Analyst Estimates AT&T Needs To Spend $5B To Catch Up 187
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.'"
Re:I don't get it (Score:2, Insightful)
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
Re:Sprint? (Score:1, Insightful)
nice uid bro
The analyst must not be an MBA (Score:2, Insightful)
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...
Re:They're spending all right... (Score:5, Insightful)
I strongly believe that beyond an initial marketing push, if a product is truly good, it can sell itself.
Well, we do have the computer field as a major counterexample. The best-selling computer system for a long time has been MS Windows, which has always been the crappiest product available. They're a prime example of an old business guideline: The best way to be a major vendor is to have the biggest advertising budget. If you have that, there's no point on paying extra money to have a good product, because it won't get you a significant increase in sales. Only a tiny part of the market understands how to judge quality, and you can safely leave those sales to the small companies that will never be large.
Of course, the telephone business has long worked on a different basis. Their business plan has always been to make deals with governmental authorities to get a local monopoly wherever possible. Then quality doesn't matter because the regulators will guarantee that you always have a profit and no competitors.
At present, there is a small amount of competition allowed in the recently-developed wireless phone market. But this is only a temporary situation. The phone companies are hard at work on mergers and acquisitions, plus "campaign contributions" to reestablish regulated local monopolies. So we can expect that fairly soon they'll be back to their normal non-competitive situation. AT&T's only real problem is management that hasn't heard about the competitive market. But this is only a temporary situation.
"We're the Phone Company. We don't care. We don't have to."
We have seen this game before. (Score:3, Insightful)
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).
Re:They got lazy and slothful (Score:4, Insightful)
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.