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AT&T Wireless Does Not Suck (And Apple Was Right. Maybe.)

Apple (AAPL) has been taking heat from many, including me, for sticking with AT&T (T) as its exclusive carrier partner in the US. Certainly many of us have been razzing AT&T, with good cause, given the network's long history of performance problems. But it seems as though the last laugh (or at least a strong chuckle) is with Apple and AT&T, as the carrier appears to be the top 3G performer compared to Sprint (S), T-Mobile, and Verizon (VZ).

PC World did a 13-city test of 3G network performance for AT&T, Sprint, T-Mobile, and Verizon. Although the four carriers all range in the 92 percent to 94 percent reliability range, AT&T had, on average, data download speeds 67 percent faster than its competitors. Critically for AT&T, download speeds in New York City tripled over previous performance measures, and those in San Francisco were 40 percent faster than before. AT&T has received many complaints about past service in the two cities.

The publication's test did suggest some conclusions about how the carriers have handled the quick increase in data traffic triggered by the growing pool of smartphone users:

In the past year, Sprint and Verizon--like AT&T--have seen a marked increase in the number of 3G smartphones that rely on their networks. Our speed results suggest that Sprint is upgrading its network capacity fast enough to meet the demand, while Verizon may be having trouble keeping up.
Most of this is good news for Apple, which has felt the anger of U.S. consumers who experienced dropped calls on AT&T's network and disliked the exclusive iPhone deal. However, there are some weak spots in AT&T's performance as well. Look at this chart from PC World:

Check out the reliability numbers for AT&T: San Francisco, San Diego, and San Jose all still experience below-average service, meaning that connections are more likely to drop in some of the biggest usage areas in the country. That probably helps explain many of the pot-shots taken at Apple.

Also, don't assume that Verizon will give up its TV ad campaign attacking AT&T. Improving service where it exists is great, but there's still a significant gap between AT&T's 2G and 3G service areas. According to AT&T's web site, its "wireless data coverage reaches 303 million people -- or 97% of the U.S. population." However, its 3G network "covers 233 million people or 75% of the population." Its EDGE network is a 2G transition and reaches 301 million people, or 96 percent of the populace. But that's not 3G, and we're talking about bragging rights and marketing.

Even with the network improvements, Apple still faces a dilemma in its relationship with AT&T. On the one hand, over a third of all iPhones end up on AT&T's network. It's tough to walk away from that type of business. On the other hand, the iPhone is vulnerable to Android as well as to the Blackberry. Carrier diversification -- otherwise known as selling to Verizon customers -- would help. But for the time being, these results may make Apple executives feel a little more comfortable maintaining the status quo.