AT&T CEO sandbags iPad 3G subscriptions

Randall Stephenson tells investor conference he sees more people using the Apple tablet with Wi-Fi rather than the sweet subscription deal he agreed to.

One of the bigger surprises about the iPad when it was introduced was the sweet 3G prepaid subscription deal Apple and AT&T are offering.

But it turns out, AT&T's CEO doesn't anticipate many people will even use it.

AT&T iPad 3G
AT&T says more people will choose Wi-Fi on the iPad over its prepaid 3G subscriptions. James Martin/CNET

At an investor conference Wednesday, Randall Stephenson predicted that Apple's tablet computer, which comes in both 3G and Wi-Fi-only flavors, will primarily be "a Wi-Fi-driven product," according to Reuters.

"My expectation is that there's not going to be a lot of people out there looking for another subscription," Stephenson said.

Presumably by "another" he means in addition to a mobile wireless contract and home Internet service. But it's a bit of an odd business decision to talk people out of potentially using your service. Especially when the iPad-AT&T deal was greeted with plenty of enthusiasm.

Somehow Apple got AT&T to agree to provide pre-paid 3G service for the iPad , as in no contract, no two-year commitment. The choices are 250MB of data per month for $15, or unlimited data for $30. But AT&T expects few people to take advantage of it?

It's a curious statement for one of Apple's partners, especially one as important as AT&T, to cast any sort of doubt on an upcoming product with which it's associated. For that matter, why would a carrier say that at all? AT&T provides 3G service to PCs from Hewlett-Packard and Dell , but it hasn't gone on record saying it doesn't expect people to use it.

Maybe that is why AT&T decided to cut iPad 3G customers such a good deal--because they didn't think people would use it anyway, so they wouldn't be leaving that much money on the table.

Or, more likely, it could also be Stephenson trying to set investors, current AT&T customers, and the Federal Communications Commission at ease. The wireless operator's problems with its 3G network have been well-publicized, and it's even admitted to difficulties with its service in iPhone-saturated markets like San Francisco and New York.

Knowing there could be yet another burst of users flooding the AT&T network this summer when the 3G version makes its way to stores could scare away new or incumbent customers whose contracts are up for renewal and would rather avoid potential network connection issues. Plus, the FCC has also expressed its concern. Last month, the agency posted a blog calling out the iPad as a possible source of strain on wireless networks, albeit without naming AT&T specifically: "With the iPad pointing to even greater demand for mobile broadband on the horizon, we must ensure that network congestion doesn't choke off a service that consumers clearly find so appealing, or frustrate mobile broadband's ability to keep us competitive in the global broadband economy."

The 3G version of the iPad is still roughly two months from its debut. Hopefully this doesn't mean AT&T is signaling that its network isn't ready for it.

About the author

Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur.

 

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