AT&T CEO: Unlimited iPhone Data Was A Big Mistake, I Lose Sleep Over iMessage

AT&T CEO: Unlimited iPhone Data Was A Big Mistake, I Lose Sleep Over iMessage

Randall Stephenson is playing the world's saddest song on the world's smallest violin.

AT&T CEO Randall Stephenson made some interesting comments relating to Apple and the iPhone at the Milken Institute’s Global Conference earlier this week. In particular, Stephenson remarked that he wished his company would have never offered unlimited data for iPhone customers, citing the capital AT&T had to invest up front to strengthen its network.

Stephenson also said that he loses sleep over iMessage, because Apple’s messaging service cuts directly into AT&T’s SMS/MMS revenue.

Every early adopter knows the story of how AT&T buckled under the extreme weight of data-hungry Jesus phone owners. Apple was an exclusive partner with AT&T for the iPhone until Verizon jumped on the bandwagon in 2010. iPhone exclusivity made AT&T the hot carrier in town, and Apple undoubtedly kept AT&T afloat for several years. While people were flocking to AT&T in droves for the iPhone, the carrier’s network was also experiencing incredible strain from the enormous growth. AT&T is just now starting to recover and mature into a formidable network after Verizon, Sprint, and others have been added to the mix.

According to The New York Times, Stephenson made the following comment on AT&T’s decision to offer unlimited data to iPhone owners out of the gate:

“My only regret was how we introduced pricing in the beginning, because how did we introduce pricing? Thirty dollars and you get all you can eat,” he said in the on-stage interview at the Milken Institute’s Global Conference on Wednesday. “And it’s a variable cost model. Every additional megabyte you use in this network, I have to invest capital.”

AT&T has since canned its unlimited plan, pushing Verizon to do the same. Sprint is the only major iPhone partner in the U.S. that still offers unlimited data, and it plans to keep doing so for the foreseeable future.

Considering unlimited data helped score AT&T boatloads of iPhone customers in the first place, Stephenson’s comments seem to be biting the hand that feeds.

Apple introduced its own messaging service, iMessage, alongside iOS 5 last year. The solution bypasses the carriers entirely by using data instead of the typical SMS/MMS protocols. Apple didn’t let the carriers know about iMessage until it was unveiled to the public, and it turns out that AT&T has been worried about iMessage’s encroachment on its territory ever since:

“You lie awake at night worrying about what is that which will disrupt your business model,” he said. “Apple iMessage is a classic example. If you’re using iMessage, you’re not using one of our messaging services, right? That’s disruptive to our messaging revenue stream.”

No kidding. Who wants to pay 20 cents per text when you can send messages for free to other iOS users? All of Stephenson’s comments sound like the bitter musings of a carrier executive who’s upset because Apple has been dictating the terms of the relationship. Why not innovate as a carrier instead of waiting for companies like Apple to beat you at your own game?

Stephenson also recalled when Steve Jobs approached AT&T (then Cingular) about partnering for the original iPhone launch:

Mr. Stephenson was chairman of Cingular’s board at the time, and he said Mr. Jobs had met with Stan Sigman, who was chief executive of Cingular. After the meeting, Mr. Sigman approached the board to talk about a “unique opportunity.” He hadn’t even seen a picture of the iPhone, but he described a device with a touchscreen that one would use to make calls, do e-mail and run apps.

The board was nervous about the Apple smartphone because it was aware that it would transform its business model, Mr. Stephenson said.

Related
  • sosickitzill

    More fuel for the fire. Add this story to the list of reasons why I hate AT&T mobile division so damn much. 

  • zviivz

    SMS charges is a rip-off! I don’t have a text plan right now but now and then I’m charged freaking 20 cents for receiving text messages from some idiot.

  • Sumdawg01

    AT&T: “Oh no, our customers are getting the best bang for their buck? What can we do to rectify this?”

  • shannon_f

    I hate AT&T so much. The products are great, but I hate their business model. This is coming from an iPhone 4S owner on AT&T network who also has uverse tv and internet through them

  • Tallest_Skil

    Screw you, screw your company, and screw all companies in your market. You had your chance, you failed. 

  • Lane Jasper

    This guy can go F-Himself! Yeah he may not sleep well at night, but it’s in a 40 million home (one of probably 10 I’m sure) Yeah, I feel REALLY sorry for this douch! What a dickhead.

  • techwarrior

    Perhaps, Mr Stephenson, if your text plans were more reasonably priced, the workaround apps like iMessage would have been far less attractive to users and never been developed.


    How you thought charging arms and legs for text messaging on phones with data connections would be a successful long term strategy is the real disappointment

    Perhaps an ATT app to send text messages from smart phones over the data connection with a $1.99 or even $2.99 per month fee for unlimited messages might have been a better strategy as an alternate to standard SMS messaging. 

    Now, the door is open and text apps abound. Further, it helped reinforce that all Apple and other smartphone vendors are after is network access which only you (and a few) could offer in the past. With VoIP technologies, all these handset makers need now is an agreement with ubiquitous data network providers to launch their own services…leaving ATT with what (hint: being one of the ubiquitous data network providers)?

    You sir have been outsmarted by the geniuses at Apple who paved the way for Samsung and others… While you got short term benefits, you will in the end lose everything due to your greed and lack of willingness to keep up with the technologies of our times. 

  • noksucow

    What an ungrateful POS. I really wish T-Mobile or Sprint, hopefully both, get their act together so that we can have some true competition. So sick of this duopoly BS.

  • llahnoraa

    Wondered if AT&T is behind sending mass spam SMS for those who ditched SMS plan in favor of iMessage… #suspicious

  • Weegie_Mac

    The prices of cellular contracts and tariffs in the US are frightening.

    I’m on Pay As You Go due to preferring to buy my iPhones outright from Apple, and for £15 per month I get unlimited calls and texts to O2 numbers (all but one person I know is on O2) and 1GB of 3G data per month.
    My wife, also using an iPhone, is with O2 and for £36 per month she gets Unlimited Calls and Texts to O2, 1GB of 3G data as well as 500 bundled cross-network texts per month.
    On MacRumors forums some of the American users were listing their monthly bills in one thread, and some guys were quoting astronomical amounts ($98, etc) a month.
    While we Brits do tend to get ripped off with everything else, it does seem that the US is being bumped by Cellular carriers who charge ridiculous amounts for very little service.
  • benandarchie

    Poor little AT&T. SMS is a rip off I usually just use facebook or imessage because it dosent cost so much! Data to be fair is very expensive for mobile networks. But the prices their charging is ridiculous.

  • Thunder Dan

    What a loser!

  • Germán Villacreces

    The comment made by AT&T’s CEO shows how unprepared AT&T is for the future, if they actually did research they would have figured out that if you give unlimited data to phones that have an AppStore, people will eventually find a free way of texting to each other. If it wasn’t iMessage, it was going to be WhatsApp or any other app that would allow free texting. The same thing might happen with voice so they better plan their next move…

  • Jdsonice

    Well my heart bleeds for Randy. NOT. AT&T made billions and provided shitty service to its customers. If anything He should be apologizing to his customers who were fleeced and screwed buy him and his cohorts.

    As far as SMS is concerned it should be free which exactly what Apple did. It is PURE profit for AT&T and yes I hope you loose sleep over it you mother….r.
  • Jdsonice

    WOW – I have to say buddy you fuc,,ed up badly. Not a single reader is defending you. 

  • ApplePr0n

    C’mon Apple, do yourselves and every consumer a favor and release Apple Wireless

  • Alexander530

    I can’t wait for Apple to be their own carrier for the iphone and the ipad.

  • Wirehedd

    Anyone arrogant or stupid enough to publicly bemoan an inability to gouge his customers is a moron of monumental stature.

  • Ronald Stepp

    “In particular, Stephenson remarked that he wished his company would have
    never offered unlimited data for iPhone customers, citing the capital
    AT&T had to invest up front to strengthen its network.”

    Okayyyyy.. so lets figure out what this means.

    1. We KNOW that our network doesn’t have the capacity to support the iPhone’s data needs.
    2. We will HAVE to strengthen the network, eventually, someday.
    3. We’re going to go ahead and sell as many iPhones as we can, even KNOWING 1 and 2.
    4. We’re going to blame the customer for using the iPhone we sell them KNOWING 1, 2, and 3.
    5. After all that, we’re going to drag our feet and knowing 1, 2, 3, and 4, we’re STILL NOT GOING TO MAKE THE NETWORK STRONG ENOUGH TO HANDLE THE TRAFFIC FOR YEARS!

    So do we make the decision NOT to sell all the iPhones we can and keep the traffic under control as we expand our network? HA HA HA, OF COURSE NOT! What?! Give up all that cash we can make even as the network collapses? HA HA HA!

  • sonofsci

    He should lose sleep over the most valuable company in the world growing tired of his sorry ass service and creating their own.  I sure would have loved to see Apple use that 100 billion in cash to establish their own wireless network.

  • Tcphoto1

    Did he think that the iPhone was the Golden Goose? Well, it kind of is but with more users, you’ve got to actually have a network that is actually proportional to the number of users. AT&T charges .05 per text when you go over your allocated number and it costs them under a penny for data. Now he’s crying foul that Apple introduces iMessage which allows iPhone users to communicate with each other and not count against their text allocation? Let him go back to his palatial home and count his money and watch his Apple Stock soar instead of nickel and diming us to death.

  • Lane Jasper

    This guy can go F-Himself! Yeah he may not sleep well at night, but it’s in a 40 million home (one of probably 10 I’m sure) Yeah, I feel REALLY sorry for this douch! What a dickhead.

    And I am sorry for the language, but this reallty torks me these CEO’s of MAJOR companies complaining because they have to take paycuts, and pat more taxes etc. in this economy, MANY people would love to be in their “financial shoes”

  • elpapo

    AT&T is known for gouging it’s customers. This CEO is proof positive that these guys are just crooks with business suits. I am disgusted to do business with them.

  • ApplePr0n

    @sonofsci. I feel that if Apple offered competitive prices, good coverage and unlimited data, either Sprint or T-Mobile would be gone ans AT&T and VZW would be left to phandroids sticking their heads in the sand

  • 1MatthewJTaylor

    Ok watch the video! Watch the whole video and make up your own mind, there is a lot more to the over all cost of data; that he speaks about. Just think of how much capital has been invested in infrastructure for me to post this comment.

  • Ronald Stepp

    Gods please fix this forum, its is blinking in and out, loading messages then clearing them loading them, then clearing them loading then clearing over and over. It’s either scribol or vanilladev.

    Its driving me absolutely bonkers.

  • Mharter11

    awwww…BooHoo…I feel so bad for you.  So bad it fact that I am going to double pay my bill for the remainder of the contract, just so you don’t leave sleep anymore.  This guy truly is a piece of work.  Wonder when they are going to charge us to transfer our numbers to a different service?  It’s bound to happen…

  • ThatsWhatsUp

    wow…unlimited data was a mistake? because you had to strengthen your network to keep up with the changing times? oh your losing sleep over iMessage because you can’t charge your ridiculous sms fees (I would really like to know how much it actually costs to send an sms message)? All I have to say to that is…..you sir are the biggest douche in the world, go f*ck yourself.

  • Oleg Zieaev

    He did not mention how much they made on data plans when users started to buy iPhones. Yes, the revenue shifted from SMS to data, so what? You’ve got even more money now! But I guess it’s never enough for this guy. What a BS !!!!

  • Michael Kleinpaste

    Welcome to the 21st Century Mr. Stephenson.  Your inability to see the future is the fundamental issue, not the fact that it happened.  Had you been looking at what AT&T COULD have been on the forefront of instead of focusing on your bottom line you could’ve come out on top and fatter in the wallet than ever. 

    You (AT&T) are a data carrier and should stick to that, not try to force your own proprietary services.  It is criminal that other countries have better cellular data networks and pricing than the US because you’ve been allowed to drag your technical feet as long as your stock holders were happy.  We (the US) invented the Internet for God’s sake and should be at the front of the innovation!

    You are complaining about the only thing that put your sad ass company ahead of the competition.  By the way.  As soon as my contract expires, I’m jumping.

  • dscar

    I leaving to sprint as soon as my contract is up. ass.
    My telephone dropped calls since 2008 when i signed up, untill end of 2011 when they upgraded their towers with our iphone data plans

About the author

Alex HeathAlex Heath has been a staff writer at Cult of Mac for over two years. He is also a co-host of the CultCast. He has been quoted by places like the BBC, KRON 4 News, and books like "ICONIC: A Photographic Tribute to Apple Innovation." If you want to get in touch, additional contact information is available on his personal site. Twitter always works too.

(sorry, you need Javascript to see this e-mail address)| Read more posts by .

Posted in News, Top stories |