AT&T, tear down these tired old bars

AT&T Mobility is once again caught in a spat over its claims of network coverage, but maybe the company should be concentrating its efforts on lucrative data services.
As RCRWireless.com’s Allie Winter reported earlier this week, the nation’s largest carrier is ignoring recommendations from the National Advertising Division (NAD) of the Council of Better Business Bureaus to modify or discontinue two of its “More Bars in More Places” TV spots. The NAD, responding to a complaint from Verizon Wireless, found that two of the commercials misleadingly implied that AT&T offered superior coverage indoors; the operator said it “respectfully disagrees” and won’t change the spots. (AT&T has vowed to take the NAD’s findings into account in future advertisements, however.)
The dust-up comes on the heels of news that AT&T enjoyed a record-breaking third quarter, with 1.7 million net adds and data revenues up more than 50% over the same period last year.
But those users aren’t flocking to AT&T for its great coverage. As many onlookers have pointed out, it’s the iPhone, stupid. Apple’s sexy gadget accounted for 2.4 million activations, 40% of whom were new customers, and company executives boasted that iPhone users generate 60% more ARPU than the average AT&T user.
And that impressive uptake came in spite of AT&T’s network – not because of it. The launch of the 3G iPhone spawned a flurry of criticism about the carrier’s coverage, with customers complaining about signal strength and network speeds in major markets such as Los Angeles, New York and Philadelphia. The complaints drew headlines in the mainstream press, and Verizon Wireless attempted to exploit the problems with full-page ads in USA Today and other newspapers.
AT&T hasn’t had to worry about marketing the iPhone. Apple has aggressively promoted the device and educated consumers with a savvy, eye-catching campaign backed with buckets of cash. But the operator’s strategy will have to evolve as high-end handsets such as the BlackBerry Bold – which was delayed due to network connectivity problems – come to market. Although Research In Motion Ltd. has produced a few new commercials to back its line of prosumer devices, it can’t seem to match Apple’s marketing expertise.
The No. 1 carrier in the United States says it will continue to run the tired “More Bars” spots that seem as likely to attract $30-a-month subscribers as they do high-end users. But it would be wise to put more resources into telling users about its sexy new handsets and what they can do. Because of all the things Apple has done right in wireless, educating consumers is the most important.
Article updated Oct. 30 to qualify AT&T’s advertising plans.