Imnage: Apple iPad
Marcio Jose Sanchez  /  AP
The Apple iPad tablet is examined after its unveiling Jan. 27 in San Francisco. Versions of the device will be available with Wi-Fi only, as well as with a 3G chip for use on AT&T's wireless network.
By
msnbc.com
updated 1/29/2010 9:15:30 AM ET 2010-01-29T14:15:30

You could almost hear groans of disappointment around the country when Apple CEO Steve Jobs said there will be versions of the new iPad tablet that will run on AT&T's wireless network. Message boards and blogs bemoaned the news. "AT&T again? Haven't they learned anything?" was one comment on Newsvine (owned by msnbc.com) that typified the responses.

AT&T is the exclusive carrier of the iPhone in the United States, and iPhone customers have complained about lack of service in areas like San Francisco and New York City, as well as poor connectivity in various parts of the country.

Perhaps not as widely known as the complaints about AT&T is that the company also started providing wireless service for Amazon.com's latest Kindle e-readers last fall, and is doing the same for Barnes & Noble's Nook e-reader and Sony's new Reader Daily Edition. AT&T says it is working rapidly to make improvements to its 3G, or third-generation, network to handle increased data traffic, and re-emphasized that point Thursday in discussing its fourth-quarter results.

"Apple, which had criticized AT&T the year before, wouldn’t have committed to them if they’d felt they were going to have significant problems," said Ken Dulaney of Gartner Research, whose specialties include wireless communications.

"That said, I think all carriers, once they start to get the kinds of exciting devices that AT&T has had, are going to have problems with bandwidth. We are in a bandwidth crunch time."

The iPhone, released in 2007, has been a runaway success; early reactions to the iPad, announced Wednesday, are more mixed, and its success is not guaranteed. In addition, buyers will have a choice of a "non-AT&T" iPad, one that runs on Wi-Fi only, as well as one that runs on both Wi-Fi and AT&T's network.

It also remains to be seen how iPad buyers — or buyers of other tablets that are coming — wind up using the devices. Will they want to stream large audio and video files much of the time? Or will they will be used more like netbooks for e-mail and general Web surfing, tasks that are not as onerous on a network.

"The actual dominant usage patterns for this product are still yet to be determined," said Dulaney.

E-readers like the Kindle and the Nook do not tax network resources in the same way streaming video or audio do, said Jeff Orr, ABI Research senior analyst.

"Is somebody going to have a significantly different user experience because their e-book reader is using 3G instead of 2G (second-generation wireless)? No. if I could download that book in 30 seconds instead of 45 seconds, it’s really no different than what’s being promised, which is perhaps 60 seconds for a book to be downloaded."

Avi Greengart, Current Analysis' research director for mobile devices, said that Verizon Wireless "has been hammering AT&T hard for its 3G coverage map, but AT&T’s 3G coverage isn’t the problem — it’s the fact that in the places where smartphone users congregate," such as Manhattan or San Francisco, "the network is overwhelmed."

Greengart said he has been "using the Nokia Booklet 3G (netbook) with built-in AT&T connectivity for the past few months, and in most places it works fine — and fast. And in a handful of places, it doesn’t work at all."

He points out that "Apple did make a change in the rate plans for the iPad; it is not subsidized (like the iPhone), and rate plans in the U.S. start at just $15/month" for 250 megabytes a month, with an unlimited data plan costing $29.99 a month, and no contracts required in either case.

There will be Wi-Fi-only versions of the iPad, which will cost $130 less than those equipped with both Wi-Fi and 3G. The iPad's starting cost is $499 without 3G, and the first Wi-Fi only tablets are due out in 60 days; iPads with both Wi-Fi and 3G, about a month later.

The Wi-Fi only option may be the right one for those who don't want to deal with AT&T or any carrier, for that matter, and would appeal to consumers who plan to use the iPad mainly at home or in public locations where free Wi-Fi is available.

About 30 percent of U.S. households now have wireless networks at home, said Orr of ABI Research.

AT&T is upgrading its 3G service by going to what is called "High Speed Packet Access (HSPA) 7.2." The company says HSPA 7.2 should result in doubling peak data transmission speeds, from 3.6 megabits per second to 7.2 megabits per second.

"We are giving particular attention to markets like Manhattan and San Francisco," said company spokesman Mark Siegel recently. "We're adding cell towers, we’re building and upgrading antenna systems to boost performance in high-traffic areas, like stadiums and convention centers and public transportation routes. And we're adding radio network carriers to make sure that we have maximum capacity on the spectrum that’s available."

Even smaller, but significant, steps are being taken. Last fall, AT&T also said it will use the Opera Mini Web browser on many of its feature phones. Opera Mini "optimizes" Web browsing by compressing the size of Web pages on mobile devices.

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