In a comment that surprised industry insiders and pundits alike, AT&T CEO Randall Stephenson today downplayed the use of 3G on the soon-to-be-released iPad, calling it a mainly "Wi-Fi driven product." Apple CEO Steve Jobs had made much mention of the fact that the iPad will have a 3G compatible model and touted AT&T's iPad-only 3G subscription plans at the product announcement in January. However, Reuters reported today that Stephenson told webcast viewers
at an investor conference that his "expectation is that there's not going to be a lot of people out there looking for another subscription."
Amid the hype surrounding the iPad launch, when many observers were thinkng that Apple would open the iPhone and iPad up to a second carrier, Apple was able to convince AT&T to offer pre-paid 3G service for the iPad, with no contract or time commitment. The pay-as-you go nature were generally well received, with many prospective buyers considering the tiered plans: 250MB of data per month for $15, or unlimited data for $30. The CEO's comments were unexpected also because AT&T already offers 3G service to PCs and netbooks from Hewlett-Packard and Dell, which it promotes pretty enthusiastically
. So it's raising more than a few eyebrows that AT&T is coming out now and say that they don't think people will really pay for 3G on their iPads.
Stephenson may be considering at the significant premium that would be paid by users wishing to enjoy broadband on the go: the 3G models are priced $130 higher than WiFi-only models, despite the cost of the 3G radio being only a tenth of that difference. Factoring in that and the cost of the subscription (along with the fact that it's too big and unwieldy to use for Web browsing as you walk down the street), the iPad becomes much more expensive with only limited additional functionality, as WiFi hotspots proliferate and 3G coverage remains spotty in some locations.
Erica Ogg at CNET
wonders if AT&T took the deal because they thought it wouldn't cost them much: that "they didn't think people would use it anyway, so they wouldn't be leaving that much money on the table." More likely though, Ogg thinks, they are trying to reassure investors and regulators that the iPad isn't going to choke AT&T's network, as the FCC publicly fretted it would
. The US regulatory agency's director of scenario planning worried that the iPad would escalate the surge in demand for wireless broadband by smartphone users and worried that it would lead to a situation similar to the "congestion dialup users experienced following AOL’s 1996 decision to allow unlimited internet use."
In his remarks, Stephenson also addressed concerns about AT&T possibly losing its arrangement with Apple, saying that iPhone would be "an important part" of AT&T's phone line up "for quite some period of time." He did not elaborate on how much longer AT&T might keep its exclusivity deal, nor did he directly respond to speculation that Apple might be looking for a second wireless carrier in the US. Apple has also declined comment on that matter.