Any likelihood that it was consumer backlash?
More like world phone envy, or at least T-Mobile envy. T-Mobile has been selling WiFi phones for a year or so. They're popular, like the ones from HTC. Only problem, they were originally crippled so that they only worked with T-M WiFi.
WiFi cell phones are popular in Europe. There are even several mobile companies that have some accounts with only WiFi. One is in Paris where you pay 9€ a month for unlimited service. The network is encrypted. You have to log in to use it, but in the region you have unlimited calls. T-Mobile is offering some of the top Nokia phones with WiFi, 5-8 megapixel cameras, all the bells and whistles, for prices like 19,95€ with an 18 month contract; others have the same deal, plus you get free broadband during your contract.
Most consumers don't know about what others around the world pay for their services or what the services are, although I'm pretty sure that net neutrality played some part in ATT's decision.
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