AT&T's Desire to Distract Attention from Verizon Ads Could Backfire

You've gotta have some sympathy for AT&T (T). It must be painful to see your big competitor, Verizon (V), hoisting you on your own petard of having much spottier 3G service, which you push along with the iPhone, than 2.5G or 2G. But taking the other guy to court in this case will only exacerbate the damage as well as potentially doing damage with Apple (AAPL), which might well be looking to end the exclusive access to its handset line.

First of all, let's be clear. Suing Verizon is about the single most self-damaging marketing action that AT&T could undertake. How long does the average ad campaign run? A few months? You do get some like the Apple and Microsoft (MSFT) ads targeting each other, but then they have room to develop on a theme. But how many different ways can you say that AT&T's 3G coverage is about as thorough as a sieve? Unless you come up with significantly different approaches to the topic, you end up at a dead end that runs its course.

So what does the AT&T brain trust do? Take the one action, a lawsuit, that offers a whole string of immediate self-inflicted wounds:

• Tons of media types, myself included, find the story too good to pass on, so the message about AT&T's 3G coverage just gets spread more and more -- without significant cost to Verizon outside of its lawyers, whom it employs or has on retainer anyway.
• Not only does the story reach more people than the ads, but it starts lasting longer. What might have died off naturally now becomes a predictable cycle of ad placements and close-at-heels news stories. You know that when the ad eventually gets pulled, for whatever reason, that will become a widely circulated story as well.
• AT&T looks like an ill-mannered lout that can't face its own limitations, because it started fighting back without any apparent evidence that what Verizon was illustrating was incorrect. Trying to argue that Verizon makes it look as though it has no coverage in much of the country simply invites an add by Verizon comparing AT&T's total coverage with 3G, and then comparing both to Verizon's. It only takes one more map. I'm sure they could figure out how to squeeze that in.

AT&T did not file this lawsuit because Verizon's "There's A Map For That" advertisements are untrue; AT&T sued because Verizon's ads are true and the truth hurts-- AT&T now is attempting to silence Verizon's ads that include maps graphically depicting the geographic reach of AT&T's 3G network as compared to Verizon's own 3G network because AT&T does not like the truthful picture painted by that comparison.

Now for the final touch. Apple and AT&T have been the target of one consumer suit after another, all over the promises of 3G service. AT&T has benefited from the exclusive access it's had to the iPhone (though I wonder whether the heavy data usage and the subsidies it pays to Apple ultimately makes iPhone customers a lot less profitable). Apple has no interest in being associated with poor performance. So what the carrier is doing is essentially giving more fodder to whatever sizeable impulse that Apple already has to start doing business with other US carriers -- specifically, Verizon.

[UPDATE: Talk about being tone-deaf over criticism. According to a report by Sam Diaz at ZDNet's Between the Lines, AT&T has announced $65 million in 3G upgrades for the San Francisco area. What geography do they not address? Most of Silicon Valley, including Cupertino! That's right: If you work at Apple, you can't get a 3G signal in or around the office for your iPhone. Is that saying "Don't do business with us" or what?]

[UPDATE II: I got an email today, November 18, from someone at AT&T looking for a correction: "It is incorrect to say that Cupertino does not have 3G service. It does, in fact, have 3G coverage, and benefited from the Bay Area 850 MHz spectrum overlay announced yesterday." But wondering whether Sam had totally misread something from AT&T, I asked a few more questions. Apparently Cupertino got its upgrade "several months ago" and so was left out of the announcement of "more recently-completed upgrades." But, wait - when did the iPhone 3G come out? According to CrunchBase, July 11, 2008. OK, so Cupertino got its upgrade maybe in the summer, which means that you couldn't get onto a 3G network with the iPhone 3G at Apple's own headquarters for at least a year. Glad to clarify that update.]

[UPDATE III: It's the call for correction that wouldn't die. Now the AT&T person is claiming that Cupertino had 3G before the iPod 3G was released and apparently any work done in 2008 and 2009 -- which was only completed "several months ago," according to said person -- must not have added anything. After all, either the city had 3G service, or it didn't. Or maybe only Apple headquarters had it. In any case, a single story would be simpler. And more believable.]

[UPDATE IV: Yes, it still goes on. I heard from another AT&T person who said that the question is one of spectrum frequencies. He wrote that the company had 1900 MHz UMTS (G3) in Cupertino "as early as March 2007" and that 850MHz UMTS arrived there in December 2008.]