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The iPhone Is a Stone Cold Network Killer

Illustration for article titled The iPhone Is a Stone Cold Network Killer

Being among the first of the world's networks to carry the iPhone practically guaranteed a flush few years. Also: network trouble! Take the UK's O2, whose spokespeople now seem to be reading from an apologetic PR script written by AT&T.

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Addressing network congestion as the result of iPhone users utilizing data services exactly as you'd expect them to, O2's CEO Ronan Dunne told the FT (via AllThingsD):

Where we haven't met our own high standards then there's no question, we apologise to customers for that fact,

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Now, remember AT&T CEO Ralph de la Vega's qualified admission about the general crappiness of the company's network in some major cities:

[It's] performing at levels below our standards.

So far, so familiar. Dunne takes the next step in what appears to be a step-by-step guide for carrier mea culpas, and claims that it's really not a huge deal:

But it would be wrong to say O2 has failed its customers en masse

Which, again, sounds extremely familiar. AT&T?

We have 98.68 percent nationwide voice retainability, which means that the difference between AT&T and the industry leader is less than 2/10 of a percentage point on this important metric.

Finally, users get a ray of hope. Vague hope, but hope nonetheless:

[Dunne] said "any short-term blip" in O2 's "network reputation" would be "more than addressed" by three solutions to the difficulties.

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which corresponds rather neatly to:

This is going to get fixed," Mr. de la Vega said. "In both of those markets, I am very confident that you're going to see significant progress.

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But it's not just the PR damage control that runs parallel here, it's the entire situation. O2, like AT&T, was the first carrier in its country to offer the iPhone, and the only one for quite a long time. iPhone users' increased data use was unprecedented in both markets, and brought the companies infrastructures, which were previously thought to be robust, to their knees. The next analog is how they somehow failed to predict this: they've known how data-hungry iPhone users are from the start, and they've been watching sales climb at a steady rate. So why weren't these carriers, two of the largest iPhone providers in the world, able to keep up?

That comes down to the last, most important parallel: they're both cheap. Like pretty much every carrier! Where they go from here looks like it could be different though, with AT&T hinting at "incentives" to tamp down data use, and O2 admitting outright that this is an infrastructure issue that needs to be solved, which counts for something.

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To be fair, it is the iPhone that caused their problems, with a potent combination of broad appeal and transparent, heavy data use. It's just the carriers' fault that they couldn't foresee that, or that they just didn't care. [FT via AllThingsD, WSJ]

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DISCUSSION

I think they predicted a pretty massive increase in data consumption, and hoped they could keep up. But like everything else with the iPhone, the demand was much much greater than they thought. As others have pointed out, they are spending billions to upgrade. I'm not sure they could move at a faster rate without going insolvent. And all this effort is to upgrade a network that will be largely obsolete in 5 years. Don't forget they are also losing money on each iPhone sale, made up slowly over time with the data plan.