Print 30 comment(s) - last by OKMIJN4455.. on Jan 24 at 6:28 AM

AT&T may need to spend as much as $7B to catch Verizon's network

When it comes to wireless networks in the U.S. there are many claims bandied about by the various providers. Each clams to have the nation's fastest or most reliable network; and each claim is seemingly backed up by little verifiable data for the most part.

AT&T is the second largest wireless provider in America behind Verizon. AT&T is also one of the most maligned networks in the country thanks to what is widely perceived as a shoddy 3G network. In many cities large and small, the 3G coverage of AT&T is spotty and at times non-existent making for many irate customers. AT&T's wireless network ranked last in customer satisfaction in a Consumer Reports study conducted in December 2009.

AT&T maintains that the poor performance in some of its markets for its 3G network is due in part the huge amount of bandwidth that iPhone wielding customers consume. AT&T has seemingly brought the ire of analysts and customers on itself and also reportedly spends less on their wireless infrastructure than Verizon and third place Sprint per customer.

PC World reports that analysts from research firm TownHall investment Research estimate that AT&T needs to spend about $5 billion on its wireless network to catch up to the coverage that Verizon offers.

TownHall reports that AT&T has spent $308 per customer on its network over the last three years compared to $353 per customer from Verizon and $310 per customer from Sprint. AT&T spends more on its wired network than it does on its wireless network according to analysts.

Ironically, the wired network makes less money for AT&T than its wireless services. AT&T is said to get 57% of its operating income from wireless and only 35% from wired services. At the same time, wireless services only get 34% of AT&T's capital expenditure while wired services get 65%. AT&T apparently wants to change that situation though.

AT&T has asked the FCC to drop regulations that require it to support its aging wired network despite the fact that the use of the network is declining. AT&T has asked the FCC to provide a deadline for phasing out wired service around the country. If the FCC agrees, AT&T will have much more funds available for its wireless network. Whether or not the FCC will agree to the request is unknown.

TownHall's Gerard Hallaren figures that the amount AT&T needs to spend on its network could balloon to $7 billion thanks to the need for additional backhaul capability. AT&T is already adding additional backhaul capability to its towers in preparation for rolling out its faster HSPA 7.2 service and the transition to LTE networks starting in 2011.

Hallaren says, "This is going to be a juggling act for them [AT&T]."

The iPhone has been keeping many customers tied to AT&T thanks to the exclusive deal between AT&T and Apple. That exclusive arrangement is expected to end by the middle of 2010 – at that point, many expect to see a mass exodus of customers as they move from the AT&T network .

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By namechamps on 1/20/2010 11:39:32 AM , Rating: 5
Who would spend $5B today on 3G with LTE right around the corner.

Likely ATT will use iphone exclusive, termination fees, and sweet renewal deals to lock customers in for next 18 months despite crappy network and then look to upgrade to LTE in 2011.

Yeah they will do some token upgrades to 7.2mbps 3G but it will be just that a token upgrade.

By dubldwn on 1/20/2010 11:45:03 AM , Rating: 2
My iPhone contract goes until mid-2011 and I’ll hang with AT&T if they do make that token upgrade. 7.2 down on a phone is pretty fast. Plus, if a lot of the iPhone people leave, maybe my overall service will be better.

By Samus on 1/20/2010 12:22:10 PM , Rating: 1
Plus, if a lot of the iPhone people leave, maybe my overall service will be better.

Hah, funny how that works. Like if people drove less, gas would be cheaper.

By Targon on 1/20/2010 1:46:43 PM , Rating: 3
No, it is like saying that if fewer people drove cars, the roads wouldn't be as congested, and people could get places faster. A part of the problem that AT&T has is the bandwidth demand from iPhone users really IS very very very high, and no matter what Verizon may claim, once they start getting all the bandwidth hogs running to THEIR network, things will slow down over there too.

By Jalek on 1/20/2010 8:35:23 PM , Rating: 2
I've heard that many, many times. My original model's over 3 years old, and it's data totals are 35MB sent, 470MB received.

That's with some streaming webcasts and things, but I also connect to any open wireless I come across.

I'd allow that it's probably low, the person I got it from hardly streams anything, but half a gig of traffic in three years doesn't sound excessive.

By Ammohunt on 1/20/2010 2:18:40 PM , Rating: 2
Um thats exactly what happens. Gas prices are controlled primarily by supply and demand becasue of limited refining capacity

By JediJeb on 1/20/2010 3:36:04 PM , Rating: 3
Except when OPEC lowers supply as demand lowers to keep the price high.

By callmeroy on 1/21/2010 1:06:05 PM , Rating: 2
Or when speculators get involved like what happened last time we were knocking on the door to $4/gallon gas here on the East Coast.

By Regs on 1/20/2010 12:44:42 PM , Rating: 2
Who would spend $5B today on 3G with LTE right around the corner.

Since At&T did such a wonderful job of forecasting the demand for bandwidth use of a 3G network, I can imagine them doing even better with LTE. (sarcasm). And what does it matter? At&T will just barely meat the specs for "4G" or "LTE" and again fall short on bandwidth demand.

To me it sounds like they're trying to limit investment to keep up with the shorter life cycles in technology while also keeping their debt to equity ratio in check. Smaller upgrades take less time to roll out so you can keep the revenue stream open before the next product life cycle ends. After all, 4G is nothing more than a marketed term for a hopeful unified standard. If it is just a series of upgrades, who's to know any different when they come out with their press releases?

My worry with At&T is that they are ultra conservative (tight a**es). If they fall short of their potential or forecasts then they are going to lose out on a lot of money again come "4G". Then again, if something even better comes quickly down the pike after 4G and they all ready borrowed so much....

By The0ne on 1/20/2010 1:56:04 PM , Rating: 2
No one will for $5B. That would be insane ignorance.

By quiksilvr on 1/20/2010 7:38:57 PM , Rating: 2
Yeah, they would much rather spend 2.3 Billion dollars on advertising instead of improving their infrastructure.

Even with LTE around the corner, that doesn't automatically mean every 3G phone that AT&T watches over will magically transition to LTE overnight. They need to at least make SOME effort to improve their 3G network.

LTE is around the corner, but it will take a LONG time to expand.

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