For Every iPhone User in NY, A Conspiracy Theory

Posted on February 3, 2010. Filed under: venture capital | Tags: , , |

So this is not another rant about AT&T and the absolute shit service/coverage that I have with my iPhone.  Nor is it a complaint about the customer service ping pong that these two companies are playing, passing the buck to the other and sending consumers back on forth without taking any responsibility for what I view to be a breach of contract at this point.  These stories have been beaten to death…I’ll just leave it at “I agree” and now tell you a story that is way more intriguing:

But first, I’ll outline an explanation (admittedly coarse and unnuanced) for why we all don’t get the service we are paying for.  AT&T has built a physical infrastructure of cell towers that supports all of their customers’ phone/data usage.  When we try to make a call or view a webpage on our phones, we are requesting a portion of this fixed infrastructure.  There is a limit to how much data one node in the network can support, and when that limit is reached, we as consumers are either routed to a different tower, or simply can’t pull data (failed call/failed page view/etc…)…

So picture the infrastructure as a single pipe carrying water to a village of 100 people.  The amount of water that village can consume in a day is defined by the diameter of the pipe and the speed at which the water is pumped.  That pipe was built to support the villages cooking and bathing needs, and it did the job for many years.  Now imagine that almost overnight the village grew from 100 people (AT&T customers pre iphone/smart phone penetration) to 10,000 people (AT&T customers post iPhone/smart phone penetration), and each person decided they were going to install a swimming pool in their hut, and water their lawns 24 hours a day.  Obviously, demand for water will outpace the speed at which the town can build a new, fatter pipe, and all of the sudden…not only can they not fill their pools (mobile internet usage), but now they can’t even rely on a steady shower in the morning (calls/texts)…

So now imagine that the Company that owns the pipe (AT&T) can decide which homes in the village get water first, and which don’t.  How do they decided which villagers deserve priority.  We, as AT&T customers, assume that as we try to pull data from the network we have an equal priority to all other users, and everyone is having the same shitty experience as us.  Having been through the customer service ringer with AT&T and apple for the past 5 months, I have an alternate theory, and at the route of this theory is Apple’s iPhone return policy (reprinted below):

“iPhone Return Policy

If you are not satisfied with your iPhone purchase, please visit online Order Status or call 1-800-676-2775 to request a return. The iPhone must be returned to our warehouse within 30 calendar days from shipment to avoid an $175 early termination fee. The iPhone must be returned in the original packaging, including any accessories, manuals, and documentation.

Apple will assess a 10% restocking fee on any opened iPhone. Shipping fees are not refundable.

Note: iPhones must be returned to the original point of purchase (e.g., Apple Online Store, Apple Retail Store, AT&T, Apple Authorized Reseller) with a proof of purchase (e.g., Shipment Notification, Invoice Receipt).

Service Cancellation

By returning your iPhone purchase within 30 days from shipment, your wireless service will be cancelled automatically. You will be responsible for all applicable usage fees, prorated access charges, taxes, surcharges, or other charges through the termination date. Please contact AT&T for more information about applicable fees.”

So, when Apple seduces you to trade in your Blackberry/Verizon set up for a shiny new iPhone, they force you to sign an AT&T contract, and assuage your concerns around the horror stories of service outages with the following statement “if you don’t like it for any reason, you can return it within 30 days, cancel your AT&T contract, and it won’t cost you a dime.”

Now here’s where it gets fucked up.  Over the past 4 months or so, I have spent an estimate 6 hours on the phone with AT&T customer/tech support, trying to solve by service problems (at a very high cost to AT&T…those tech heads are not cheap)…finally, although it had never been mentioned previously, a few months ago, a customer service head said “have you tried a new Sim Card?” When I replied no, he said “I can’t believe we haven’t done that.  Go to the store, they’ll swap out you Sim Card, and that should solve your problems.”  Sure enough I did that, and for about 1 month and a half, service was noticeably better…then, of course, calls started to drop/fail again, No Data Service messages returned, and I was back where I started….I went to the store, asked for a new Sim Card again, and once again service returned.

So my theory is that AT&T is identifying the iPhones that have new Sim Cards as “new customers” and prioritizing the data packets being requested by those phones for the first month or two of service (until they exceed the 30 day return window when the phone and service can be cancelled), and then they push those customers into the general pool to make room for new accounts that Apple is funneling into them.  Obviously, I am not an engineer, but my understanding is that this is technically possible, and my business mind says that this is incredibly evil, but also incredibly brilliant…anyone who understands this stuff better than me, please chime in.  Steve Jobs (CEO Apple), Randall Stephenson (CEO AT&T)…responses welcome…everyone else, poke holes in this theory if it’s wrong/not possible.

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6 Responses to “For Every iPhone User in NY, A Conspiracy Theory”

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Jordan, what reason did the AT&T tech head give you for trying the new sim card solution? If he gave no reason other than “*wink* try it *wink*” I’d say that gives some support to your suspicions!

potential “sim card degradation”

Either your SIM card works (you get a signal) or it doesn’t (you get a “SIM card error”.)

However I would not be surprised if AT&T did have some sort of system setup for newly implemented SIM cards to get priority. It could also just be some poorly written code that inadvertently prioritizes newer SIM cards over older ones.

I think the reality of the situation is that AT&T’s network is severely over subscribed (specifically in your market, NYC), and that network congestion leads to countless connectivity oddities / problems.

I have the same issue in Los Angeles and will test the SIM card conspiracy theory locally here and report back my findings…

I can’t wait to celebrate – running around my apartment with my arms outstretched in the “Airplane” celebration if/when I finally get decent service. I’m getting excited just thinking about it.

please film airplane celebration and post link to my blog. thanks

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    I’m a NYC based investor and entrepreneur. I've started a few companies and a venture capital firm. You can email me at (p.s. i don’t use spell check…deal with it)


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