Economic Snapshot: AT&T Still iPhone's Biggest Flaw

After toying with the hearts of iPhone users since Apple (AAPL) unveiled the first model, today marks AT&T's (T) much-anticipated nationwide activation of Multimedia Messaging Service (MMS) for the popular smartphone. A move that screams "It's about time," the feature launch will allow iPhone users to finally send pictures, video, audio, and contact information without having to compose an email.

Once the digital dam is broken, AT&T insiders expect to see a usage increase of roughly 40% today -- according to DSLreports.com -- coming from folks anxious to unleash a torrent of party photos to their hungover friends. However, a handful of iPhone users discovered that MMS had been enabled last week -- likely due to some preliminary network testing. And if this week's outage is any indication, AT&T needs to seriously scramble to handle the workload.

But if you ask any iPhone user, MMS is far too small of a recompense for more than two years of abhorrent service -- one that no amount of last-minute tinkering could ever fix.

AT&T and Apple's exclusivity contract is the bane of every iPhone owner and often the deal-breaker for people interested in owning the device. That contract is set to expire in 2010, and customers -- existing and potential -- are begging Apple to consider branching out to Verizon (VZ) and to a lesser extent, T-Mobile (DT) and Sprint (S). Given the public's push for options in wireless coverage, Apple would be extremely foolish to stick with a much-maligned provider.

Aside from the slow rollout for MMS, iPhone owners have decried everything from terrible coverage to delayed voicemail messages to having a hand in disabling apps. In an article entitled AT&T Takes the Phone Out of iPhone, CNet scribe Elinor Mills wrote a celebrated attack against AT&T's ongoing indifference into improving its service. She cited the routinely dropped calls and poor reception despite close proximity to urban areas. Mills also spoke with AT&T spokesman Mark Siegel -- who had an unsurprising adverse reaction toward her polling users for their AT&T horror stories.

"So you are actively asking folks to submit their experiences? Sorry, but you and I have a basic disagreement about why you are doing this story. What is the news here beyond what others have covered?" Siegel wrote in an email.

Well Mark, perhaps Mills -- like many other users -- is utterly fed up with the service unfit for what is the most popular smartphone in the country, and she's attempting to bring this to your attention. You know, since your company is continuing to ignore the accounts of everyone else.

But until the exclusivity contract runs out or Apple comes to its senses -- whichever comes first -- iPhone users are stuck with a great device on a sub-par network. And in the meantime, AT&T will keep spewing excuses as to why mere adequacy is simply beyond their reach.

In light of the provider's ongoing ineptitude with the iPhone, Minyanville analyzes some of the recent business strategies AT&T has displayed in the last two years and surmises its intention behind each botched move.

AT&T Still iPhone's Biggest Flaw