I hate to be blogging about Apple again, but it has been quite ubiquitous of late and given that I own an iPhone, an Apple TV, a Mac Mini and a MacBook Pro, I cannot help caring.

From a PR standpoint, the last few months have been mixed at best for Apple (more on that later), and yet from a financial standpoint it has been pretty much blowing right through this recession, announcing just last month the best non-holiday quarter in the company’s history. What’s going on here?

I grew up very much a PC guy. My first computer, in 1994, was a 75MHz Pentium I with 8 megs of ram and a 500 MB hard drive running Dos and Windows 3.11. I was 14, it was by far the coolest thing I’d ever owned, and the internet was just getting started. Sometimes when I’d go visit a school buddy of mine, I’d take a peek at his dad’s Apple PowerPC which, he liked to remind me, was much more expensive and cooler than my PC. It also wasn’t compatible with mine. It never would be. Apple actually cultivated that difference, it thrived on it: remember ‘think different?’

From that point until about a year and a half ago, I discarded Macs as over-priced, over-engineered rounded cubes without a delete key or a right-click button, designed by and for intellectual snobs.

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This week in etilities: mobile phone practices are under close scrutiny in the public arena, AT&T tries to catch up to Apple, and lagging US broadband penetration is underlined.

Mobile phone practices under scrutiny

Competition between providers benefits consumers in the form of lower prices, better service, and more features. Unsurprisingly, wireless carriers tend to do whatever they can to either land exclusive deals or be on a level playing field with each other. The FCC, at the request of four US senators, is launching a probe investigating the AT&T / iPhone exclusivity deal while the Senate Judiciary Committee is exploring whether Verizon, AT&T, Sprint, and T-Mobile are colluding to set the price of SMS messages outrageously high. AT&T and Verizon claim that this is not the case.

AT&T is playing catch-up with the iPhone 3GS

The partnership between AT&T and Apple is proving quite a headache for the wireless carrier indeed. There has been much coverage about how the carrier is not yet ready to handle some of the new features of the iPhone 3GS, most notably SMS and Tethering. Unsurprisingly, a lot of the information out there is little more than hearsay. AT&T denied rumors that they were going to offer tethering for $55 a month and announced that multimedia messaging (MMS) capability will be included as part of the existing SMS bundles at no additional cost.

As for the iPhone 3GS early upgrade controversy, AT&T has announced that more 3G owners who are currently locked mid-contract will be eligible for the upgrade price of $199 for the 16GB model and $299 for the 32GB model as opposed to $399 and $499, respectively. There are several criteria for determining eligibility, including whether you’re a big spender with AT&T, and not everyone will benefit.

US broadband penetration needs a lot of work

Ars Technica published an article last week dicussing a topic dear to our hearts: broadband penetration. According to the survey, which measures per household broadband penetration rather than per capita penetration, the US ranks 20th, with 60% of households connected by broadband as opposed to 95% in South Korea, the top country on that list.
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This week in etilities: the DTV transition finally happens, two highly anticipated phones are placed under the spotlight, and AT&T takes a beating in the media.

The Digital TV Transition has finally happened

We’ve been talking about this for a long time, and it finally happened on Friday. Endgaget has a good summary of lead-up coverage here. As was expected, millions of people were still not ready, but the consensus seems to be that the transition was mostly smooth and that the delays did help in preparing more households for it.

New smartphones: the Palm Pre and the iPhone 3GS

This was a big week for smartphones, with the release of the Palm Pre and the announcement of the iPhone 3GS. Both phones have gotten a lot of media attention and generated much emotion among their respective fan bases. We are thrilled that the technology behind smart phones is further maturing, allowing you to take advantage of your online services everywhere you go.

AT&T wireless under fire

This week should have been a good one for AT&T (Etilities Forum), given that they are the only authorized iPhone carrier, but it was not. Indeed, not only is the carrier not ready to handle the 3GS’ new Multimedia Messaging Service or tethering capabilities, but this was pointed out pretty explicitly by Apple during its developer’s conference. This is being seen by some as a clue that it is going to be parting ways with AT&T as soon as it is legally able to do so.

Adding insult to injury,  AT&T also announced that it is charging $399 and $499 for an early upgrade as opposed to the $199 and $299 price tags if you are a brand new customer, which has generated much anger among current iPhone owners.

One thing is for sure: AT&T has a lot of PR work ahead…

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VOIP service Skype (Etilities Forum) made headlines everywhere earlier this week when it finally released its iPhone application. The reception was overwhelmingly positive with great reviews and millions of downloads. Wireless providers, however, were not so pleased: AT&T (Etilities Forum) quickly responded by changing its terms of use to restrict the use of third party apps like Sling and Skype on its network. For example, Skype can only work with a wi-fi connection. AT&T does not allow it to work over its 3G network. This of course generated much negative media coverage, with talks of already instigating FCC probes into whether these practices are anti-competitive.

Of course it’s understandable that wireless providers are scared of the prospect of a competitor offering a cheaper service than they offer on their own network. But why stop at VOIP and video streaming? Why not start banning e-mail from the AT&T network? After all, it constitutes free transmission of text that could otherwise be done via SMS, which directly profits the wireless providers. Why not shut down all web browsers, all third party apps, and lock down that phone nice and tight? That way it’ll be just like being back in the 90s!

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In the world of technology, there are almost always two major and conflicting forces being exerted on providers and consumers: the continuous improvement of the service, and its longevity.  This has been evident for a very long time in both hardware and software: when you buy a new product, you want it to have all the latest bells and whistles, but you also don’t want to have to replace it every six months. This can be a delicate balance to strike, and can be the source of much frustration for all parties involved.

AT&T (Etilities Forum), like most wireless providers, is experiencing this squeeze as well: most of their consumer base has phones that use the 2nd generation ‘2G’ network, some have already moved to the third ‘3G’ generation, and already products are coming out that support tomorrow’s network, ‘4G’. Their challenge is therefore to extend their 3G network, plan ahead for the development of their 4G network, and encorage users to move away from 2G. The way that they are going about it, however, has the potential to be rather controversial.

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There has been a debate brewing for decades about the importance and the role of networks who provide content and that of those who transmit it to end-users.  Each side, of course, supports its own self-interest.  Over the past few days, several fairly heated discussions have occurred between companies on both sides.  Most notably, Viacom recently threatened to pull some programming from Time Warner Cable.  In light of these problems, the news of CBS and Time Warner Cable reaching a fresh broadcasting deal without major fireworks led to a large sigh of relief from the industry and all of us as consumers.  

Cable companies have also been increasing their rates, a move parallel and related to these discussions.  As we’ve mentioned, Comcast (Etilities Forum) is planning to raise rates in February, and today Time Warner Cable (Etilities Forum) announced a planned increase in fees as well.  A spokesperson for the company explained that the move is required in order to overcome higher fees from programmers: “The programmers, we are wholesaler distributors of them, we have to purchase their product, biggest expense”.

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Between the FCC approving the use of the so-called ‘White Spaces’ and Cox Communications (Etilities Forum) getting into the wireless game, it seems that the communications industry is betting big on the future development of the wi-fi market.

AT&T (Etilities Forum) has certainly caught wind of this, as it announced yesterday its planned acquisition of hotspot provider Wayport for approximately $275 million.  The news follows AT&T’s announcement last week that all iPhone customers could now enjoy free wi-fi access at a large number of locations throughout the country.  I tested this out a couple days ago at Starbucks and it worked great.  However, my MacBook was not so lucky, and I had to pay $4 to be connected for 2 hours.

Well, there may be hope for a solution soon.  Ars Technica reports that AT&T will likely launch an iPhone “tethering” service soon.  This would allow your laptop or even your home computer to connect to the internet through your phone and its Internet connection.  Now, before you get too excited about this, it will likely not be a free service – the pricing has yet to be announced.

©2008-2009, Gallop Services, Inc. All rights reserved.