AT&T 3G service disruption hits San Francsico

AT&T 3G wireless customers in San Francisco had problems making calls, sending and receiving text messages, and accessing data on Friday evening.

AT&T spokesman Mark Siegel said that starting at about 4 p.m. PT on Friday afternoon, AT&T experienced a hardware issue in San Francisco that disrupted its 3G wireless network within the city. The hardware issue, which he did not elaborate on, was fixed by around 6:15 p.m. PT. And the 3G network has been working fine ever since, he said.

The problem did not affect AT&T's older and slower networks that use 2.5G EDGE or GSM technologies. This means that even though 3G service was disrupted, most customers' devices were able to switch to the slower networks to make calls and to send and receive data. Still, Siegel noted that AT&T detected that customers were having trouble accessing the 3G network, and the company quickly figured out the problem and resolved the issue within hours.

Even though their phones were likely switching over to AT&T's slower technology, many AT&T customers still noticed the issues, with many people reporting having problems with their 3G service on Twitter. Some of these customers said they were unable to access voice, data, or SMS messages at all.

Truth be told, the service disruption in San Francisco was not a really big deal. It affected a handful of customers. But at this point, any network problems, particularly in tech-savvy areas of the country such as San Francisco, only flames the fire of criticism that is heating up around AT&T's 3G service.

The disruption comes at a time when AT&T's reputation for 3G service is already tarnished. For more than a year, iPhone users have complained about dropped calls and poor service on the 3G network. The problems appear to be particularly acute in densely populated urban areas, such as New York and San Francisco.

Last week, Ralph de la Vega, head of AT&T's wireless business, admitted that AT&T is having problems in these cities. He said the company is working on resolving the issues.

De la Vega also admitted that AT&T is struggling to keep up with demand for data on its 3G network. And he alluded to adopting new "incentives" to encourage wireless customers to use less data.

Verizon Wireless, AT&T's biggest competitor, sees AT&T's problems as a golden marketing opportunity. And the carrier started running advertisements recently that highlight AT&T's lack of 3G coverage in some parts of the country. AT&T sued Verizon last month over the ads, accusing Verizon of misleading consumers.

AT&T has dropped its lawsuit, but the publicity around the tiff has likely not endeared AT&T to its customers, nor has it painted the company in a favorable light to anyone considering becoming an AT&T customer.

Meanwhile, AT&T claims in its own ads that it has the fastest 3G wireless network, a notion Verizon disputes. Earlier this year, Verizon also filed a lawsuit against AT&T claiming that the company was not being truthful in its advertising. But Verizon has also decided to dismiss its complaint.

The biggest problem for AT&T is that it is the only carrier in the United States that offers the most data-friendly and data-hungry mobile phone on the market: the iPhone. Analysts say users of the Apple smartphone consume five to seven times more data per month than other wireless subscribers.

AT&T has been upgrading its network to add capacity to keep up with demand, but for many consumers, the upgrades have not solved their service problems. AT&T recognizes more needs to be done. It has launched a new application for the iPhone that lets users report service problems. And the company is urging the Federal Communications Commission to find more wireless spectrum to auction off. But these solutions will take years to implement.

In the meantime, AT&T is faced with a major dilemma. It must continue to market the iPhone and all its bandwidth-hungry applications in order to continue growing its subscriber base, but it also needs to curb data usage until its network can handle the additional load.

In short, AT&T is in an impossible situation. If it backs off on its marketing, it risks losing Wall Street's confidence. If it continues to add new iPhone users, and its service suffers for it, it risks alienating its customers. And then the company may find itself spending the next several years repairing a severely damaged reputation.