AT&T still operates 65,000 payphones in 13 states — more for the advertising they can stick on the sides than for the calls they generate. Even that won't sustain them much longer, the WSJ reports. AT&T said payphone revenue is small and declining, and it wants to get out of the business by the end of next year. The first coin-operated phone, installed in Hartford, Connecticut, went into operation in 1889, 13 years after Alexander Graham Bell invented the device. The payphone killer isn't the iPhone alone, of course. The CTIA estimates that there are 251 million wireless customers in the U.S. — or 84 percent of the population. (Photo by Mayr)

Why did AT&T head Randall Stephenson let it slip that a much faster iPhone was coming next year? PBS pundit Robert X. Cringely says — in a roundabout 1,000-word way — that it was no slip. He also reminds us several times that it was he, Cringely, who foretold all of this. All of it. I bolded those parts to make sure he gets the credit. Deservedly. For once, I'm sure the Cringe is right.

Thinking about getting an iPhone as a gift for your loved ones this holiday season? Wait 'til next year! That's the message AT&T CEO Randall Stephenson delivered at a meeting of the Churchill Club in Santa Clara yesterday when he announced that a 3G iPhone would arrive next year. "You'll have it next year," Stephenson said. Way to help sales, Randall!

Martin Varsavsky, founder of the Spanish Wi-Fi sharing company Fon, has made a video of his impressions of meeting with Apple CEO Steve Jobs. But who cares? You've heard it all before. The Apple campus is at One Infinite Loop. The decor is monochromatic. Jobs asks lots of questions, is "not the nicest guy," and wants you to know how wonderful Apple products are. What is interesting, however, is how this hapless wantrepreneur even got a meeting with Jobs in the first place.

Piper Jaffray analyst Gene Munster estimates that AT&T pays Apple $18 a month per iPhone. And, after some quick math to figure in research firm iSuppli's July estimate that it costs $265 to build each device, which retails for $399, others are now estimating Apple profits $565 per iPhone over two years. No wonder Jobs felt so comfortable shafting the early adopters who paid $599 for their phones.

AT&T reported 42 percent year-over-year revenue growth after completing its BellSouth merger. The company said it added 2 million subscribers since the iPhone launch. Says Fake Steve Jobs, the faux leader of AT&T partner Apple: "Enough! Dear Leader appreciates your love and affection." [NYT]

In today's earnings call, Apple estimated that around 250,000 out of 1.4 million iPhones — 17 percent — were purchased with intent to be unlocked. No details were given about how the company came to this conclusion, but we surmise it was the number of iPhones sold minus the number of iPhones activated with AT&T. [MacRumors]

Napster, the slow-dying music-subscription service born from the file-sharing startup's ashes, continues to lurch, corpse-like, at any business partner that doesn't flinch in disgust. Its latest shamble is a deal with AT&T to place its song library on mobile phones — at twice the price of regular downloads. AT&T backs the $1.99 price, saying that it costs a ton to transfer data files over the air. Somehow, I don't think consumers care about AT&T's bandwidth problems; the price point will likely make this partnership dead on arrival. Anyway, we're more interested in the other part of the Napster deal, which involves AT&T's broadband business. How, exactly, is AT&T going to promote Napster to AT&T Yahoo DSL subscribers without displacing its broadband partner's Yahoo Music service?

AT&T is taking Vonage to court over patent infringements, just like everybody else. AT&T seeks an injunction, alleging Vonage infringed on a patent related to VOIP calls on standard telephone devices. Who knew there was anything left to gain from suing Vonage? Verizon and Sprint already had their way with the company when judges ruled in their favor in two prior suits. (Photo by Torbert Timson)

"We all want the same thing. We are kind of new in this, and we all want the Internet to flourish and grow rapidly. We come at it from infrastructure and we are plowing a ton of money. We are learning how to work together. Don't regulate until there is a problem... The rules get dorked up and nobody will invest in these businesses... If somebody steps out of line they need to be slapped but don't mess with the business model." — AT&T CEO Randall Stephenson, speaking at the Web 2.0 Summit on government regulation of the Internet. [Between The Lines]

Evan Williams, the astute creator of Blogger and Twitter, is acting mesmerized by the unflappable showmanship of AT&T chief executive Randall Stephenson. He Twitters: "I like this Randall chap that runs AT&T, surprisingly. Straight shooter, he seems." Clever. Yes, Ev, I'm sure Stephenson will agree to that text-message revenue-share scheme you have in mind. [Twitter]

WEB 2.0 SUMMIT — "You're sort of unflappable, aren't you?" says conference organizer John Battelle. He's repeatedly needling AT&T CEO Randall Stephenson about Google, but Stephenson's not rising to the bait. That is, I believe, part of a calculated charm campaign by the monstrously large telecom. "We all want this Internet thing to flourish," he says. Stephenson plays dumb when Battelle asks about "net neutrality," and later, he actually gets applause from the skeptical crowd when he inveighs against government regulation. He means "regulation not written by AT&T's lobbyists." Not a bad performance. But still a performance.

AT&T has taken a lot of shots for its evenings spent moonlighting as spy, but it turns out it's not the only telecom happy to hand over customer call information at the first sign of a government request. Verizon has happily supplied such information hundreds of times since 2005. But to our minds, the scandal here isn't that Verizon is volunteering to play snoop — it's that it's cheating shareholders by not charging for the privilege. Verizon is already prepping to share calling data with third parties. It wouldn't be too difficult to create a vast, for-pay resource for private investigation firms. How much would you pay to figure out who that 310 number your husband calls four times a day belongs to? Thought so.

To avoid being gored, you don't have to outrun the bulls — you just have to outrun the other guys. That seems to be the strategy AT&T and Verizon are taking, at any rate. The telcos hope a few changes in policy are enough to hold off a sweeping regulatory bill proposed in the Senate last month. Verizon has stopped automatically renewing contracts when customers make a change to their plan and AT&T is offering prorated termination fees. The Senate has proposed a bill requiring prorated termination fees, no hidden fees not required by law, and a 30-day grace period for consumers to get out of any new contracts. An industry lobbyist says the bill is bad for consumers, natch — while the companies are marketing their changes, largely identical to lawmakers' requests, as good for consumers. Is this self-policing just bull? We're skeptical. This Congress has failed to get much done, but cell companies are oxen we'd all like to gore. (AP Photo/Alvaro Barrientos)

Last week I (and many, many others) wrote about AT&T's DSL Terms of Service. When taken literally, they suggested that if you wrote disparagingly about Ma Bell, you would have your service disconnected. Some fuzzy-minded bloggers, confusing AT&T with the government, called it censorship. I said that was nonsense. AT&T has come out with updated Terms of Service making their intentions very, very clear. The new TOS and our take on it, after the jump.

A clinical psychologist has looked at the recent brouhaha between iPhone owners, Apple, and AT&T and come up with a theory. Steve Jobs is the overbearing, tyrant father who knows what's best. Dad dictates exactly what you can and can't do with "your" phone. AT&T is the stepmother, newly married into the family. Some kids are happy with the arrangement and perfectly willing to live by the rules. Others are rebellious, defying the parents and doing what they want without regard for the consequences.

Sprint Nextel board members are on the hunt for a new CEO to replace Gary Forsee. Sprint has been losing out to AT&T and Verizon in signing up new customers and recently lost the confidence of investor Ralph Whitworth, who owns almost 2 percent of the company. [WSJ]

Folks are working themselves into a lather over an AT&T/BellSouth DSL Terms of Service that may or may not be real. The scary part:

According to Australian tech trade Communications Day, Google may be planning to fund a new trans-Pacific fiber-optic cable, part of its growing in-house telecom network. (A Google rep neither confirmed nor denied the plans.) Why would Google want to lay cable on the ocean floor? Google already owns a considerable fiber network, used for in-house needs at present. But its telecom activities, which now include bidding on wireless spectrum in the United States, arouse suspicions that it might be getting into the phone business. Nonsense.

Sick of those $3,000 bills for international iPhone data roaming? AT&T has created a data plan that is slightly less wallet- gouging at a generous $25 a month for 20MB of data transfer. [The Unofficial Apple Weblog]