have acquired and are activating more spectrum in many markets. We have also been steadily upgrading the performance of our 3G network with our HSPA 7.2 service, and expect the majority of data traffic to be carried over HSPA 7.2 by the end of 2010. We believe, as you have seen in our ads, that this is the nation's "fastest 3G network".
We have also been working closely with our partners at Apple, at the highest levels. There are many innovative design attributes in the iPhone 4 that help to maximize the performance of the network.
Overall, we believe we have made substantial progress over the past year, which has been acknowledged in many independent analyses and research reports.
We have also invested heavily in providing alternatives to our customers. We operate more than 20,000 WiFi hotspots in the United States--more than any other carrier--and they are free for all our customers. Nearly every smartphone we sell today is WiFi-enabled. We encourage customers to use WiFi where available--performance will usually be faster than over cellular, and WiFi does not count against your data usage. We have also launched, on a national basis, our Microcell "femtocell" product, which is a mini base station you can put in your home or office that boosts signal reception and data network performance.
You should also know that wireless is a radio-based technology, using spectrum allocated by the FCC, and as such has far more capacity limitations than "wired" broadband networks. We in the wireless industry are working hard to urge the FCC to allocate additional spectrum for wireless services, as quickly as possible. You can help by writing to your Congressman.
Finally, we have recently implemented a change in our pricing structure. Rather than "one size fits all", our new plans offer greater choice and flexibility. Many of you will pay less for a data plan than you do today. Our philosophy is that the price consumers pay should be more reflective of consumption, similar to how many other services are paid for.
We hope this note gives you a sense how committed we are to providing the best network experience possible. We thank you for your loyalty, appreciate your understanding, and look forward to serving you for many years to come.
Mark Lowenstein, a leading industry analyst, consultant, and commentator, is Managing Director of Mobile Ecosystem. Click here to subscribe to his free Lens on Wireless monthly newsletter, or follow him on Twitter.