What gives with AT&Ts 3G?

AT&T seems to be trying hard to become a cyberpunk-style evil mega-corporation. The iPhone has effectively given them dominion over the smartphone market, and they know it. Seedy things continue to happen, but could it be they're just hiding behind a big tough facade? I think that AT&Ts 3G data network is more stressed than they're letting on.

The iPhone has resulted in a massive increase in cell data traffic. There are a few little tweaks in the phone's settings that are clearly geared towards reducing the use of cell data. Some functions like downloading podcasts or apps over 10MB are not allowed on cell data (though, some of this may change in the 3.0 software). Skype is also wifi only. Now, here we see a new bandwidth intensive app with 3G limitations. Slingbox is releasing an app that will only work on a wifi connection.

For the uninitiated, a Slingbox is a set-top box that allows you to stream your TV signal over the internet to wherever you like. The iPhone app allows you to view the stream on the phone. It seems unlikely that this is much different than watching youtube videos on the phone, so why the limitation? I think that AT&T is worried about the possibility that their network is reaching the breaking point. They were unprepared for the number of data-using iPhone customers they now have to contend with.

In some areas, the 3G network is already becoming saturated. In the great barbaric northlands, where I live, I rarely see people using smartphones. If I do, they're not usually big data users. I went on a trip to Orlando recently, and I must have seen an iPhone every 5 minutes. The 3G access was also considerably more touch and go. I can only imagine how bad it is in bigger metro areas like Chicago or New York.

They want to limit any bandwidth intensive app they can, to keep ahead of the curve. AT&T will do anything to lock Apple into an extended exclusivity agreement. Their network has to at least appear to be up to the task.