Boy Genius Report is claiming that two separate sources have told them that AT&T is looking to sell an 8GB iPhone 3GS for $99 US before Christmas. While this news wouldn't come as a shock, it would certainly take more than AT&T to make it happen. As most of you know, Apple doesn't make an 8GB iPhone 3GS and it would probably mean the discontinuation of the iPhone 3G in general.

If you think back to the time of the first generation iPhone (it was so long ago now), you'll probably remember that Apple quickly discontinued the 4GB iPhone after realizing that most people were opting for the larger capacity. Not too long after that, Apple introduced the 16GB version and discounted the price of the 8GB. Now that the iPhones themselves are subsidized by the wireless carrier, the game is a little different.

I doubt that we'll see AT&T discount the 16GB iPhone 3GS to $99 US, even though it would be a huge strategic move before the holiday season, but I have a hard time believing that Apple would be willing to manufacture an 8GB iPhone 3GS. It's one thing for them to continue with the 8GB iPhone 3G because they already have the manufacturing in place, but for Apple to start manufacturing another iPhone 3GS at a capacity less than its current models -- that just seems out of place.

I've found it disappointing that the iPhone (a professional device) has had a smaller capacity than that of its sister, the iPod touch. Currently, the iPod touch is shipping at a top capacity of 64GB and the iPhone only 32GB. Here's the point: if AT&T and Apple could work together and release the 16GB iPhone 3GS at $99 then that could potentially allow for the 32GB at $199 and a 64GB model at $299. That would be a killer plan for the two companies just before the holiday season.

While this may be far-fetched, I don't think it's impossible: Apple did release a bump in storage to the 16GB iPhone in early 2008 without any warning. Here's hoping that they do that again.

Stung by some pretty aggressive advertising by Verizon, AT&T has had enough and is suing the communications giant for false and misleading claims.

AT&T says the ads, which show that AT&T has poor 3G coverage compared to Verizon are causing it to lose "incalculable market share."

According to the lawsuit which AT&T filed in Atlanta federal court, a recently broadcast ad campaign shows maps with white spaces that mislead consumers into thinking AT&T has no network coverage outside of areas where it offers high-speed mobile services, known as 3G.

But AT&T argued that its customers can "fully use their wireless devices outside of a '3G' coverage area and undisputedly have coverage in areas depicted by white or blank spaces on the maps used in Verizon's advertisements."

Verizon says the lawsuit has no merit, and Verizon Wireless spokeswoman Nancy Stark said the ads "clearly state" that voice and data services are available outside 3G areas. She said the ads were intended to tell consumers about coverage for smartphones, which are used for data services.

If you want to see the ad that sparked the lawsuit, click here.

[via Engadget]

Reports of trouble for AT&T's 3G network have done nothing to keep people from the iPhone in the U.S.

The nation's second largest wireless carrier announced third-quarter earnings Thursday morning that were full of iPhone goodness. AT&T (T) activated a record 3.2 million iPhones in 3Q, 40% of which went to people new to the company.

Wireless data was the supporting star of the show. Services such as messaging, Internet access and the like were up 33.6% from 3Q of 2008 to $3.6 billion. Data sales now account for 29.4% of AT&T's wireless revenue.

The company's earnings were relatively flat, having posted a profit of $3.2 billion, or 54 cents a share for 3Q '09 versus $3.23 billion or 55 cents a share for 3Q of '08. AT&T did, however, bring in enough to beat analyst expectations. The street was only looking for earnings of 50 cents a share.

[via MediaPost, Marketwatch]

Update: As of this writing, Total Apps reports that it's back in the UK App Store. We still don't see it in the US store.

That sure didn't last long. Just shortly after the discovery of a 3G "backdoor" for the EyeTV app, it has been pulled from the App Store.

The workaround let users of the app stream video over a 3G or other cellular network connection, something that AT&T has objected to in the past. Specifically, users can connect to ElGato's My EyeTV service to schedule and stream recordings.

When users try to stream video outside of a Wi-Fi connection, a dialog box appears saying that a Wi-Fi network is required, but streams the video anyway. Elgato says they have just submitted an update to Apple, after Apple removed it from the App Store, removing "test code" that allowed this streaming:

"Some test code that enabled live TV streaming over the cellular network was accidentally left in the the EyeTV App. Apple requested that we remove the code since their agreement with AT&T does not allow redirecting TV signals over the cellular network. The code was removed and a 1.0.1 version of the EyeTV app was submitted," they told TotalApps.

This app rejection is similar to the removal of the Commodore 64 app, that was pulled after hidden access to a BASIC interpreter was discovered. This removal adds just more trouble and frustration to users and developers, especially because of the current state of the Google Voice app.

[Via Total Apps]

iPhone users have been waiting for tethering for a long time. More specifically, AT&T customers are still waiting for it. Since the WWDC 2009 Keynote Address, where it was announced that iPhone OS 3.0 would support tethering, AT&T has said they would support it... sometime.

Appmodo.com is reporting that iPhone tethering will not be available this year. They suggested that AT&T had previously gone on-record saying "that iPhone tethering would become available 'sometime this year'" -- presumably referring to this quote on CNet.com, from AT&T Mobility chief Ralph de la Vega who said (in November of 2008) that "iPhone 3G users will be able to use their phones as wireless modems at some point next year," which would obviously mean 2009.

The Appmodo story links to an article by Andrew LaVallee, writing for The Wall Street Journal's Digits blog, who quotes an unnamed spokesman for AT&T who refused to say when tethering would be available and said: "Whenever we offer new features, we want to offer the best possible customer experience. For tethering, we need to do some additional fine tuning to our systems and networks so that we do deliver a great experience."

Appmodo seems to think this is a change in AT&T's official stance, but LaVallee explicitly refers to it as "the company's prior statement."

When it comes to iPhone tethering, has Appmodo gotten the story straight before? Well, on June 17th they quoted a source who said "The highly anticipated tethering option will also be delivered towards the end of July with pricing around $55 per month..." -- then on June 19th, AT&T explicitly denied the $55 cost via their Facebook page.

On July 9th they quoted the same source saying that MMS and tethering were coming in September, and repeated the "around $55" estimated cost which had already been dismissed on the record. Appmodo added, "Our source is from an undisclosed reputable AT&T employee." So much for that. Granted, we've also been off the mark on tethering rumors, but we're trying not to make such a habit of it.

When will AT&T make tethering available? The answer is that no one outside of AT&T and Apple knows. AT&T isn't saying, but what Appmodo is seeing as a change in the answer, the WSJ says is the same line they've heard before. Given the way Appmodo has been reading the tethering tea leaves, I am highly skeptical that this represents an official schedule change -- sure, tethering might not show up until 2013, but that was just as true last week as it is today.

Business Insider is reporting that AT&T has given Apple the go-ahead to enable Voice over IP (VoIP) apps such as Skype on its 3G network. In the past, VoIP apps required a Wi-Fi connection.

The announcement was made in advance of the annual conference sponsored by CTIA - The Wireless Association. AT&T Mobility CEO Ralph de la Vega is scheduled to give a keynote at the conference tomororw and could use the event to further elaborate on their intentions.

The announcement is most likely a response to recent events at the Federal Communications Commission (FCC), which is proposing new rules that would prohibit carriers from blocking apps on their networks.

A public announcement by AT&T stating that they will allow apps such as Skype on their network would remove any doubt that it's the company that is doing the blocking, and put the spotlight firmly on Apple to explain why they're not approving VoIP apps. As noted yesterday, VoIP provider Vonage has made its app available in the App Store, although ratings after the first day probably make them wish they hadn't...

It should be noted that the announcement will likely have no bearing on the fate of Google Voice, which was rejected by Apple on the grounds that it duplicates functionality already found in the iPhone. The Google Voice app allows users to control their Google Voice account, send SMS messages and check voicemails, but does not provide any VoIP functionality.

Dear Auntie T,

My father-in-law (long time reader) has the old original iPhone. He finally made the jump and got himself a brand new shiny 3G S. My mother in law wanted the old phone, and promptly took her SIM card out and popped it in the old phone. It should have worked. It did not.

It prompted her to connect to iTunes and then tried to get her to choose a data plan, which she didn't want. All she wants is the essential function of a cell phone with a nice iPod layered on top. Wifi would be nice. She couldn't be less interested in a data plan.

This used to be possible. Is it now not possible? A good friend of mine, somewhat recently did this very thing and had no problem whatsoever. He is happily chugging along with a data-free iPhone 3G. ATT is giving them grief over the phone and won't let her use the phone without a data plan, despite the fact that the iPhone, being the original one, is owned outright and is not subsidized in any way.

Love and kisses,

Lauren

Read on for Auntie's response....

Editor's Note: We welcome guest poster Murphy Mac, a long-time friend of the site who shared with us his experience of setting up one of the new femtocell AT&T repeaters that promise to improve reception for well-heeled iPhone users... or will they?

Good times for Charlotte, North Carolina: First AT&T makes Charlotte one of six cities getting a 3G speed boost by the end of 2009. On the heels of that news comes the MicroCell, a device that facilitates AT&T 3G calls where coverage is weak or nonexistent.

How? The MicroCell acts like a miniature cell tower in your home or office. Your 3G phone connects to the MicroCell just like it's any other tower. Voice and messaging traffic is then relayed across your broadband Internet connection. Charlotte is the sole initial test market for AT&T's version of the device, though other carriers are distributing their femtocells more widely.

Here's the full breakdown on pricing:

Purchase Price: $150
Monthly Charge: None

Optional Unlimited Voice Minutes Plan while using MicroCell:

AT&T Customer with both AT&T landline and DSL: Free
Customers with AT&T Landline or DSL: $10 per month
All others: $20 per month

I installed a MicroCell for a friend the other day, and after one small hiccup it's running. But is it everything I hoped it would be?

Setup for the MicroCell is straightforward. Most users will probably connect it via Ethernet to their router, which is exactly what we did. Optionally, the device can be placed between the router and the modem, giving MicroCell traffic priority handling over other Internet connectivity. If you don't have a router, the MicroCell can be plugged directly into your broadband modem and your computer can be connected to the MicroCell.

File this one under AYFKMWTS (are you freaking kidding me with this stuff?): a Gizmodo reader, aggravated with an unacceptably high rate of dropped calls on his iPhone, took it to a New York City Apple Store to have it checked for issues. The call dump statistics revealed a 22% drop rate on calls, which most of us would call "wicked awful" -- but not Apple and AT&T.

No, in this particular case the Genius told our hapless iPhone owner that he should count himself lucky, as Apple's baseline stat for dropped calls in NYC is a blistering thirty percent. Yes, almost one in three calls on an iPhone in the Big Apple will end with frustration, and that's just OK with everyone.

Well, not with us. Combined with the "five bars, no calls" dead zones and mysterious "call failed" issues, it must be said: this phone is not getting it done when it comes to the whole phone thing, at least on AT&T's network in the city that never sleeps. Or, for that matter, makes an uninterrupted cell call.

[via Engadget]

The long awaited and much vilified AT&T MMS service was finally launched in the U.S. yesterday. I've scoured the Apple support boards, and it seems like it was pretty tame, with some reports of failure to get the update, failure to get the MMS functions after an update, late delivery of MMS messages, and so on.

In my own circle of friends it seemed to go OK, but most of them didn't need MMS and didn't really care about it one way or the other.

So how was it for you? The update of your dreams, or your worst nightmare?

Update: It appears that this post describes a sponsorship discount (business/school/etc). Those users get a percentage off of their monthly plan ($29.99 voice plan and iPhone data charge excluded). Those who do not see this as an option lack the corporate discount; those who do are seeing what the monthly service cost is after the discount is applied.

Go here to see if you qualify for the corporate discount.

Note that this discount only applies to the voice plan and not to the iPhone data plan. Nor does it apply to the additional lines in a family plan.

Looking to save a little on your monthly iPhone rates? AT&T just announced a price break but you do have to opt-in. It's not automatic. You can save from $6/month on the Nation 450 with rollover up to $12/month on the Nation 1350. The Unlimited plan remains unaffected.

So what's the downside of all this? You may lose some or all of your rollover minutes by converting to the new plan price. So check the fine print before you click Submit. Any existing corporate or student discounts remain unaffected. If you're already receiving a 15% discount, for example, you'll continue to do so after the change. The iPhone data plan for $30 is not altered in any way.

The rate change takes effect immediately. Your current month will be pro-rated up to the date of change, the old charges affecting everything up to your change date, the new charges thereafter. AT&T warns that you may not be able to view your yet-unbilled usage for the remainder of the billing cycle, but you can call and talk to an AT&T representative if you need that information.

[Thanks, Dale Gattis]

As the AT&T iPhone MMS launch is only one day away now, Engadget is reporting that they heard some launch details from AT&T. Specifically, AT&T has stated that it expects MMS for the iPhone to launch in the "late morning" Pacific time, which would mean it "early afternoon" Eastern time.

Also, this update will arrive as a carrier settings update, which means you'll have to connect your iPhone to iTunes to update. These updates are very small and don't require a restart. Just make sure you and your iPhone are ready to update on Friday.

For many iPhone owners in the U.S., the fact that you're tied to AT&T as the wireless carrier has been a serious problem. As an example, until this week, I was lucky if I got 2 bars of signal strength on EDGE at my house and I never had 3G service. Now, for some inexplicable reason, I'm able to get a full 5 bars on 3G on the top floor of my house and about 3 bars on the lower floor.

Unless you're fortunate enough to have a similar miracle take place near your home, you may need to take advantage of AT&T's upcoming 3G MicroCell service. This service literally puts a tiny Internet-attached cell tower in your home or office, blasting out 5 bars of 3G goodness to about a 5,000 square foot area.

The 3G MicroCell comes at a price, of course -- the device is rumored to cost $150 and there will be no monthly charge if you wish to use your existing minutes. You can also add unlimited phone calls through the device for an extra $20 per month, so if you primarily use your iPhone in one location, it might be cheaper to get the minimum service plan for the iPhone and just use the 3G MicroCell unlimited plan for your calls.

AT&T's rollout of the 3G MicroCell service will make the iPhone available to a wider audience of potential users, and may also benefit the overstressed AT&T network by decreasing the number of voice and data calls using the regular cell towers.

At the present time, AT&T is testing the 3G MicroCell service in Charlotte, NC. You can check availability of the service by visiting the AT&T site.

Well, it looks like they were telling the truth, for once. Last weekend, a friend of mine just happened to forget that my iPhone couldn't receive MMS messages, and sent me a picture he had taken. So needless to say, I was surprised when I saw the MMS notification, complete with picture, show up on my phone.

I was fully prepared to hop on to TUAW and write up a post, letting everyone know that MMS was turned on a full three weeks ahead of schedule. To be on the safe side, I decided to check with others to see if MMS was working for them. Unfortunately, everyone I asked said MMS was still not working on their phones.

Here at TUAW, we have received several tips over the past few months from individuals who have indicated MMS had suddenly started working for them. Many of these were from people who had also installed an updated carrier settings profile to their phones, which has produced mixed results across the board, ranging from MMS actually working to accidentally removing Visual Voicemail and even the basic ability to make phone calls. Even with these profiles installed, however, most people were still unable to use MMS due to settings on their AT&T account which prevent iPhones from sending media messages and filter incoming messages through their web-based "Multimedia Messaging" platform.

For the record, I was running the iPhone 3.0 software, and I had previously modified my carrier settings, although that hadn't really made much of a difference until now. I had been lucky, in that I had found a profile that did not break anything, and had even temporarily enabled tethering on my phone, which I successfully used for about five minutes to try it out (although when I later tried to use the tethering during a recent power outage, the option mysteriously disappeared from the settings panel after I turned it on). So I had to draw the conclusion that my newfound ability to send and receive MMS messages was probably related to the carrier settings I had previously tinkered with, and I was doubtful that it would last.

Now here we are a week later, and MMS is still working for me. But what's even better: reports are flowing in from around the country that MMS has started working in different markets. There are still quite a number of people out there that don't have it yet, but it looks like AT&T is actually serious about meeting the September 25th deadline. Yeah, it's definitely not "later this summer" as promised, but at least we are finally seeing some progress instead of just vapor dates and promises.

For those who are wondering where MMS has landed, HowardForums has a thread running with many people reporting which locations are up and running. Also, it's worth mentioning that the majority of users who have reported MMS as working have the "AT&T 5.0" carrier profile installed, which is included as part of the iPhone 3.1 update. So be sure to update if you haven't already!

Thanks to everyone who has sent tips in regarding MMS in their area.

In between watching those Sunday NFL games, we're hoping that you're snacking on some TUAW goodness. For your munching pleasure I thought I'd cook up some of the interesting tidbits that have accumulated in our inbox this morning and present them to you for consumption.

First, from TUAW reader Tom, is a fascinating look at a pre-Apple "Apple logo." Apparently in 1969, Piaggio Vespa, world-famous for their Vespa scooters, had an Italian ad campaign featuring apples with both sides missing a bite. The campaign used the Italian phrase "Chi Vespa mangia le mele," or "He who Vespas eats apples." Echoes of the campaign can still be found on various Vespa websites, including the USA site where you'll find many dingbats and buttons are apples with a bite or two taken out of them.
Next, TUAW fan Keith pointed out something interesting. If you go into Settings > General > Usage, there's a list of your iPhone usage. Down near the bottom of the list of statistics is a section called Tethering Data.
This shows up on 3G / 3GS models, since tethering is allowed by many carriers. Of course, as "Seth the Blogger Guy" notes in the AT&T video, American iPhone owners don't get the joy of using their iPhones as wireless data modems for laptops because the AT&T network has insufficient capacity. We've talked previously about AT&T's view on tethering; read here for more info. Of course, there's always the jailbreak option. Read on for more news tidbits.