Massucci's Take: AT&T's lawsuit against Verizon draws attention to its own flaws

AT&T (T) is suing Verizon Wireless for misleading advertising. But its actions could do the company more harm than good. The reason for the lawsuit: Verizon (VZ) has been mocking Apple's (AAPL) iPhone "There's an App for That" ads. Verizon TV ads show off a coverage map depicting its larger, third-generation (3G) wireless coverage next to AT&T's smaller 3G coverage map. In its advertisements Verizon quips: "There's a Map for That."

That may irk AT&T, but the company does not dispute Verizon's larger 3G coverage. But it is suing Verizon for highlighting its spotty coverage in a misleading manner. In Verizon's ads, the maps display blank space in AT&T's coverage area. The intent, according to Verizon, is to show where AT&T lacks 3G coverage. But AT&T claims the ads imply that AT&T provides no coverage at all in those areas.

I would argue that viewers are intelligent enough to know what Verizon means. I would further argue that by suing Verizon, the damage to AT&T is greater than the effects of any negative Verizon advertisement. Not only does the lawsuit draw attention to AT&T's lack of 3G coverage, but its lack of a backbone too. Instead of trying to do damage control and prevent others from pointing out its flaws, AT&T should just solve the problem.

Walking home last night in New York City, I stopped at AT&T and Verizon stores to ask if the "There's a map for that," ads were having much impact. I spoke with a Verizon store manager, who wished to remain anonymous. He said the in-store map illustrating Verizon's larger coverage is quite effective when selling phones, but no customers had mentioned the Verizon's TV ads. At AT&T, the store owner, who also didn't want to be identified, said he was aware of the TV ads, but said "it's just a commercial." No customers have talked about it. "The iPhone is the iPhone," he said. "It sells itself."

Mark Siegel, AT&T spokesman in Atlanta, said consumers don't understand the blank space in the ads. "They don't see it as no 3G coverage, they see it as no coverage at all," he said in a phone interview. "That's misleading and that's why we've take the action we have." Consumers are used to being told that blank areas on wireless maps mean no coverage, he said. Verizon spokesman Jim Gerace countered Siegel's remarks telling DailyFinance, "This suit that AT&T filed is goofy. We clearly state in the ad that voice and data service is available outside of the 3G coverage area, which is their concern."

By tackling Verizon Wireless, a joint venture between Verizon and Britain's Vodafone, AT&T is sacking its rival when it should be beefing up its 3G network. If AT&T could fill those blank-map-gaps with wider 3G coverage, then Verizon would have little argument. AT&T is drawing more attention to its smaller-than-Verizon's 3G network and more people are hearing that it's slower too, from folks who use iPhones.

AT&T CEO Randall Stephenson, in an interview with DailyFinance on July 23, told me that AT&T's "data network behaves differently with the load of demand [from iPhone users] that's being put on the network." IPhone users have complained about the lack of 3G coverage and the slow speed while surfing the Web on their phones, not to mention dropped calls. In July, I asked Stephenson about the anger from iPhone users about AT&T's poor network quality. He said he puts the network to the most drastic tests possible when he travels to large cities like New York and Los Angeles. He "abuses" his phone as much as he can, with Web surfing, app using, and e-mailing -- "I beat those phones up," he said. When there's a problem, he calls his service-support team and gets them to fix it. "I'm on it like a hawk," he told DailyFinance.

If he's on it like a hawk, then AT&T should be telling us three-plus months later about solutions and improvements it has made to its network, not trotting out some half-baked lawsuit that ironically draws attention to the company's still-sparse 3G coverage.

How about an announcement telling customers how AT&T has been working with Apple to help boost the quality of iPhone service? Heck, if Stephenson would say, "We're still working on it, sorry we have nothing new to report," that would be welcome news to many iPhone users, who are loyal to their phones in spite of being tethered to AT&T's slow service. Simply telling folks they haven't lost their focus on the problem, would be enough for many.

Instead, AT&T insults its customers with this third-grade-level lawsuit of "Verizon hit me first." Please.

Back in July, I told Stephenson that I owned an iPhone and that I don't recommend it to friends because the network quality can to often be poor. Add this silly lawsuit to the list of reasons I'd tell people to stay away from the iPhone until it works on a network besides AT&T's.

Anthony Massucci is a senior writer for DailyFinance. You may follow him on Twitter at hianthony.

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