A gorgeous phone…That i can’t use.

I had hope that Apple’s integration of the usually complicated and obtuse world of mobile phone activation into iTunes would actually make things easier for the user. Unfortunately we have been given a nasty glimpse into the even MORE complicated and obtuse world of the mobile phone billing system.

I sat in line this afternoon with anticipation of getting an iPhone to review in our typical fashion for our readers. I happily forked over my $600 to have a chance to play with the latest wonder of the Apple universe. I came home, updated iTunes to version 7.3, removed the device from its lovely package and sat down for what promised to be a great end to a great week. Then I actually tried to activate the thing.

Apple normally puts a lot of thought into the wording of its error messages and exerts an inordinate amount of control over their presentation. In this case, after filling out the Activation Form I was presented with a very atypical error page that read:

We’re sorry, AT&T has determined that your current account cannot be used with the iPhone.

It proceeded to give me a link to a most unusual FAQ Page at AT&T’s site with strange acronyms like CRU, IRU and FAN. I don’t pretend to understand these things. I don’t really care. The question that it purports to answer is “Business customers: Problems activating your iPhone?”. Well I suppose I have a business account as I currently enjoy the benefits (?) of AT&T’s Developer Program due to an accounting snafu at a former client. [Update: This sentence is irrelevent; I have a business account and that’s all that matters for this issue] However, I am the only user and I have 2 lines. I would hardly call myself a corporation and I am certainly an individual, but I have no idea how I am classified in the arcane world of AT&T billing.

So I proceed to read on and find that there is a document called the Pre-Purchase Understanding that I have never seen or heard of, much less “understood”. There is a sentence down at the bottom of the flyer that says “Available only to consumer accounts. iPhone and associated wireless service are not eligible for corporate discounts.” It would have been a bit better of AT&T to actually mention this more fully in their literature and to better prepare their employees for the inevitable “CRU” or “IRU” to walk in the door requesting kit that they can’t use.

After attempting to understand this crazy FAQ Page and having little patience for it (I was in the “it just works, it’s Apple” state of mind). I decided to call our friends at customer care to see if they could help. Our friends being no doubt inundated with calls from people in similar situations I was happy to oblige the 5 minute hold time. The obviously flustered representative proceeded to inform me that because I had a business account I had to call some other number called “NBO” and have them convert it to an individual account before I could activate it, then convert it back to a corporate account so that my other phone would work properly. She then said that there was a number (buried on the bottom of that FAQ page as well) that was run by Apple, but that it was down right now so I should keep trying. I tried. It was indeed down.

This post might seem uncharacteristically rant-y, but I feel like something should be said in public about this gross oversight. As a user and a customer, I should never be exposed to the intricacies of your internal billing system. Apple should have pushed AT&T more for the availability of this device to corporate accounts, discounts or no, knowing that they would be desired on day one.

This the first of what I’m sure will be many holes poked in the veil that is iPhone. I’m sure it’s a fabulous device, but I didn’t pay $600 to have it sit on my shelf all weekend. At the very least AT&T could have extended the “NBO” line’s hours to accomodate the influx of calls related to iPhone on its inaugural weekend. I will bet that Apple will be quite unhappy with the state of PR affairs if enough people talk about the fact that “Just Works” and AT&T don’t really belong in the same sentence.

[Update]After reading some of the (less) constructive comments here, it would seem that most people see this as a bashing of the device itself. It is by far not a criticism of the iPhone, since I’ve not been able to actually use it. I have absolutely zero impression of the device other than it’s got a pretty screen.

[Update]It seems that AT&T has gotten the better of me. After waiting on hold for almost 2 hours I got to a set of folks at AT&T who were supposedly able to help me. They told me that they had to convert my existing corporate account into an individual account. Ok. I gave them a bunch of personal info and then they said that I’d have to pay a $150 deposit on top of the $250 deposit I gave them 2 months ago to open the account in the first place.

I asked about getting the original deposit back and they told me that since there was another line on the account that I wouldn’t get it back for a year, but I was free to convert the second line at the same time for an additional $150 deposit. Then I could get the whole $500 deposit back as a check within the following 6 weeks after I contacted another department.

The second line would have to have its own separate plan and couldn’t share minutes with the iPhone. This would have changed my monthly bill from $170 for 2100 minutes with unlimited BlackBerry service (and an 80MB plan on my 2nd line) to almost $250 for similar service.

I have no issue with converting my account to an individual status. Once again, I don’t care about AT&T’s billing system. The fact that I pay $600 for a device and then am asked to pay additional deposits and jump through arcane hoops in order to activate it. I opened the original account on my own personal credit and wasn’t informed of its Corporate status until this whole fiasco. They have my money. They don’t need more for me to prove that I am worthy of an account that I already have with them.

This is an unprecedented grab of power by a carrier over its customers. This is the height of mediocrity and poor management. The representatives who I spoke to were not empowered to actually fix things in any way. They were slaves to the system. The people whom I purchased the phone from at the AT&T store were very aware that I had a corporate account, but failed to inform me that I wasn’t going to be able to actually use the phone I was about to purchase.

AT&T is obviously unprepared for such a device launch. They did not train their personnel properly and did not empower them to fix the inevitable problems that would crop up. They also failed to properly staff the call centers to react to high call volume.

Steve Jobs was quoted in the Wall Street Journal talking about how great this will be for corporate users. Steve, you missed the fact that corporate users can’t even use the device. There are far more corporate users in the world of AT&T than there are individual users. You might want to review your numbers.

I have no choice but to return the device and fight for a full refund. Shame on AT&T and Apple for providing me with a poor experience. Shame on AT&T for exerting more control over your customer in an era where being more open will get you a lot farther. Shame on Apple for caving to obviously bizarre requirements imposed by AT&T for your device.

Cluecon is now over, and a good time was had by all. Jay Phillips gave an excellent talk about Adhearsion; Truphone spoke about its new cellular clients and hinted at some new developments (just in time for the new Harry Potter movie, it seems that Truphone will have a Rug Rat Army to compete with Dumbledore’s Army). And, showing up only for the last day of the conference, I was pressed into service to give the day’s opening talk with one hour’s notice. (”We all have hangovers, Moshe. We need someone to wake us up.”) The title of my talk was “Who is the Competition?,” in which I raised questions about how voice services can compete against new, very innovative, and compelling interfaces for non-voice services on cellular phones.

In a conversation with Jay after his talk, we discussed the benefits of programmatic interfaces (such as Ruby/Adhearsion) over pure descriptive telephony languages, such as CCXML. In my opinion, both have advantages and both have disadvantages; it’s the usual series of tradeoffs. I am looking forward to using Adhearsion — especially since Jay announced that Adhearsion ported to Freeswitch with generous support from Gaboogie.

Thomas Howe gave an excellent talk about the need for innovation in telephony. By this I mean that he apparently agrees with me on the need for new thinking about VoIP. As he noted, “We’ve re-created the PSTN,” but so far we’ve moved very little beyond that.

OpenMethods announced their open-source VoiceXML interpreter, which works on Asterisk and Freeswitch. More on this later.

And while we’re on the topic of W3 languages for telephony: I will give a three-hour class at SpeechTek University, a CCXML Application Workshop. If you’d like to attend, use discount code D07 for 10% off conference registration.

The good folks behind barcamp are putting on an iPhoneDevCamp on July 6-8 at the Adobe campus in San Francisco. Brady’s got all the details over on Radar. I spoke with Chris Messina over the weekend about the event and he seemed really excited by the response so far and the possibilities for developing some innovative web apps for the iPhone. I’m really looking forward to seeing what comes out of efforts like this.

Over on the Asterisk.org developer blogs, Russell has posted a handy link to the CHANGES file in the Asterisk development tree, which contains details on new features being added in version 1.6.

While the development team is working the hardest on fixing bugs in Asterisk 1.2 and 1.4, we are also adding new features into our development tree that will eventually become Asterisk 1.6. Most of the biggest features that will make it in to this version have not been merged yet. However, I wanted to post a link to where you can go read a list of some of the features that have already been merged.

Looks like a lot of work is being done to voicemail, SIP handling, and queue management, among many other things.

The iPhone may well be the most innovative mobile communication product since the Blackberry, but as with nearly every product, the carriers will do anything they can to kill it. Apple’s Achilles’ Heel in this case, brain damaged pricing from AT&T Wireless.

Word is out that for $60/month, you’ll get 450 minutes of talk time, and for $100/month, you’ll get only 1350 minutes. The iPhone is an expensive device compared to most mobile phones. While there are a lot of people who will pay a premium for Apple products, it is hard to see where many people will jump at rate plans like these, especially since the people most likely to buy an iPhone use the phone a _lot_.

This is why I had hoped the iPhone would have been launched on T-Mobile. T-Mobile understands the youth market much better, and has way better pricing. I pay about $120 per month for several thousand minutes per month _and_ unlimited data _and_ wifi hotspots. The plans AT&T is promoting don’t even come close.

I’ll be interested to see how things pan out. It’s possible that Apple’s brand will trump AT&T’s lame offer, but I would not be surprised if the iPhone is stillborn in the US market because consumers don’t want to sign up to pay AT&T $1,000 plus in extra airtime (over a two year contract) compared to buying a less expensive device and plan over at a competing carrier.

It’s a shame AT&T was not as innnovative as Apple. As it is now, they’re offering the same rate plans, except with unlimited (slow) data. The device is cool, but the network it’s hooked up to just doesn’t seem all that compelling.

Hopefully Apple has terms in their contract that if sales don’t meet a certain threshold they can turn around and start selling through other carriers like T-Mobile.

I’ve been watching with a mix of anticipation and doubt the ongoing reportage of the Apple iPhone launch. Without a doubt it is the most genius marketing campaign I’ve seen of late. Starting with the early announcement of the device and dominating headlines Macworld Expo in January 2007, the machine was turned on and has revealed a highly tuned plan that has been executed with perfection. The device can sell itself and the hoards of rabid fans in the blogosphere have been hyping it since before it even officially existed. Over the intervening months, Apple has continued to seed the press with rumors and announcements about the phone having a glass screen and 8 hours of talk time (inexplicably sending the company’s stock even higher). This has all been, as anyone who has followed Apple knows, extremely well calculated and planned out. Apple knows what it’s doing and it has done an amazing job of hype management over the past few months. There is by now little doubt of the iPhone’s imminent success in the US. This is the crux of the matter.

The US has roughly 213 million mobile phones according to the ITU. There are 2.2 billion mobile subscribers in the world. The US is a tiny market as a whole. It’s a great, high-end, mature market with lots of competition and is no doubt the a good place to launch a product like the iPhone. Europe is ostensibly an even more mature market, having higher end services and a more mature tariff scheme overall and 620 million mobile phones. Apple says they want to sell 10 million devices by the end of 2008. That is unlikely if all they have to work with is the US.

Mobile churn rate of all of the other carriers in the US (excluding AT&T) is about 6% per year. That’s 12.7 million accounts. Assuming optimistically that AT&T and Apple got 10% of that, we’re talking 1.2 million iPhones. Adding in an additional 10% of AT&T’s published 60 million subscribers you get 600,000 more devices for a total of 1.8 million devices. That isn’t your typical consumer electronics play that Apple is used to. The end result of this equation is the only way that Apple and AT&T could sell 10 million devices this year is to capture all of the churn in the market and cut off any churn that AT&T has at the same time. This is very unlikely to happen. Especially with a $500-$600 device. It doesn’t matter how pretty it is.

So statistically speaking, Apple needs to get Europe and Asia in the game quickly to meet its targets. There has been a lot of press out of Europe that Apple wants too much of the conservative mobile carriers in the region. They apparently want exclusive deals, infrastructure changes and most of all network upgrades. Apple also chose to forgo high-speed 3G services due to the complicated patent dispute that Qualcomm (the chipset maker for W-CDMA phones) is having with the WTO. These things have all pointed to a delay of the launch of the iPhone in Europe, and will likely have the same effect in Asia given Apple’s overall smaller profile in the region.

The iPhone will be a boon for both AT&T and Apple and will likely be the largest launch of a mobile device to date. I will certainly be getting one to review for our readers. The verdict is still out, but the craziness over Apple’s stock of late is not necessarily warranted or even sane given these rather obvious numbers. Given the market realities it is becoming clear to those of us who watch the mobile industry that Apple will need to have another device available soon that requires less of carriers.

Here is some food for thought:

1. In 2001, it was a lot easier to publish your mobile content such as a ringtone or wallpaper or your WAP application onto a carrier catalog. Today, only if your brand is Tier 1 such as Disney or you work through a publisher, will you even have a chance of being considered for a carrier catalog.

2. Only as far back as a year ago, when you were on a data plan, you could browse wherever you want. Today, more and more, you are seeing unlimited data plans required for full internet browsing and even then, there is still no guarantee you will be able to stream your mobile video - port blocking madness…

3. EU carriers are wondering why the US is beginning or has surpassed EU in mobile content revenue such as games or even ringbacks. EU has always been the more “open” market with off-deck content generating a majority of the revenue. Well maybe, now they are kicking themselves, realizing that to maximize carrier revenue, they need to move more people onto subscriptions and off of pre-paid and distribute the content on-deck maintaining absolute control.

4. In the last year, we’ve heard about 1800Free411 getting blocked and then Truphone for VoIP calls getting blocked. Since when has a voice call been regulated and doesn’t unlimited data mean unlimited data?

The conclusion is the carriers have learned. Over the past 7 years selling and delivering mobile content, they know what works, they know what sells and they especially know what is profitable and what is not. For example, there is no arguing that video is by far less profitable than SMS for a carrier - $1.99 for a video ringtone, 15 cents for an SMS - 300K versus 1K in size, there is no comparison.

To be seen…

Chris Holland has penned an interesting post over on the Internet Brands Developer Blog, suggesting that Apple may have its sights set on integrating VoIP into the iPhone, making it a truly converged communications device. At first glance, it seems unlikely that Apple would be thinking this away about VoIP (and we KNOW AT&T isn’t thinking this way), but Chris makes some excellent points and his predictions are really some food for thought.

I’ve grumbled about .Mac along with others and don’t think Apple’s online service offers much bang for the buck today, but if it became the integrated SIP provider that Chris envisions that could change everything.

A SIP Address looks just like an E-Mail address. A Person’s SIP Address could easily be stored in the iPhone’s Address Book. Apple could build SIP-capability right into the operating system, pre-configured with a number of existing SIP Providers for one-click setup, while still allowing for custom configuration, following a model very similar to E-Mail.

There are a few SIP Providers out there. But Apple could easily roll out its own SIP infrastructure as part of the .Mac framework, increasing their chances of providing a superior out-of-the-box experience, while promoting the .Mac brand to … competitive usefulness. From here, the sky’s the limit as to what Apple can do, leveraging iPhone’s brand and near ubiquitous and still increasing WiFi penetration. Forget about fighting over 3G vs GSM. WiFi and IP are universal WorldWide.

What do you think? Has Chris been SIPping the VoIP kool-aid, or he is on to something?

The Nokia N95 that I’ve been using for the past couple of months has forgotten how its volume keys work. It makes me super sad to say that even though Nokia made a great telephone, it’s not above certain mechanical difficulties that befall all of our devices from time to time.

Nokia might have come out with an iPhone before its time. Sure it’s not the super cool touchscreen interface and beautiful GUI that Apple seems almost singularly capable of creating, but it is very capable and easy to use. The N95 has been the best phone that I’ve had to date (and I have a box of used mobile phones) and I can’t wait to get it back from the shop.

Adhearsion is an open-source framework written in Ruby that was developed to improve complex Asterisk development. Jay Phillips is the creator of Adhearsion and he has written a section about the open source Ruby framework for the upcoming second edition of Asterisk: The Future of Telephony. We’re proud to present this expanded excerpt of Jay’s material here on ETel. Our latest ETel article explains how to get up and running with Adhearsion, provides working examples, and a detailed discussion of Adhearsion’s database integration. For the all of the latest Asterisk info, the newly updated version of O’Reilly’s best-selling Asterisk book is available now as a Rough Cut.

A friend just sent me an article from the Boston Globe about AT&T lowering the price of it’s entry-level DSL service (768k/128k ick) to $10. Right now it’s only for current landline subscribers (little help there), but they are supposed to lower the price of their dry loop offering in the near future as well. Both price drops are concessions to the FCC as part of the AT&T/Bell South merger.

The Boston Globe article is here: http://www.boston.com/business/technology/articles/2007/06/18/att_quietly_offers_10_dsl_plan/?p1=MEWell_Pos3

OpenWRT is an embedded Linux platform for wireless routers, and one of the key drivers behind the Wi-Fi revolution. OpenWRT has proven to be highly versatile and has spawned a number of forks such as FreeWRT, dd-WRT, and Ewrt, and serves as the operating system for such Wi-Fi notables as Fon and Meraki. In our latest ETel article, OpenWRT 101, Ash Dyer describes how to install and configure OpenWRT, discusses the differences between the various forks, and highlights some of the packages that will be useful for securing and managing an OpenWRT router.

So a colleague recently put together this graph.

It’s using data from the published numbers available in the Verizon and Cingular financial reports; you can look up these numbers yourself. There is no doubt that MMS is finally taking off but the real question for me is MMS to a service taking off. What this graph doesn’t show is the break-out between MMS phone-to-phone versus MMS to an email address; I’m going to assume that 99% of it is phone-to-phone.

One of the issues we’ve been experiencing at Veeker, is teaching users how to send MMS to an email address. Often when we tell users to send a photo or video from their phone to an email address, they immediately assume “email” and not MMS. Phones are not optimized for this behavior, usually placing you in T9 numeric mode when entering in the recipient (phone-to-phone).

The US consumer learned about SMS from American Idol but the difference there is SMS is being sent to a shortcode (a 5 digit number). MMS to a shortcode is still a ways out - only time will tell as to what will be the US campaign to teach the US consumer how to send an MMS to an email or maybe it won’t happen until MMS to a shortcode is available but I definitely wouldn’t say MMS has failed as many express - the hockey stick has just started.

Looks like Nokia’s heeding the research of staffer Jan Chipchase in their design of handsets for emerging markets.

Matt Web noted in his recent keynote at Reboot, that a new range of Nokia phones addresses the social use of handsets in India and China…

They’re for the emerging markets of India and China. There, the context of use of the mobile is the whole village.

• The phone tends to be shared by a family, so each one stores 5 distinct addressbooks
• There’s often one mobile per village, which is rented out. These home can have pre-set call time/cost limits, so make renting out easier. They come with a built in business model
• It turns out that after voice calls and texting, two major uses of a phone are as a clock, and as a torch. So there’s an external screen showing the time, and a torch built-in
• There’s a teaching mode
• And these phones are cheap. Like, 40 euros cheap

I’m impressed to see such a huge corporation building products in such a progressive way.

Well done Nokia :)

The publicity around municipal wireless networks has been horrendous recently. Internet access by city governments–cable, fiber, or wireless–evolved from a utopian vision nurtured by community activists with a technological bent in the early 1990s to a mass movement spawning major policy debates in many states within the last few years. Then, during the past year it all seemed to fall apart.

Only over the past few weeks have I noticed the municipalities and community advocates putting together the shards of their business plans and coming up with credible models for building municipal networks again. And these models, not surprisingly, revive the solid understandings of past builders.

I spent the day at the MuniWireless New England conference, a show devoted to showing municipalities the latest models, technologies, and strategies for developing municipal networks. This is not a technology show, but a place to ask questions such as, “Whom do I get involved in planning for building a network?” and “What kinds of surveying should I do in order to lay out wireless sites effectively?” But I waited to get home before posting my blog, because the wireless access at the show was kind of slow.

The bankruptcy filing by US MVNO Amp’d over the weekend was very high profile, sad and, to many of us who cover the industry, not all that surprising. Amp’d had amassed a reported 200,000 subscribers and burned through hundreds of millions of dollars to build a broad-market MVNO. It hasn’t worked very well and it appears that Amp’d has found it time to pay the piper.

According to this post on mocoNews the bankruptcy filing lists over $100 million in debt owed and less than that in assets. Amp’d is the classic story of overreaching in a nascent market. They made a big bet and lost. In their press release they state that they plan to continue operating while restructuring their debt. I assume that they will emerge a smarter company for it.

This is a very high profile failure, to be certain, but it is not the end-all and be-all of the US MVNO marketplace. In fact many US MVNOs are doing quite well on a small subscriber base with well targeted marketing plans. The fact that Amp’d overreached was its downfall, not the fact that it was an MVNO in a market that doesn’t understand or want them as many in the blogosphere have commented in the past few days.

MVNO success appears to not come from spending millions of dollars on high-profile ad campaigns targeting huge audiences and acquiring “premium” content. It comes from careful investment, market research and targeted marketing. The most successful MVNOs have been based on these principles.

For example, Virgin Mobile USA has almost 5 million subscribers and revenues of over $1 billion dollars anually. They do very targeted marketing (most of it in store, very little on TV or Radio) and have grown phenomenally. They have been losing money on a planned basis in order to grow to this size, but they are sustainable and plan an IPO in the near future.

There are more success stories than failures in the US MVNO market. The failures to date have mostly been by prominent companies (ESPN Mobile most notably) who have spent money without good planning. The MVNO game is pure arbitrage of wholesale minutes at this point. MVNOs are not allowed to innovate with new network-layer services, so they are stuck with handset development. The market is vital and continues to grow. We just never seem to notice.

After much hand-wringing and whinging about Apple’s apparent stance of “no third party apps on the iPhone”, news is coming out today based on a New York Times article that Apple may release a SDK for the iPhone at this month’s World Wide Developer Conference. Rumors around the iPhone have reached a fever pitch the past few weeks, and even the Times has been known to get things like this wrong before, but this is one rumor I’m really hoping pans out. Say it’s so, Steve!