AT&T’s important role in the success of the iPhone

With the celebration of the tenth anniversary of the iPhone, little has been mentioned of the other company that made it possible: AT&T.  I’ll admit that I’m reluctant to write a positive piece about the carriers that are so easy to criticize for their anti-consumer behavior, but it’s important to note how AT&T helped make the iPhone a reality.

At the time Steve Jobs was developing the iPhone, he was facing a huge challenge: gfinding a partner to provide cellular service and distribution. Without a major carrier, it would be much more difficult to succeed.

Carriers had always dictated the designs of cellphones. They approved their looks, the circuitry, the software used, and the features included. When Jobs went to the major carriers and tried to get them to partner with him, all but AT&T turned him down. Jobs would not tell the carriers anything about the phone he was working on. Verizon, reportedly ridiculed the idea: Who does Apple think they are that they can control the design of a phone on our network, was Verizon’s answer.

But, to their credit, AT&T thought differently. They, alone, agreed to sell the iPhone, site unseen. Remember, at this time Apple was a struggling company and nearly bankrupt. AT&T would only learn about the phone a couple of months before its introduction. This was a courageous decision that AT&T made. In retrospect it was also one that catapulted them to the top with a multiyear exclusive.

And while AT&T benefited from this decision, it was not without pain and a lot of problems. The success of the iPhone overwhelmed their networks, their customer service, and their wireless performance. Customers suffered from dropped calls, poor call quality, and customer service support.

Apple usually blamed AT&T, while AT&T had to bite their tongue and rarely blamed Apple. I remember arguing with AT&T’s PR spokesman, who carefully avoided answering any questions about dropped calls or blaming Apple. But according to inside sources at Apple, where I had worked, the iPhone had serious cellular performance issues. As a first generation product, it was full of bugs and design mistakes.

As happy as the customers were with their iPhones, they spent hours in the Apple stores exchanging or trying to get them fixed. Apple, with few questions, exchanged their phones, time after time (to keep their customers happy, but knowing the product was flawed). One insider told me that Apple replaced more phones than were originally sold. That’s a return rate of over 100%.

Apple and AT&T managed to get through the first couple of years, with AT&T feverishly strengthening their wireless network and Apple fixing their phones). In the end, both companies benefitted from the risk they each took. And, most importantly, the consumer benefited with better phones and better networks, now ten years later.

by Phil Baker