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Analyst Estimates AT&T Needs To Spend $5B To Catch Up 187

Posted by Soulskill
from the connection-lost dept.
itwbennett writes "The public's perception of AT&T's network is poor and declining, apparently because of real shortcomings when compared with Verizon Wireless and Sprint Nextel,' says Gerard Hallaren, director of research at TownHall Investment Research. 'AT&T's capital expenditures on its wireless network from 2006 through September 2009 totaled about $21.6 billion, compared with $25.4 billion for Verizon and $16 billion for Sprint (including Sprint's investments in WiMax operator Clearwire). Over that time, Verizon has spent far more per subscriber: $353, compared with $308 for AT&T,' Hallaren said. 'Even Sprint has outspent AT&T per subscriber, laying out $310 for network capital expenditure.' All this means AT&T has a choice, says Hallaren: 'spend or suffer.'"
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Analyst Estimates AT&T Needs To Spend $5B To Catch Up

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  • Bell and Telus collectively spent about $1 billion rolling out 7.2 Mbps GSM across Canada, and did it in about one year. Canada is larger than the US, and has 1/10th the population. That means it costs a lot more to provide bandwidth on a per-person basis. Backhaul links are less available as well, further increasing difficulties.

    So why is this going to cost AT&T 5 times as much, especially when they already have the towers and the problem is (apparently) backhaul - which is cheap.

    What am I missing here

    • by Rogerborg (306625) on Wednesday January 20, 2010 @10:44AM (#30831756) Homepage

      Bell and Telus collectively spent about $1 billion rolling out 7.2 Mbps GSM across Canada

      For certain patchy values of Canada.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Bell and Telus collectively spent about $1 billion rolling out 7.2 Mbps GSM across Canada, and did it in about one year. Canada is larger than the US, and has 1/10th the population. That means it costs a lot more to provide bandwidth on a per-person basis. Backhaul links are less available as well, further increasing difficulties.

      So why is this going to cost AT&T 5 times as much, especially when they already have the towers and the problem is (apparently) backhaul - which is cheap.

      What am I missing here?

      Maury

      Canada's people tend to be compressed into a band hugging the U.S. -- so your "Canada is larger than the US" doesn't quite fit. I doubt Bell or Telus has service on Ellesmere Island

    • by 0racle (667029)
      Well you're missing that 90% of Canada's population lives within 300 miles of the US boarder. So they didn't have to (finally) upgrade their network over all of Canada. I also doubt that they rolled it out to ever part of the small part of Canada they have to either.
      • by ceoyoyo (59147)

        They did a pretty good job of it. I have a friend back home (north of the 55th parallel) who wanted an iPhone but couldn't get one because Rogers didn't have service out where she lives (you drive an hour on the two lane primary highway from the nearest major city, population 30k, then turn onto the secondary highway and drive for fifteen minutes, then turn onto the gravel....). She's now got a Telus iPhone and has service, no problem.

        If she's got Telus/Bell GSM then they've probably rolled it out pretty

    • by Shatrat (855151)
      AT&T doesn't like to go outside the company for backhaul, now that it has a wireless company and a transport company under one roof.
      As their old transport contracts are expiring they are rolling those circuits onto their own network.
      They are focusing on cost savings this way instead of spending their efforts on bringing new cell sites online.
    • The US has significantly more large, densely populated cities than Canada, and AT&T also has to hook up a lot of small towns. There are over 270 cities in the US that have at least 100k people living in them [wikipedia.org], and AT&T doesn't stop there with trying to provide full 3G service; I routinely get it in places like Harrisonburg and Warrenton in Virginia where the population is about 50k.
    • Executives like money?

  • by Anonymous Coward

    AT&T's little game a while back where they decided that they were going to blame and overcharge iPhone users for their problems pretty much guaranteed I won't be looking into AT&T for service any time soon. I think the iPhone is a silly and largely pointless thing, like most Apple products, but that was just ridiculous.

    "Oh gee, we sold a whole bunch of phones that are built to be and advertised as mobile media platforms, let's blame the users of those phones using them as mobile media platforms for

  • efficiency (Score:3, Funny)

    by drougie (36782) on Wednesday January 20, 2010 @10:42AM (#30831718) Homepage

    These numbers are misleading. AT&T doesn't need to spend as much money to be as productive in infrastructure expansion as its CDMA competitors because their engineers can talk and surf at the same time.

    • by elrous0 (869638) * on Wednesday January 20, 2010 @11:10AM (#30832094)
      I'll tell you what my grandfather said on his deathbed 20 years ago. "Kid," he said. "Never trust a Wilson brother to give you advice on your telecommunications needs." I've heeded those words ever since.
    • by Creepy (93888)

      Talk and surf can be done on any GSM network, not just AT&T - lack of it on Verizon networks is a byproduct of CDMA technology. CDMA itself has bad spectral efficiency and is essentially being killed off in the 3GPP and 4G, so I expect Verizon and Sprint will need to extend or replace it. That said, AT&T's data rates are pretty shoddy according to my brother - he likes T-Mobile better (I don't have a data plan, so I have no idea).

      • Re: (Score:3, Informative)

        by nbvb (32836)

        It's the other way around.

        CDMA's air interface is quite efficient, actually.

        So efficient, in fact, that the 3GPP's 4G standard (you know, LTE, Long-Term Evolution) is much, much more CDMA-like than TDMA-based GSM. (CDMA and LTE are both spread-spectrum technologies -- GSM/TDMA divide signals on a carrier frequency based on timing.)

        Keep in mind that the cdmaOne product family is what's not being evolved any further --- the actual air interfaces developed under the CDMA banner are really the path forward. W

        • And AT&T has been killing the TDMA part for a while now. In many areas they have more spectrum allocated to UMTS (WCDMA) than TDMA based GSM.

      • I'd say it's more likely a business decision. When I (G1) or my wife (Cliq) use voice, the data access cuts of. Since they use the same tech as AT&T it's more likely a business decision to cut down on bandwidth usage for data + voice at the same time.
        • My Touch Pro 2 has no problem sending/receiving email while on a call while in 3G. If it's not working, maybe you're out of the 3G area and the handset has fallen back to EDGE?
    • by Dare nMc (468959)

      Can anyone with a droid confirm if the "can't surf and talk" is true? The droid features on Verizon specifically state that the multi-tasking OS "does" "Make a call, take a picture, answer a IM, and switch between up to 6 apps at once" [verizonwireless.com]. So I guess that AT&T really means is what a black-berry doesn't?

  • Seriously, that is far more?
  • Most AT&T users could tell you that AT&T really needs to get their shit together. No need for expensive research.

    Personally, I am with AT&T now because:
    1 - I had to have a GSM phone (CDMA FTL!)
    2 - T-Mobile's covereage sucks where I live in Atlanta (or at least it did 18 months ago)

    I am pissed and dont have much of a choice - its MaBell of Tmob. Not much is out there that would drive me to the shackles of CDMA hell with BigRed.
    • by i_ate_god (899684)

      Most AT&T users could tell you that AT&T really needs to get their shit together. No need for expensive research.

      Personally, I am with AT&T now because:
      1 - I had to have a GSM phone (CDMA FTL!)
      2 - T-Mobile's covereage sucks where I live in Atlanta (or at least it did 18 months ago)

      I am pissed and dont have much of a choice - its MaBell of Tmob. Not much is out there that would drive me to the shackles of CDMA hell with BigRed.

      If CDMA is faster than light, then why did you go with AT&T?

      • Because the FTL technology requires a transmitter [slashdot.org] with one of the universe's highest SAR ratings.

        That, and the fact that the FTL causes temporal distortion, meaning that the person you talk to via FTL hears you speak before you say anything. We've all regretted saying things a split second after saying them. FTL CDMA means you might end up saying something you shouldn't have even before you say it.
      • by tepples (727027)

        If CDMA is faster than light, then why did you go with AT&T?

        Because when you rearrange the letters, it spells Digital Millennium Copyright Act.

    • I'm kinda interested in whats going to happen when both ATT and Verizon go to LTE.. That could get very, very interesting..

    • by caladine (1290184)

      1 - I had to have a GSM phone (CDMA FTL!)

      I personally find this hilarious on two counts:
      1.) GSM and EDGE are TDMA technologies that are inferior in every way to the CDMA waveform.
      2.) Your 3G service through AT&T is based off of CDMA. (All GSM carriers use W-CDMA for 3G service. See also #1.)

      • by radish (98371)

        1.) GSM and EDGE are TDMA technologies that are inferior in every way to the CDMA waveform.

        Except the whole international roaming thing. And that's a pretty significant "way".

        • by nbvb (32836)

          .. of course, a phone with dual radios such as the BlackBerry Storm, Samsung Saga, HTC Ozone, HTC Touch Pro2, etc. will work anywhere. My BB Storm works here in the US, in Europe, in the Caribbean, just about everywhere ...

          • Too bad that on the "dual radio" phones, Verizon locks the GSM radio to only work with its own overpriced roaming SIM cards ... which aren't even included, you have to BUY one from Verizon and then pay Verizon through the nose for roaming. (the same way you pay for everything with Verizon, usually described as either "pay through the nose" or "pay out the ass").

            Real GSM carriers will unlock your phone for you if you tell them you need it unlocked for travelling, and then you have the option of getting a che

      • For the love of $DIETY.
        CDMA != WCDMA. You might as well be saying you can't connect to the internet unless you have RJ-45
  • They rested on their laurels with the iPhone along with retarding their capital expenditures to beef up their stock price when earnings season rolled around. They are paying for that dearly now with major issues with infrastructure and bandwidth issues.

    Major mistake, playing to the stockholders instead of their customers.

    • by cob666 (656740)
      Because they have a fiscal responsibility to the shareholders, customers are just a revenue stream.
      • by SydShamino (547793) on Wednesday January 20, 2010 @11:47AM (#30832624)

        They have a fiscal responsibility to their long-term shareholders, too, not just those looking to cash out after a few quarters of artificial pumping.

      • by WiiVault (1039946)
        Yeah but what happens when the iPhone leaves AT&T thanks to their lack of forward thinking?
      • by ckaminski (82854)
        Unfortunately, without those customers, there *IS* no revenue stream.

        This meme of fiscal responsibility to the shareholders has to end. It's not true, never has been, never will be. Once a company IPOs, that money is effectively the companies. They are under no obligation to ever pay it back, except through bankruptcy litigation, and then actual creditors are given first whack at the money.
    • by Dare nMc (468959)

      I do wonder how much of this is Apples fault. Apple forced AT&T to spend on updating their voice-mail system so that it would be search-able, and other make it look cool features. Apple also siphons off a bunch of the per user revenue of customer they bring in, and bringing in a bandwidth hog onto the network. Had apple chosen to tell AT&T what bandwidth to have instead of what shiny features to have, then the customers would have been happier with AT&T, but the iPhone wouldn't have been the

    • by ArhcAngel (247594)

      Major mistake, playing to the stockholders instead of their customers.

      Major mistake, playing to the customers instead of their mobile subscribers.

      FTFY

      Obligatory car analogy:

      3 lane highway with several hundred cars == mild congestion

      same 3 lane highway with several thousand cars, buses, 18 wheelers == #!$^WTF@#$%

  • I suspect AT&T feels that those numbers represent a cost per subscriber rather than an investment per subscriber.
    Now how about a big round of executive bonus...

  • After resting on the success of the iPhones and what they had, AT&T now has to spend the money to catch up.

    Expect the majority of shareholders, who are ridiculously short sighted, to hate AT&T for it and decry it as a waste of money, just like how all the Verizon stockholders were whining about the investment per household for FiOS.
  • AT$T just keeps getting worse and worse. They were overcharging me a lot 10 years ago and I changed my service to Bellsouth and I was so much happier. Then AT$T bought Bellsouth and so I unhappily had AT$T again. Deciding to give them another chance I stayed with them. But then came the unexplained fees and hugely overcharging me for $899 for long distance service that should have been less than $20. So at the beginning of this year I discontinued their service again for a Cable phone service that is great
  • by elrous0 (869638) * on Wednesday January 20, 2010 @11:07AM (#30832050)
    But my iPhone would probably just drop the call.
  • OK, who paid for this and what's in it for them? I've yet to see a piece of so-called "business research" of this nature which was produced with no ulterior motive.

    The most obvious thoughts that spring to mind are:

    • AT&T paid for it. They want an excuse to be able to add another "extra" onto the bill of all their customers (or get a government subsidy).
    • Verizon paid for it. They want to be able to say "Don't use AT&T, their network is obsolete and they can't afford to upgrade it".

    Any others?

    • Re: (Score:3, Interesting)

      by swb (14022)

      What I found strange about the "story", which incidentally, I also thought read like a successfully placed bit of corporate propaganda, is that AT&T is currently running commercials that capitalize on their data network being faster than Verizon's, and IIRC there have recently (last 3-6 months) been multiple stories from multiple sources (Engadget/Gizmodo, some cellular research company) that have BOTH released the same results -- AT&T's data network is faster than Verizon's.

      My own personal datapoin

      • 1x is a CDMA technology (1xRTT). I assume you are referring to EDGE which has comparable real world performance to 1x.

        I believe 1x was upgradable to EVDO without replacing as much equipment, and certainly doesn't require splitting up the spectrum to run two networks. UMTS, AT&T's 3G network, has to be build out with additional equipment and requires dedicated spectrum. As a result, AT&T has to spend a lot more money for each cell, and will leave most rural coverage with the good enough EDGE.

        Where

  • Ah, another satisfied iPhone user.

  • I chose Verizon. There is no point in having a fast network or browsing while calling if I can't freakin' connect to the network.

    I'm quite happy with my HTC Ozone and having at least two bars reception no matter where I am, even in the elevators at work.

  • by Steauengeglase (512315) on Wednesday January 20, 2010 @11:42AM (#30832532)

    When this becomes a more serious problem they will beg/demand/get massive tax breaks and claim that it will go to infrastructure building. Then they will pass the majority to their stock holders. If anyone complains and suggests regulation concerning either the tax breaks (outside of suggesting more tax breaks) or how the additional revenue should be spent will be branded a socialist and an enemy of capitalism.

    We saw this under both Clinton and Bush and we will see it again under Obama, because there is one simple fact that no one in government can understand. You cannot bribe businesses. You can sign contracts where they provide a service for a price, you can enforce current legislation and if you are willing to waste the time you can write new legislation, but you will never get anything done with bribery (ie. tax cuts).

    • by ianare (1132971)

      It's not that the government doesn't understand that, they certainly do. After all, many in government used to be in business. It's just that you can bribe elected officials very effectively (ie campaign contributions).

      • by Steauengeglase (512315) on Wednesday January 20, 2010 @01:21PM (#30834236)

        Then I guess the real question is why do voters fall for it? If we swapped out tax cuts with welfare benefits and large corporate entity with welfare recipient, voters would howl. We place restrictions on what someone can or cannot buy with their food stamps, why not do the same for tax cuts that are specifically targeted for infrastructure building?

        • by ianare (1132971)

          Ah, well that's the $64 million question, isn't it ? Part of it could be voter apathy. Another part is certainly what you've mentioned in your fist post, namely that many think placing any kind of limit on business is anti free-market and socialist. As has been proven many times, there are situations in which regulation is the only way of ensuring effective competition.

  • <title>Analyst: AT&amp;amp;T needs to spend US$5B to catch up | ITworld</title>

    That title is so &amped it goes to 11.

  • I think it's clearly spend or make your customers suffer and there's plenty of evidence which way they'll probably go.

  • If you look at the differences in the US 3G coverage maps shown in the Verizon commercials, I think $5B is freaking cheap!

  • Then simply looking at per subscriber spending would be a valid metric. That way the vendors could buy as much blow as they wanted for the acquisition department and then bill it through higher bids.

    As it is, verizon is no longer the absolute leader. Sprint, ATT, even some of the small guys like boost and cricket have competitive products. All verizon can say is they have the premium product, and use the higher fees to maintain the premium product.

    I suspect the issue is not spending, but the free spa

  • 700 Mhz anyone? (Score:3, Interesting)

    by sneakyimp (1161443) on Wednesday January 20, 2010 @12:33PM (#30833468)

    So whatever happened to the much-ballyhooed 700 Mhz spectrum? Didn't AT&T & verizon both invest in that bit? So far I haven't seen hide nor hair of any 700mhz devices nor any announcements about wireless service using this spectrum.

    • by jra (5600)

      Oddly, there was a webcast on this topic from Verizon *an hour ago*. I missed it too, but no, they're starting their Block C rollout this year; my city's pretty high up the list.

    • AT&T's 700mhz spectrum is reserved solely for LTE [att.com].

      In the future, AT&T's 700 MHz spectrum holdings will provide the foundation for deployment of next-generation wireless broadband platforms such as HSPA+ and LTE.

  • Can we get some real competition between cellphone providers. AFAICT they are all the same company, offering the same shoddy service for the same insane price. The cheapest plan you can get is $40/mo and 450 minutes. Can we have a plan that doesn't assume i'm a twelve year old girl who must constantly yammer? Most of my calls are less than 5 minutes and i make a call about every two or three days. The pay as you go plans (inaccurately called "pre-paid") are often monthly plans in disguise because you c

  • .. a large land line customer base from whom they can squeeze cash while providing piss poor service.

A penny saved is a penny to squander. -- Ambrose Bierce

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