What brought AT&T to its knees?


Philip Elmer-DeWitt is a senior editor at Fortune.

A rash of online fraud in New York may have done what Operation Chokehold couldn't

Why did AT&T Wireless (t) halt online sales of Apple (aapl) iPhones in New York City the weekend after Christmas? None of the answers AT&T has given so far make much sense.

The new policy was first reported to The Consumerist's Laura Northrup by a reader in Brooklyn. In a blog entry posted Sunday afternoon, Northrup suggested that AT&T had found a novel solution to the city's data congestion problems: it had simply stopped selling iPhones to online customers in the metropolitan area. "The phone is not offered to you," a sales rep told Northrup, "because New York is not ready for the iPhone."

In an update later that day, Northrup posted AT&T Public Relations' inscrutable official statement on the matter: "We periodically modify our promotions and distribution channels." That didn't help.

The mystery deepened Sunday evening.

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All Things Digital's Peter Kafka and John Paczkowski were told independently by AT&T representatives that sales had been halted due to an increase in "fraudulent activity" in the "high-risk area" -- specifically fraudulent orders made online. Indeed, the iPhone is still available at both Apple and AT&T stores in the city.

But as Paczkowski pointed out, you could still buy equally expensive Research in Motion (rimm) smartphones in New York City through AT&T's website. Apparently the BlackBerry was not quite as hot as the iPhone in the city this holiday season.

We await a fuller explanation from either AT&T or law enforcement officials.

Meanwhile, the whole situation has got Fake Steve Jobs -- whose Operation Chokehold protest against AT&T had no visible effect on the carrier -- chewing Ativans like they were breath mints and threatening to throw cars through the windows of AT&T headquarters.

UPDATE: By Monday afternoon, online sales were working again on AT&T's website.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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