Inside the Taco Shell: Mergers! No iPhone For You! And WiMAX Rocks (Nortel assures us)!

I view the wireless landscape as a sort of unholy taco of delicious and distracting spices, anchored by some sort of...meat?...laden with all the food groups, perfect in its layering, diverse in its permutations, and always interesting in its texture. In other words, it’s kind of the perfect food...er...beat. But great guacamole, the recipe’s been turned upside down this week with a veritable cornucopia of weirdness.

If it bleeds it leads, so here goes with item No. 1: We got a Web comment in from one Margaret Hiltz, loyal AT&T Inc. customer since 1992, current quad play customer and iPhone craver. Unfortunately, she was told she couldn’t buy the iPhone for $199 because she already has a contract (effective June 2007) in place with the operator. “I am being punished because I am an AT&T customer,” she wrote, tugging on the ol’ heartstrings, I must admit. She added: “This is not fair. I would expect consideration as a loyal customer. I also would expect that the increase to my monthly wireless bill because of the new phone would allow me to update my contract. I've had other options for service, but have remained with AT&T. Where are they when I need them????”

Yes, dear reader, she is upset enough for four question marks. FOUR. And I can’t say I blame her.

So I pinged my ever-responsive and lovely AT&T spokesperson, Jenny Parker, who promptly got back to me to explain that unless you are new, have the iPhone 1.0, or are what was nebulously described as “eligible for an upgrade discount,” which she said generally happens “later in the contract,” you pay $399 (8GB) or $499 (16GB) for the hot device. And she did say that AT&T is truly sorry that the customer feels punished for her loyalty.

Now, I feel the plight of Margaret, and I agree that quad-play customers oughta get a bone or two thrown their way for giving AT&T that hefty ARPU. But what strikes me the most about this is that it’s counterintuitive. My reasoning goes something like this:

• 1) AT&T holds contracts for the largest portion of the wireless market share in the United States – A-No. 1, baby.
• 2) The U.S. market is close to the saturation mark unless you count 5-year-olds. So essentially, most customers purchasing the iPhone are switching carriers or upgrading devices.
• 3) Limiting the populist price tag (OK, relatively populist) to the switchers and existing iPhoners would seem to be counterintuitive to AT&T’s joint goal with Apple to break into the business market, become the go-to peeps for the mobile and blended work/life lifestyle, and kickstart the three-screen, open-access revolution.
• 4) I mean, what’s the problem? Usually when you go to upgrade you get a discount with a contract extension — the operator burns a few quid to get the hooks into you for two more years. I wonder: do they fear oversubscription? Or do they know that given the rabidity of Apple fans, and the likely reluctance to give up after waiting in line for hours or days (human nature 101), that the bait and switch isn’t going to matter? Is it AT&T’s way of mitigating the profit hit the additional handset subsidy for the lower-priced version represents? Hmm. Thoughts? AT&T? Jenny? You want to weigh in further?

Our content and resi guru Bob Wallace recently wrote on the difficulty of adding wireless to the triple play for operators. I think this bears watching.

OK, enough iPhone. More AT&T. The juggernaut is also lobbying the FCC to (cue the flashing red lights and bull horn) “stop the Sprint-Clearwire deal!!!!!!!!!!” It was hard to tell from the twisty elocution (and let’s face it, the ‘Bytes is at the end of a long week) what the basis for this is. Something along the lines of Sprint and Clearwire are getting away with it without having to submit the kinds of antitrust arguments for vetting and various and sundry materials for scrutiny that AT&T has had to throughout its long and illustrious—and maligned—history of putting the Bell back together.

You can read all about it here.

The new Clearwire might be the nation’s largest holder of mobile broadband spectrum in the U.S., but the FCC is chomping at the bit for a new nationwide competitor (and one that can bring broadband across the digital divide is even better), so I have a feeling this might fall on deaf ears.  But then again, it is AT&T. And here’s the weirdness factor: As No. 1, the iPhone-wielding No. 1 at that, with a shiny new HSPA upgrade to show off, why is it so nervous? It doesn’t have a history, unlike Verizon, of crotchetiness. Could it be because...

...WiMAX Rocks! At least, that’s what Nortel wants to make very, very clear. Its recent deal to resell Alvarion’s WiMAX equipment does not, repeat, does not constitute Nortel’s abandonment of its WiMAX plans! Got that? Can you repeat it back?

Apparently the punditry has been so thick around What it All Means—the Alvarion deal, that is—that the company issued the following statement: “The agreement with Alvarion allows Nortel to achieve faster time-to-market with WiMAX at a lower cost, while focusing its internal R&D resources on LTE and 4G application development. While the agreement with Alvarion has been viewed by some as Nortel abandoning WIMAX, this is absolutely not the case. Nortel is aggressively pursuing early market opportunities with WiMAX...”

OK, OK, I get it! Now, I happen to be a big fan of Nortel, and I happen to really like their spokespeople, their PR folks and their overall Canadian goodness, but most of all I like their WiMAX (and LTE, truth be told) demonstrations, which often involve making sales guys act out various thespian-worthy parts (I’m not kidding).

What other taco-turning weirdness is out there this week? Well, I wanted to talk about the Android-Symbian merger rumors too, but I’m tired. Maybe I’ll regale you Monday.

Have a good weekend.

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