AT&T Plays Dumb as iPhone Romance Hits Rocks

AT&T can’t decide whether it loves or hates the iPhone. But for many iPhone users there’s little doubt: They hate AT&T.

The upcoming release of the new iPhone comes with some nasty strings attached. While Apple upgraded the device to deliver innovative features -- like multimedia messaging and "tethering," which allows you to connect computers to the Internet via the device -- AT&T has blocked customers from using them.

And many of the more than 5 million iPhone’s devotees in the U.S. aren’t happy. This anger became palpable online as it spilled over onto Twitter, driving the issue to the top of the social network’s trending topics for much of the day Tuesday.

A Slap in the Face

"[I] cannot believe how AT&T is shafting current iPhone and future iPhone customers," wrote Javs42. "First with the upgrade pricing, then the [multimedia messaging] & tether support."

Many blamed AT&T's exclusive contract with Apple. "Apple please don't extend the contract w/ AT&T," DanMcneely pleaded.

"This is ridiculous and a slap in the face to long-time loyal iPhone customers like me who switched from T-Mobile and the only reason was the iPhone," wrote an iPhone customer on the AT&T support forum.

"AT&T sucks, period," a commenter named Dan said on the iPhone Blog.

Exclusivity Sucks

Multimedia messaging has taken off among users in Europe and Asia, who can send pictures and videos using a variety of smart phones available on the market. The new European iPhone, which will be made available via overseas carriers, will have the new features built in.

But in America, the iPhone is offered exclusively by AT&T, and for many that’s the real problem.

An AT&T spokesperson told the New York Times that "the delay has nothing to do with network issues," but declined to say why AT&T is slow to embrace cell phone innovation in the United States.

Ma Bell Nostalgia

Some clues might come from the company’s long and turbulent relationship with any new technology that threatens its control. For decades, the old AT&T telephone monopoly controlled every phone on its grid and banned other companies from connecting innovative devices -- including answering machines, fax machines, cordless phones and early computer modems.

A groundbreaking 1968 policy change, known among tech wonks as “Carterfone,” pried open the device marketplace so that numerous new phone products could be introduced. This in turn spawned a flood of innovation in services that greatly benefited customers.

That old monopoly was broken up. But the new AT&T seems nostalgic, unilaterally deciding which applications make it onto the iPhone and which don’t. Both Skype and SlingPlayer won’t work over AT&T’s 3G network, not because the technology doesn’t function, but because the AT&T media empire is threatened by services that may strain its already shaky networks and compete with its other products. AT&T's lead lobbyist, Jim Cicconi, told USA Today, "We absolutely expect our vendors not to facilitate the services of our competitors."

Garden Walls Must Fall

Applying Carterfone rules to the wireless marketplace would spark a revolution in gadgets while freeing up users to bring their handheld Internet devices with them from one carrier to another.

But don’t expect AT&T (and its many lawyers) to stand idly by as policymakers, public interest advocates and angry consumers try to free the iPhone from its walled garden.

"Consumers are tired of wireless carriers impeding innovation instead of promoting it. Congress should unlock the mobile marketplace by putting an end to these exclusive deals,” said Chris Riley, policy counsel of Free Press.

"Cutting-edge wireless devices and applications have the potential to launch new industries and revolutionize everyday life," Riley said. "In this challenging economy, we cannot afford to allow AT&T or any other company to stand in the way of progress."