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12/29/2009
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London iPhone Problems Spotlight Network Issues

O2, the United Kingdom's exclusive iPhone provider, has apologized to users for dropped calls and poor reception.

English iPhone users have a message for American iPhone users: "You are not alone."

United Kingdom mobile phone operator O2, which has the exclusive marketing rights to Apple's iPhone, has apologized to its users for service problems. iPhone users in the United Kingdom have suffered problems similar to those encountered by iPhone users in the U.S. -- dropped calls and other serious reception problems.

O2 chief executive Ronan Dunne apologized for the shortcomings in an interview Tuesday with the Financial Times. "Where we haven't met our own high standards, then there's no question, we apologize to customers for that fact," Dunne said. "But it would be wrong to say O2 has failed its customers en masse."

Both O2 and AT&T in the U.S. are racing to beef up their networks. Both carriers have been victimized by the success of the iPhone, whose applications are downloaded by consumers at ever-growing high rates, putting a strain on their networks.

O2, which is owned by Spain's Telefonica, is likely to get some relief for its U.K. network soon, as different carriers move to break its iPhone monopoly. France Telecom's Orange began offering iPhones last month and Vodafone will begin marketing the iPhone next month in the United Kingdom.

O2 said it has been talking with Apple and also with BlackBerry provider Research in Motion, seeking solutions for its network data surge, which is up 18 times since the beginning of 2009. AT&T, too, has been moving to strengthen its network. The exclusive U.S. iPhone provider has said it, too, has seen a surge of iPhone use largely due to the plethora of iPhone applications, and it is moving to strengthen its network, particularly in New York City and San Francisco where the network has been most constrained.

The iPhone problems are likely to be a harbinger of difficult spectrum issues to come, particularly as an exploding base of smartphone owners increasingly flocks to new applications. FCC chairman Julius Genachowski recently sounded the alarm on a coming "spectrum crisis" across the board. As partial solutions, he has suggested that Wi-Fi and femtocells be pressed into wider service and additional cell phone towers be built.

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