Tuesday, December 18, 2007

A bad iPhone experience with Apple and AT-and-T

See the picture below to start getting a sense of my frustration with Apple, AT&T, and my new iPhone.

That screen is not in any of the iPhone commercials I saw. No one at the Apple store told me that I needed "an AT&T pre-approved credit check code" before I'd be able to use my iPhone.

I am outraged that there is no way for me to resolve this without going to an AT&T store. I hate going to cell phone stores. [Note that the issue was eventually resolved on the phone - I think -- see below. I began writing this while on hold.]

Apparently this happens to anyone who has never had an AT&T account. Strangely, I did not see this in any of the iPhone ads I saw on TV. It wasn't mentioned in any of the many e-mails I got from Apple encouraging me to buy an iPhone. I didn't see it when I browsed Apple's website to learn more about the iPhone (which I did several times).

One very frustrating detail here is that no one at the Apple store told me about this. Had they told me that, I could easily have walked to an AT&T store or kiosk in Crossgates to get the pre-approval.

The one bright spot in this experience was an AT&T "activation specialist" named Darameli, who somehow made it work. She created a "pre-account" for me and that allowed her to get me the code I needed. By resolving this issue (well, I'm still waiting for some final e-mail confirmation from AT&T, but ...) she removed the urge to drive to the nearest AT&T store and throw an iPhone through their window.

Now here's what gets me, and why I would advise any investor to stay away from stock in AT&T. This has to have happened before. Apple has sold over 1 million iPhones. If 10% of the customers have never had an AT&T account before (and that has to be a conservative estimate) then 100,000 people have had this problem. From talking to Darameli, she has encountered problems like this before, and has had to deal with angry customers like me. I was bouncing off the walls before she calmed me down. I screamed at three customer service reps before they finally got me to her. The process took an extra 45 minutes because of this idiot snafu.

After 100,000 of your customers have had this problem, wouldn't you think management would have found a way around this. If just one executive had sat in Darameli's chair for one day, this problem would have been fixed the next day. It doesn't have to be the CEO. It could be the COO, the CFO, the General Counsel, any member of the Board of Directors. There's a lot of possibilities here. This was my first experience with AT&T as a customer. It wasn't a good one. What a tremendous opportunity to build customer loyalty right from the get-go. Instead, it's a big chink in the armor.

Now let's be clear about something. I should not need a pre-approved credit check code. I am a long-time Apple customer. I have bought several Macs over the past few years, including at least two in the past year. And I just bought three iPhones at a cost of $1500 (including the 2-year super-duper warranty for each. It should be a pretty safe bet that I can afford the monthly payment on the cell phone account.

What does AT&T gain by doing this? How many iPhone buyers (at $399 a pop these days) are going to fail a credit check? Maybe some, but I'd bet it's a small percentage. What does AT&T really lose if someone can't pay their bill anyway? The marginal cost of an extra customer is trivial in this business. Can't anyone at AT&T do that math?

I'm not letting Apple off the hook here. But I have years of experience with Apple and they've been pretty good all this time.

And you know, now that I think about it, my first cell phone was with Cellular One. They were taken over by Cingular. And Cingular became AT&T. So I did have an AT&T account before. These guys are idiots.

After completing my post, I did a little digging. Over three months ago someone made a similar complaint on a very prominent blog: Michael Huffington on the iPhone.

And here's another one from back in June: MacRumors on the iPhone.

Another one from July 4th: Mobilewhack on the iPhone.

I also looked at the video on the Apple website about it. The guy tells you it's really simple, and you can do it at your own pace. I started the process 90 minutes ago and I still haven't gotten the confirmation allowing me to activate my iPhone. Keep in mind that I have to activate two other iPhones and can't do them until I get the first one done.

Update: It took a total of 2 1/2 hours to activate my iPhone. The next two should be quicker. And I've gotten two marketing messages from AT&T so far. Nice.

Further update: See my next post about more problems with iPhone activation.


Unknown said...

All cell phone companies run a credit check on new account holders. So its not just an AT&T issue. To not run credit checks, even if someone can afford a $400 phone would be an irresponsible business practice. I agree though Apple and AT&T should have figured a way to automate the credit approval process within the activation routine of iTunes

Unknown said...

I appreciate Bryan's comment, but disagree that it would be irresponsible not to run a credit check. The question is whether the cell phone company loses more from people with bad credit who don't pay their bills, or from people who get denied or decide not to sign up because of the hassle.

Since the marginal cost of a new customer on the network is essentially zero, I think they lose more money from the latter.