ORIGINALLY PUBLISHED ON AUGUST 15, 2010 (on a blog hosting site that's not very friendly about exporting their data)
When AT&T announced that losing exclusivity of the iPhone wouldn't materially affect their revenues my first thought was, "I'll be patient - where's the punchline?" AT&T's very public problems concerning coverage and capacity have iPhone users incensed and clamoring over the possibility of switching carriers to get improved service.
But AT&T doesn't have to lose those customers, nor does it have to invest additional billions in network capacity to meet future needs. They just need to make one simple change. One inexpensive, easy, can't-believe-they-haven't-already-done-this change.
The change that I'm going to recommend here will cost pennies compared to the billions they plan on investing in infrastructure. In many cases it'll obviate the need for new cell sites entirely. It will certainly eliminate the ridiculous micro cell product and all of the incumbent technical hassles that go along with it. I'll get to this cure - which is a four-letter word - in a moment and, unlike lots of other consultants, I'm not even going to charge them for this great advice. I just want my damn phone to work in my house.
It's easy to blast AT&T but let's take a minute here to be fair to them. Consider this: If any other carrier experienced an increase in data traffic of 5000% over a two-year period, as AT&T did, it would have brought their infrastructure to its knees, too. And the severity of AT&T's coverage and capacity problems really depends on how you use your iPhone.
If you use your phone as a computer that makes phone calls, as I do, it's a lot less of a problem than if you use it primarily as a phone. (And, by the way, if you're using the iPhone strictly as a phone you've wasted your money.) Computers, whether on your desk or in your pocket, need Internet access - preferably very fast Internet access - and AT&T's is flat-out faster than Verizon's. So if you think your browsing experience would be better on Verizon you've got another "think" coming; I admit that your phone calls might be better but every aspect of your data service would suffer on Verizon Wireless compared to AT&T if you're using the iPhone as a pocket computer.
That said, I'll be the first to agree that if Verizon offered the identical iPhone - that is, without their notorious restrictions on features that have crippled other phones in the past - I'd be sorely tempted to make the jump. And there is, in fact, substantial evidence indicating that there will be a Verizon version of the iPhone in January. If that's the case, I might be one of the first to make the change even though I use my phone mostly as a computer because, after all, even a computer that makes phone calls does, by definition, have to make phone calls. And AT&T's phone calling network stinks worse than week-old fish. But AT&T can offer nearly perfect coverage in a vast area, including most people's homes, without force-feeding microcells to its customers or writing billion-dollar checks for additional cell sites. How?
The answer to AT&T's coverage problems is simple - just allow the iPhone and other smart phones to make calls over wifi.
Wifi - that four-letter word - is already on every iPhone. It's already used by millions of iPhone users for calls on Skype and similar services. Most importantly, though, the infrastructure is there. It's in a huge number of homes, offices, every Starbucks, Barnes & Noble, etc.. so why not allow calling over wifi in addition to data? Phone calls actually take a very small amount of bandwidth when compared to most of the other things that people do with their phones and a single wifi connection could easily handle calling plus all of the data needs in that hot spot. Moreover, if more bandwidth was needed, it's a lot easier to increase the bandwidth coming to the wifi connection than to add another cell site.
The construction of new cell sites is constantly meeting resistance by neighborhoods that don't want them to clutter up their aesthetics or blast what they assume is deadly radiation (it's not) all over the area. Cell sites are absurdly expensive, disruptive to install, require power, air conditioning and a fiber optic connection back to the cellular company's main switching center, etc. A wifi connection - presuming broadband already exists at the location - takes about five minutes to install. The hardware runs about $100 and there's no additional monthly fee above the already-installed broadband connection.
Wifi would offload a lot of traffic from AT&T's cellular network which would immediately help the capacity problems that vex their customers so often (frequently when your call gets dropped or you simply can't connect it's not because of a coverage issue but rather because there's no capacity left in that cell).
Wifi would also eliminate the need for in-house micro cells – which are remarkably similar to wifi setups, by the way – and all of the expense in making, marketing and supporting them. The micro cells are decidedly awful, by the way, and cost $150 to boot, which is a swell way for AT&T to get their customers to pay even more for service that should be included in their coverage in the first place. Nice work if you can get it but I find the entire concept pretty offensive. I've already got wifi that covers my entire house so why not just let me make (and receive) calls over it and feed them through the broadband network that I'm already paying for. I don't need yet another piece of equipment on my system.
Would this reduce AT&T's revenues? Maybe. After all, if calls were made over wifi, could they have the brass to count those minutes as part of your plan? Well, they might. And even if they did, would anyone care as long as the coverage was good and you could make - and maintain - a call anytime? But let's say that AT&T decided to allow those wifi-based calls to be made without impacting the customer's monthly minutes? Wouldn't they take a revenue hit? Again, maybe, but it would be a small one as people would likely reduce their plans to one with fewer minutes included. But they wouldn't leave out of sheer frustration that they couldn't make calls in their own homes.
Wifi won't solve all of AT&T's problems, that's for sure. There are still plenty of roads with lousy or non-existent coverage and plenty of outdoor sites where wifi may not be practical. But it would be a start. And if Verizon Wireless does get their own version of the iPhone you can bet that there will be a rush out the door to the nearest red-and-white Verizon Wireless logo.
Allowing the iPhone - and other smart phones, by the way - to make calls over wifi would go a long way to slowing that down to a trickle instead of a flood.
