Last week AT&T dropped its legal dispute against rival Verizon Wireless over advertising claims that AT&T's 3G coverage is spotty. Now the wireless carrier is turning to technology in order to boost the iPhone's performance over its broadband wireless network.

AT&T's new iPhone app should help the carrier become more proactive with respect to complaints about its network coverage, noted Lisa Pierce, an independent wireless analyst at the Strategic Networks Group.

"When it comes to coverage, they have been getting beaten to death in ads from Verizon Wireless," Pierce said. "And as we all know, Apple users have not been satisfied with AT&T's 3G network and often use Wi-Fi instead."

A Call Center Cost-Cutter

Mark The Spot provides iPhone users with an easy way to report the precise locations where problems occur -- such as dropped or failed calls, no coverage, data failure or poor voice quality. The new app automatically maps the precise latitude and longitude of the place where the user's problem was experienced.

Pierce noted that Mark The Spot allows AT&T to appear more responsive to customer concerns, while simultaneously helping the carrier reduce its internal contact center costs.

"One of the issues with smartphones in general is that they have driven a huge amount of help center requests," Pierce explained. "With an iPhone or devices like that, more than 25 percent of the calls to customer care centers are because the device won't connect to the Internet."

Though there is "no one best way" for carriers to approach solving their coverage problems, if it helps to drive their network investment decisions, then that would be an important development, Pierce noted.

"There is merit to using this type of technique to augment the work that network engineers do -- to help direct wireless capex to where it will have the greatest good," Pierce said. "This would be a good tool to have right across the industry and not just at AT&T."

However, the effectiveness of the tool will depend on what is done with the data at the receiving end of the link. "If this is just going into a black hole, then it's no good," Pierce said.

A Diagnostic Tool

Keeping its iPhone subscribers happy has to be at the top of AT&T's list of priorities. Of the 4.3 million postpaid 3G devices that the carrier added to its wireless network in the third quarter of 2009, 3.2 million were iPhone activations.

AT&T also said its wireless data revenues grew 33.6 percent to $3.6 billion in the third quarter, driven by growth in data plans and increased customer usage of Internet access, messaging and related services. However, AT&T recognizes that its future growth in the most lucrative niche of the wireless market will require network improvements.

AT&T Mark The Spot neatly helps the wireless carrier fulfill two of its key goals. "As the economy works to regain its footing, we are keenly focused on cost improvement as well as continued leadership and investment in key areas that will drive future growth," said AT&T CEO Randall Stephenson.