Stingy AT&T spoiled the iPhone party

Much of the urban United States has enjoyed indoor toilets for some years now, and - Hallelujah! - thanks to Apple, it finally has a modern mobile phone, too.

Welcome USA, seriously.

While Apple shifted over 500,000 iPhones this weekend, its partner AT&T didn't keep its part of the bargain. And that's because it couldn't, a research note by DKIB today suggests.

Data congestion left the mobile operator red-faced, and buyers fuming. Because most of AT&T's network uses an ancient, time sharing 2.5G technology - placing the USA on a par with Cambodia and Sierra Leone - the data congestion impacted voice callers, too.

(Apple decided against supporting the thoroughly modern 3G CDMA networks used by Sprint PCS and Verizon. Contrast this with the much smaller Palm, which managed to launch its Treo 650 in 3G CDMA and EDGE versions.)

Absolving Apple of this odd decision to cripple the iPhone, DKIB instead gives AT&T a brisk slap.

"AT&T has spent next to nothing on its GSM/EDGE network in the past nine months," notes DKIB analyst Pers Lindberg, who points out that in Q1, AT&T's capital expenditure for wireless was around $500m, a tenth of its fiscal year budget of $5bn.

Two years ago, one equipment vendor told your reporter that AT&T (then Cingular) was buying 3G kit purely for bragging rights: it was acquired to flesh out the company's press releases, rather than be seriously deployed. Now the pigeons have come home to roost, says DKIB:

"Operational issues and their effect on the company's brand image should feature prominently in the next board meeting. The directional change should be clearcut."

DKIB noted that iPhone problems were nationwide. AT&T has invested in a 3G network from Ericsson, but coverage is extremely patchy so far.

The analysts also reckon that whoever lands the iPhone contract in Europe should be prepared for "a sea-change" in data usage.

Well, maybe.

Given that we only have a weekend's evidence, the novelty may quickly wear off, as it has with so many mobile gimmicks. Users who have acquired phones with picture messaging and video calling also hammered the features for a few days, but rarely used them again.

We see a rather different picture. Europe's 3G networks have capacity to spare. The problem is that they're all dressed up with nowhere to go. Apple should note, however, that 3G has all but killed the Wi-Fi business in the UK, and it's imperative it kits out the European iPhone with something that isn't two generations behind. It can't hope to sell the iPhone on hype alone.

Indoor toilets are miraculous, but you take them for granted after a while. ®