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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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Betwen a rock and a hard place
By 3minence on 1/20/2010 12:18:39 PM , Rating: 3
AT&T is in a tough spot. The government requires them to maintain a non-profitable wired network. To pay for this they offer a sub-par wireless network that charges full price while giving half service.

I understand why it's in the communities interest to have a wired network, but it puts AT&T at a serious disadvantage. At some point the government is going to have to financially support AT&T. It will be politically impossible to allow the wired infrastructure to die, and financially impossible for AT&T to keep it on life support.

Note, I'm not saying this is good, fair, or anything else, I'm simply pointing out possible political realities.




RE: Betwen a rock and a hard place
By Shig on 1/20/2010 1:13:38 PM , Rating: 2
FCC regulations definately need some updating, that is for sure.

I also hope that in the future there is some sort of program setup so the telecoms can buy and sell bandwidth on demand between each other. I can dream.


RE: Betwen a rock and a hard place
By docmilo on 1/20/2010 1:41:35 PM , Rating: 2
AT&T just needs to convince the US Govt. to invest in Magic Jacks. The Govt. could offers $19 rebates for the devices for home phone service and then those people could spend the money they used to on land lines on wired or wireless internet service. Large businesses should have enough bandwidth to move to internet based phone systems. There is zero need for land lines anymore.


RE: Betwen a rock and a hard place
By theapparition on 1/20/2010 2:55:04 PM , Rating: 2
And do tell, what does that Magic Jack plug into? Most of the country still recieves IP traffic over wired phone lines.

What was completely left out of this article is that Verizon and Sprint are also responsible for maintaining thier hardline infrastructure. Yes, even Sprint has a large hardline presence.

Why is it Verizon and Sprint can do it, yet AT&T has problems?


RE: Betwen a rock and a hard place
By JediJeb on 1/20/2010 3:47:19 PM , Rating: 3
I think it is funny that once AT&T was split up because it was a monopoly, and now it is buying up all the companies it split off into which are mainly wired telecoms, and then complains about having to upkeep them. If they hadn't tried to rebuild the old company and just shifted focus to wireless then they would not have the wired infrastructure to worry about.

Also I don't see how they could drop support for the wired or the government even allow it, because there are so many places that have wired service that have never had any kind of wireless service available. When there are places where houses are 5-10 miles apart, I think it is still cheaper to run a wire to them than put up a cell tower that might support 3 or 4 users.


By Mojo the Monkey on 1/21/2010 6:22:49 PM , Rating: 2
I wonder whats stopping ATT from just setting up a quick second corporation in charge of JUST the landlines. Call it UBERTELCOMGLOBODYNE and underfund it, stack the board with idiots, have a pure-IPO to prevent obligation to existing shareholders, sever all financial ties, and kick it off the deep end.

problem solved.


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