AT&T Not Ready for Tethering, May Throttle iPhone Data

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We reported here on Tuesday that AT&T had announced plans to make VoIP services available on its 3G network, great news for iPhone users who previously could only use applications like Skype and Vonage via a Wi-Fi network. So, AT&T sorted out MMS and now it’s sorted out VoIP. That just leaves tethering, right? Now that it’s upgrading its network and fixing everything that was wrong for iPhone customers, tethering has to be just around the corner, yes?

No. According to an article from the Wall Street Journal, an AT&T spokesperson says it needs more time to work on that functionality:

Whenever we offer new features, we want to offer the best possible customer experience. For tethering, we need to do some additional fine tuning to our systems and networks so that we do deliver a great experience.

So I won’t mention how, late last year at the Web 2.0 Summit, AT&T CEO Ralph de la Vega told Michael Arrington that tethering would be available “soon.”

Clearly AT&T is struggling to cope with the data demands made by modern smartphones on its creaky old network. Speaking this week at the annual CTIA Conference in San Diego, and reported by PC World, de la Vega hinted at possible future steps the telecom giant may take to lessen the load. “We have to manage the network to make sure that the few cannot crowd out the many,” he said.

PC World’s Mark Sullivan thinks this can only mean one thing: placing hard limits on the total amount of data iPhone (and other bandwidth-hungry smartphone) owners can consume.

In the face of exploding data service demand and scarce wireless spectrum, does AT&T intend to quietly begin rationing the data usage of bandwidth hogs like the iPhone? Will AT&T begin to quietly “manage” the duration and speed of my 3G connection based on how much data I’ve used in a given day, or on the type of content or services I’m using the bandwidth to access?

AT&T announced in September that it was working on upgrading its network, but the process will take time. Is throttling data a necessary solution in the short term, until the network can more adequately meet the demands of the (growing) smartphone market?

In an article yesterday on All Things Digital, John Paczkowski reported that a staggering 4.1 billion text messages are sent every single day in the U.S. (740 billion in the first half of 2009 alone). That’s double the number in the same period last year.

According to the CTIA, there are more than 246 million wireless data-capable devices at large in the U.S. today. Of these, 40 million are smart phones or PDAs, and more than 10 million are laptops. Little wonder that wireless data service revenue rose 31 percent to more than $19.4 billion in the first six months of 2009.

Chart from CTIA

Chart from CTIA

It’s not hard to see that AT&T is behind the curve when it comes to bolstering its data network to meet the demand of its customers. So far behind the curve, in fact, that its competitors can afford to take legitimate shots at the company in television commercials.

So what’s the solution for long-suffering iPhone customers? Jumping ship and moving to Verizon? Or remaining loyal to AT&T, avoiding the hassle of changing contracts and giving the company time to improve its network and expand its services? It’s already had the better part of three years. How much more patience will customers have?

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