Google Nexus One Available on AT&T 3G

With the Google Nexus One launch and the gadget show CES both taking place next week, it’s shaping up to be a weekend of hardware rumors. The latest requires the usual cautions: It’s a single anonymous source, and the parties involved have not commented publicly.

Nonetheless, BoyGeniusReport (which has a decent hit rate on its rumor reportage) claims that the Google Nexus One (aka “Google Phone“) will be made in an unlocked version compatible with AT&T’s 3G network:

“…we’ve heard from a source that there will be an AT&T 3G-compatible version of the Google Nexus One. Our connect described it as being a ’second’ unlocked model, with the T-Mobile-subsidized unit being locked to T-Mobile. Our tipster was so impressed by a Nexus One in person, they said they would 100% give up their T-Mobile BlackBerry 9700 for one when it’s available.”

So little is known about Google’s() deals with carriers that we’d urge caution on this until the Nexus One launch on Tuesday.

AT&T rolling out MicroCell support update for iPhone users

In addition to the recent firmware update for the iPhone and iPod touch, another slightly more cryptic update has shown up. This latest is not another firmware update from Apple, but instead a carrier update that is coming from AT&T.

For users who have not hooked up their iPhone in the past few days, the message simply read “an update to the carrier settings for your iPhone is available. Would you like to download it now?”

All-in-all, the update seems to be harmless enough, I have not seen any reports of trouble coming as a result, and it will not affect any jailbroken status either.

So, just what does this carrier update do? Well, this is one time where it seems that AT&T is looking out for you, well, at least for users who have reception issues in their homes — this update enables support for AT&T’s MicroCell service which is able to blanket up to 5,000 square foot of home in AT&T GSM network coverage.

High bills for traveling iPhone users

Not long after I returned from a recent trip to Canada, I was surprised to find a $400 cell phone bill in the mailbox. This seemed odd because I’d made only two phone calls when I was there, the longer one for 15 minutes.

But when I looked closer at the breakdown, I saw what was going on. It wasn’t I who’d been making dozens of long-distance calls back to the States – it was the phone itself. While I thought my iPhone was sitting “unused” in my jacket, it had been constantly checking my e-mail for 72 consecutive hours.

You see, using a data-enabled cell phone in a foreign land has become a little like falling asleep on a train in Naples – if you’re not careful, you could end up with empty pockets. If you ever have, you know the feeling.

“Shock, fear, panic,” said Mike Cottmeyer, a software consultant in Suwanee, Ga., referring to an $800 iPhone data bill he’d been hit with after visiting Toronto for a few days last year. “It kind of makes you sick to your stomach.”

The roaming rip-off stems from a sad new kind of Catch-22: With all the contracts, agreements and stipulations we’ve signed on for, there’s more fine print than ever and less time to read it. And like a high-schooler’s nightmare, if you fail to memorize everything, you could be in big trouble.

The iPhone is more laptoplike than most other phones, so its users are more likely to use them for big graphical Web pages. But the price of roaming data isn’t unique to the iPhone, so anyone with a Web-enabled phone who is unsure about roaming costs should do a little homework before they go out of the country.

For an idea of how easy it is for travelers to rack up a nauseating data bill, consider that most phone companies charge roaming customers about 2 cents per kilobyte. How much is that? Well, your average e-mail message might be 10 kb. So that’s about 20 cents per e-mail. Not instantly fatal.

Well, what if someone sends you a message with a snapshot in it – that might run a megabyte or two (about 2,000 kb). So while the picture of your nephew in his first snowstorm might be priceless in one sense, in another it just cost you 40 bucks.

But even that is child’s play. The real action comes when travelers use their phones to surf the Web or watch videos – both of which can consume thousands of times more data than checking e-mail. The blogosphere is littered with ghastly tales of “bill shock” over such unanticipated fees, like the American who visited London for two weeks, bringing his Web-enabled iPhone, not a laptop, for all computing needs. The price tag on that bit of light traveling? $3,000.

Then there was the Briton who, while vacationing in Portugal, decided to download an episode of Prison Break to his cell phone. The guy ended up owing close to $60,000. Most of the really galactic fees end up being partially refunded. When I complained, mine was, too – but it took me 20 minutes of arguing with the customer service rep, more than most people would likely bother with.

“You get this false-positive feeling of comfort,” said Gerry Purdy, an Atlanta-based mobile communications analyst for the consulting firm Frost & Sullivan. “You get off the airplane and say, ‘Hey, the phone works? And my e-mail’s coming? That’s great.’”

But unwitting consumers and Web columnists don’t realize they’ve been silently shifted to a new set of much more expensive “roaming” rates that are, as Purdy put it, “almost insane.”

You might wonder if sending all this data around the world costs the telecoms that much money. But consider your home broadband connection, a kind of all-you-can-eat buffet that allows you to scarf down as many Web pages, photos, songs and movies as you can in one month. All for about $40 – about the same as what you were charged for that pic of your nephew in the snow.

If you had to pay that kind of price for every byte of your monthlong smorgasbord of home broadband, you’d probably be paying tens or hundreds of thousands of dollars. So wherefore the discrepancy?

AT&T, the only telecom that offers the data-hungry iPhone, won’t say whether the roaming rates reflect the real cost of keeping users connected internationally. A spokesman wrote only that “roaming fees are established by the carriers whose networks are available to our customers while traveling abroad” and that “AT&T must pay these fees to the carrier per the agreement.”

This response sidesteps the rather obvious fact that AT&T is itself an international service provider – charging roaming fees to visiting foreigners – and therefore knows precisely how much or rather how little data transfer costs.

For a hint at the real answer, we can look to the European Union, which recently agreed to caps on both the price of text messages – about 14 cents U.S. – and the price of data: 1 euro, or about $1.50, per megabyte, more than 10 times less than what AT&T and other U.S. telecoms charge for roaming.

Our own Federal Communications Commission declined to comment on the issue, noting only that if consumers have a problem with roaming charges, they should send complaints.

Frustrated with “unbelievable” roaming costs, Howard Thaw of Nova Scotia has found ways to scrimp when traveling with his iPhone. For one: Make sure you use it near a wireless connection point – at a Starbucks, say, so you can access the Web without always hearing a cash register. But as Thaw said, that sort of “defeats the purpose of what the phone was designed to do” – i.e., work anywhere.

Thaw speculated on the mentality behind the pricing: “If you can afford an iPhone,” he said, “why shouldn’t you be able to afford the data charges, especially if you’re traveling on business and you have a company paying?”

Cottmeyer, the software consultant from Georgia, did exactly that. Admitting he should have read the fine print, he gritted his teeth and expensed the $800 charge. “Did I feel like it was fair? Absolutely not. But I didn’t feel like I had a leg to stand on.”

Cottmeyer’s boss told him not to let it happen again and asked him to write a warning memo about it for his colleagues. The post is online at Cottmeyer’s blog, LeadingAgile.com, if anyone, including the FCC, would like to read it.

iphone recommendations

•Turn the “Data Roaming” slide switch to “off.” This switch is located under Settings->General->Network. That will prevent the phone from making any data transactions while abroad.

•Use Wi-Fi whenever possible. By connecting at wireless (Wi-Fi) hot spots, like coffee shops, hotels and airports, you are bypassing international cellular networks and associated mega-charges. You still have to be cautious when going the Wi-Fi route, however, especially in public spaces.

Use manual data downloading. If you prefer not to turn off data altogether, you can at least prevent the iPhone from automatically checking e-mails by first switching off the “Push” setting. This is under Settings->Fetch New Data. Then change the Fetch setting below to “Manually” so the phone only checks when you ask it to. But beware: What AT&T fails to note is that you will still be charged for any data you download manually, so there may be no real cost savings to this method.

•Buy an international roaming plan. You can pay AT&T to purchase a package that gives you a limited amount of data access while you travel. These plans are not cheap, however, and if you burn through your allocated data (the cheapest plan only gives you 20 megabytes, which is very little), you have to start paying the exorbitant base rates again.

Editorial note: As helpful as AT&T may seem for offering these tips, what they amount to are work-arounds for the underlying problem of very high, consumer-unfriendly roaming fees.

Notice the three kinds of solutions AT&T gives you:

1) Deactivate or selectively disable your phone’s functionality.

2) Only use your phone in certain situations.

3) Pay money to the phone company so that you don’t have to pay more money to the phone company.

There is no option that permits consumers to fully use their phones without incurring huge bills. And that’s because that option would require the U.S. telecom industry to work with international providers to lower roaming rates for consumers – a move that would force the U.S. telephone companies to lower the high rates they charge foreign travelers. Because they probably won’t do that, the FCC should intervene on behalf of consumers, as the European Union did for its citizens.

iPhone tethering coming soon according to AT&T

According to Harry McCracken of Technoligizer, AT&T Mobility CEO Ralph De La Vega reportedly told Michael Arrington that the iPhone will be allowed to work as a modem for your notebook soon via wireless tethering over a Bluetooth connection. Michael Arrington’s MobileCrunch site, one of the sites in the TechCrunch network, repeated the news in a later post so it would seem legitimate.

One of the largest complaints about the iPhone, both since it was first introduced and since the release of the iPhone 3G, has been the lack of any sort of sanctioned tethering solution that would allow users to connect their computers to the iPhone via a wireless Bluetooth connection and use the internet connection from the iPhone to serve as a wireless modem for the laptop. Since the news is coming from an AT&T executive rather than from Apple, this is less a feature of the phone itself than it is a service which AT&T will start allowing and for which AT&T will most likely charge a subscription fee.

Current guesses for the tethering connection are around $50 to $60 a month, which is on par with the $60 cost of a monthly 3G connection via a wireless laptop card, like the AT&T USBConnect Quicksilver. If the prices are that close, although it would mean a second contract with AT&T, you may want to go the wireless laptop card route, as the price will be nearly the same, you’ll have two separate bandwidth caps for both the 3G card and the iPhone rather than sharing the same 5GB per month cap, and the USB connection for the laptop card will take less of your batteries’ charge than the drain that maintaining a Bluetooth connection will cause on both your laptop and your iPhone.

No mention has been made on wether there will be an EDGE only tethering plan at reduced cost for people with first generation iPhones.

AT&T iPhone Wi-Fi free as in money, but not as in time

I finally got the SMS alert on my iPhone telling me that I now have access to the Wi-Fi hot spots at Starbucks, for free. Cool. But the images I had of just sauntering in to a Starbucks, selecting the local Wi-Fi network and jumping on the Internet were busted when I read these ridiculous instructions for getting access:

Activate Wi-Fi from the settings icon on your iPhone.
Select “attwifi” from the list of available networks.
Enter your 10-digit mobile number and check the box to agree to the Acceptable Use Policy. Tap ‘continue.’
You will receive a text message from AT&T with a secure link to the AT&T Wi-Fi hot spot. You will not be charged for the text message.
The SMS link will only be valid for 24 hours at the location it was requested. Another request must be submitted when using another hot spot location.
Open the text message and tap on the link for 24-hour access to the AT&T Wi-Fi hot spot.
To get on Wi-Fi, I need to tell you my phone number and then authorize over SMS? That’s just goofy. I get that the method that I think should work to authorize an iPhone on the network–a check of the phone’s MAC address by the AT&T Wi-Fi authorization system–might be more hackable than this closed-loop authorization system that checks to see if you’re an AT&T iPhone subscriber in good standing via your phone number. But so what? It’s not like the value of the network connection that someone would be appropriating if they hacked this system is that high to begin with.

Adding this “hoop jumpage” (as our writer Stephen Shankland calls it) just punishes the rest of us who only want to do a quick check of a Web site or map, thank you very much. It appears that for anything less than a long Web browsing session, we’d be better off just living with the cellular data coming into our phones.

iPhone sales buoy AT&T earnings

AT&T’s profits were up slightly in the third quarter, thanks in large part to the popularity of the Apple iPhone 3G.

The nation’s largest phone company announced on Wednesday a 5.5 percent boost in profits for the third quarter. Net income for the company increased to $3.2 billion on sales of $31.2 billion, which were up about 4 percent, compared to the same quarter a year ago.

Wireless, which accounts for about 40 percent of AT&T’s total revenue, once again saved the day for AT&T, proving that it continues to be a cash cow, even as the economy slumps. Profits for wireless services surged 21 percent on revenue that was up 15 percent on the quarter.

The big driver for wireless during the quarter was Apple’s latest iPhone, which went on sale in July. AT&T is the only cell phone operator in the United States to offer the iPhone. And the exclusive deal to sell the hot phone is paying off for the company. AT&T reported that it activated 2.4 million iPhones during the third quarter, with about 40 percent of those going to new subscribers.

It should come as little surprise that the iPhone 3G would help boost profits for AT&T. The phone company’s decision to sell the phone for a subsidized price of $199 has likely helped boost sales. The previous version of the phone was not subsidized, initially costing AT&T customers $499. The higher-end version cost $599.

AT&T is making up for any losses from the phone subsidy by forcing customers to sign a two-year service contract on a service that costs much more than the average AT&T cell phone service. The strategy seems to be working. Despite the hefty service fee, consumers are still flocking to the iPhone.

On Tuesday Apple reported that it sold 6.9 million iPhone 3Gs during the quarter, which was far more than analysts had been anticipating and more than the total number of original iPhones sold in a year.

In total, AT&T added 2 million net wireless subscribers, which is an increase of 2.7 percent.

And in general, customers seem satisfied with their service. AT&T’s churn rate, or the rate at which its customers ditch its service for another service, improved to 1.2 percent from 1.3 percent.

Despite strength in its wireless business, AT&T is still facing major challenges on the wireline side. In the past, the conventional wisdom was that phone companies were immune to economic downturns. The idea was that people always need a home phone.

But that thinking is changing, as consumers have more choices for communication than ever before. Cable operators also offer voice services as part of competitively priced service bundles. And then there are people who simply cut the cord and use their cell phones.

Roughly 17 percent of households in the United States, or more than 20 million customers, are getting rid of their old wireline phones and using their cell phones instead, according to market researcher Nielsen Media. The trend will likely continue, as one in five U.S. households is expected to be wireless-only by the end of 2008, according to Nielsen.

This helps explain why AT&T lost 990,000 primary phone lines during the quarter, which helped drag total revenue for AT&T’s wireline business down 2.2 percent, to $17.6 billion.

Clearly, wireless revenue, which now accounts for 40 percent of AT&T’s total revenue, is helping keep the company in good standing. But AT&T has also been trying to augment its wireline losses with investment in other land-based services, such as broadband. The company has committed to spending $7 billion on extending its fiber network to build its new U-verse service. U-verse allows AT&T to sell a triple play bundle of services that includes telephony, broadband and television to compete against the cable companies.

Overall broadband sales were up for AT&T, but it wasn’t enough to offset the losses of the traditional landline services. Even though AT&T’s U-Verse product has gotten high marks from consumers, it is still available only to a small portion of AT&T’s customer base. Rollout of the service has been slow. And this will likely hurt the company over the long run. But deploying more fiber, and getting the services up and running, is no easy task.

With the holiday buying season approaching, AT&T is no doubt hoping that iPhone sales will remain strong. But given the state of the economy, experts are predicting slow sales for all consumer electronics. This week, the Consumer Electronics Association said it expects holiday electronics sales to grow only by about 3.5 percent in 2008, much lower than in previous years.