AT&T now handles more than twice as much smartphone traffic as any other U.S. carrier. Or mishandles, as the case may be, notes Business Week today
“Nobody is in the same boat we’re in,” says AT&T Chief Technology Officer John Donovan. “We’re shaping the landscape for the whole industry, and I relish the opportunity to be the first to figure it out.”
Odds are against AT&T. Many of its 60,000 cell towers need to be upgraded. That could cost billions of dollars, and AT&T has kept a lid on capital spending during the recession—though it has made spending shifts to accommodate skyrocketing iPhone traffic. Even if the funds were available now, the process could take years due to the hassle and time needed to win approval to erect new towers and to dig the ditches that hold fiber-optic lines capable of delivering data.
AT&T is getting a move on. It has upgraded much of its network, including in Manhattan and parts of San Francisco, to airwave frequencies capable of providing stronger signals. The company plans to add 2,100 new cell towers by 2011, while upgrading thousands of existing ones so that the system delivers data at twice the speed now available.
One of the biggest choke points in AT&T’s network is found in what’s called back-haul capacity. Donovan tells BusinessWeek that the company has nearly doubled the number of these connections it plans to add this year. While it had planned on adding 55,000, it now plans to add 100,000 to accommodate skyrocketing mobile traffic.
Economics is another problem. Investing in a top-notch network may be critical to keep iPhone owners happy, but it does nothing for Ma Bell’s cash flow. Not only could it cost billions of dollars, but it may not bring in much additional revenue. Under the arrangement with Apple, AT&T gets only a flat monthly rate per line for unlimited data usage, normally $30. Extra revenues to use all those App Store apps are shared by Apple and the developer; AT&T doesn’t see a penny.
AT&T has begun adding 850 MHz band coverage which should dramatically improve 3G connections over their earlier 1.9GHz service. The rollout started in Atlanta, with the addition of 540 new cell sites. Additional sites that have already received the 800 MHz upgrade are Fresno, San Diego, San Francisco and Las Vegas.
AT&T is now requiring all of its new smartphone users to buy a data plan. AT&T’s data plans typically range from $30 to $60 a month.
Perhaps an iTouch with Mobile WiMAX and Google Voice could offer a faster, cheaper alternative. WiMAX chip companies Beceem and Sequans have become the overwhelming favorite for use in consumer client devices. “You can add WiMAX to wifi chips with almost no incremental cost,” says Ron Resnick, president of the WiMAX Forum.” If you try and add an HSDPA modem to that device, it can cost between $60 to $100 extra.”
Apple’s iTouch has no contractual agreements with any carrier, of course.
Clear expects to offer 4G service in markets covering 30 million people at the end of 2009 and cover 120 million people across 80 U.S. markets by the end of 2010. Clear’s mobile broadband plans start at $30 per month.
