Computers

Freeing the iPad from AT&T


AT&T isn't the only company hoping to cash in on wireless service for Apple's iPad.

In the runup to the Apr. 3 U.S. release of Apple's (AAPL) highly anticipated tablet computer, Wi-Fi service providers and cellular carriers are angling to sell consumers and small businesses that buy iPads add-on wireless data services. The services would be alternatives to monthly 3G cellular plans from AT&T (T), which is Apple's chosen data-plan provider for the iPad.

Boingo Wireless, which sells Wi-Fi access in airports, convention centers, and other public places, on Mar. 29 announced it would begin selling $2-an-hour access to more than 125,000 Wi-Fi hotspots for iPad users. Consumers can purchase the access directly through Apple's iTunes online store. Boingo Chief Executive Dave Hagan says he expects especially strong demand in New York and San Francisco, where AT&T's cellular network has suffered from congestion. "If it's not working very well, Wi-Fi is there," he says. The iPad "is going to be a very big opportunity for companies like ours."

Other wireless service providers see a market, too. Sprint Nextel (S), the third-largest U.S. cellular carrier, plans to market to iPad owners its Overdrive mobile Wi-Fi hotspot, which for a $60-a-month subscription lets users connect as many as five mobile computing devices to its next-generation 4G cellular network. "In our view the iPad will make a very compelling 4G device," says Sprint spokesman Scott Sloat. Sprint says its 4G network offers download speeds that are as much as 10 times as fast as AT&T's 3G network.

Customers of Verizon's (VZ) FiOS Internet access service already receive free, Verizon-branded access to Boingo's hotspots and could use the service with their iPads as well, according to Boingo's Hagan. Verizon Wireless declined to comment.

"Looking Outside of AT&T"

Analysts estimate that Apple could sell anywhere from 2 million to 6 million iPads this year. One million to 2 million buyers "will be looking outside of AT&T" for wireless service, estimates independent wireless industry consultant Chetan Sharma.

The iPad will let users interact with a touchscreen to browse the Web, use e-mail, view photos and videos, and perform other tasks. Apple plans initially to sell three models, starting at $499, with built-in support for Wi-Fi wireless networking. Three additional models that can communicate over high-speed 3G wireless networks will go on sale later in April, and start at $629.

The iPad will ship configured to readily purchase data plans from AT&T. Buyers of the 3G-enabled iPads will be able to access AT&T's cellular network for $15 or $30 per month depending on how much data they plan to consume. Those plans will also include access to AT&T's more than 20,000 Wi-Fi hotspots in the U.S. AT&T typically charges users who don't subscribe to its data plans, such as those for the iPad and iPhone, $4 per session or $20 per month to use its hotspots.

"One thing that will attract people is our great pricing," says AT&T spokesperson Mark Siegel. "It's all prepaid, done on the device itself, and charged to your credit card."

Price Pressure

Yet 3G-enabled iPads could conceivably work on other carriers' networks, including that of T-Mobile USA, which uses similar network technology as AT&T. There are no technical limitations that would preclude that, says Apple spokesperson Natalie Kerris. She wouldn't comment on whether Apple is in discussions with other U.S. carriers to offer iPad service plans. T-Mobile didn't return a request for comment.

The push by wireless service providers to grab a piece of the iPad service pie from AT&T could benefit consumers by pushing down prices for wireless access, analysts say. "I'd be surprised if, before [the iPad's launch], one other player doesn't come in with Wi-Fi presence," says Richard Doherty, research director of tech industry consultant The Envisioneering Group.

Wireless service providers are hoping that competitive prices and a choice of hotspots may be enough to peel some customers away from AT&T's fold.


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