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

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.'"

Comments

Re:They're spending all right...

[jc42]

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."