Is AT&T going to charge extra for new iPhone services?

AT&T's strange delay on iPhone tethering and MMS may be an early warning that the new services will pack a hefty price tag. It's time to say no

Apple's new iPhone 3G S and iPhone 3.0 are loaded with important new features and upgrades, including more speed and probably more memory. But AT&T can't keep up. The latest example: delays and confusion over the future of tethering and MMS. If there was any doubt that the exclusive arrangement between the companies is an ugly roadblock on the way to true handheld computing, it's now gone.

Fortunately, there's a lot of motion at the federal level, including both houses of Congress and the FCC, to do something about the sad state of competition in the wireless world.

[ Take InfoWorld's visual tour of the iPhone 3.0 OS | Read about the new iPhone's new features. ]

A hearing by the antitrust subcommittee of the Senate Judiciary Committee next week will focus on text messaging rates and broader competitive issues. Given the workload of a committee occupied with hearings on a Supreme Court nominee, that's a signal of significant interest in those issues, says Chris Riley, policy council for Free Press, a nonpartisan public interest group working to reform the media.

I've beat on this issue before, and some readers have said, "No one has a right to an iPhone. If you don't like it don't buy it." Fair enough. Or is it? "No has the right to an iPhone," agrees Riley. "But this is about the right to consumer choice. Exclusive deals are impediments to innovation and competition."

Exactly. Just as the old AT&T stifled landline innovation in the 20th century, the new AT&T is stifling wireless innovation in the 21st.

High price for tethering?
At Tuesday's launch of the new iPhone at the World Wide Developers Conference, AT&T was very conspicuous in its absence from the list of providers who will support tethering and MMS. Not surprisingly, the audience noticed it immediately and their jeers were quickly echoed around the Web in blogs and news stories. By Wednesday, AT&T was backpedaling furiously, saying it will offer both services -- later in the year.

I don't like to be overly suspicious or conspiratorial, but something nasty is going on. As Apple's exclusive U.S. partner, Ma Bell has plenty of insight into upcoming iPhone features and revenue opportunities. Yet AT&T said nothing about two widely anticipated features until the next day. The company couldn't have been surprised or suddenly discovered the billing and network issues it cited as reasons for the delay.

What's next? My best guess is that we'll see horrendous pricing surcharges for tethering and MMS, on top of the already expensive data and voice charges iPhone users pay. I don't think AT&T execs wanted to stand up at WWDC and announce that. They'll wait in hopes that the bad news will garner less publicity in the late summer when so many news sources are on vacation and users are thinking more about the beach than about technology.

Act now to free your iPhone
Tethering, of course, allows a user's PC to access the Internet via the connectivity of the iPhone or other cellular device. It's a tremendously useful application, and AT&T, which has boasted about multi-billion-dollar plans to upgrade its network, would be crazy to miss the revenue opportunity. Incompetent, greedy, and obnoxious, maybe. But crazy? Definitely not. That's why I'm worried about a huge price tag.

I doubt it will take long for smart develoeprs to "jailbreak" the iPhone -- create unsanctioned hacks that break Apple's and AT&T's restrictions -- to find ways to tether your iPhone without the blessing of AT&T. As many of you know, jailbreaking an iPhone is not a big deal -- and once you do, you're free to tether away. Mario Ciabarra, who runs Rock Your Phone, says, "We are expecting to release a very simple-to-use tethering app for users left behind from Apple's 3.0 release shortly after 3.0 is made available." And I'm sure other unofficial apps stores will follow suit.

That's all good, but users shouldn't have to play games with their carrier or hack their products to do what they're designed to do. And innovation shouldn't be stifled by quasi-monopolies like AT&T. One step you can take: Write to Rep. Henry Waxman of California, who chairs the House Commerce Committee (which is about to hold hearings on the matter) and Sen. Herb Kohl of Wisconsin, who chairs the Senate subcommittee on Antitrust, Competition Policy, and Consumer Rights. And let the FCC, which is preparing its annual report on the wireless industry, know how you feel.

AT&T has had a lot of time to get its act together. It needs to be pushed -- hard.

I welcome your comments, tips, and suggestions; reach me at bill.snyder@sbcglobal.net.

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