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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.'"
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 all our network's problems".
Okay, AT&T. Lemme know how that works for you.
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.
Calling out bogus battery capacity claims.
For certain patchy values of Canada.
If you were blocking sigs, you wouldn't have to read this.
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
I've never understood while Sprint get's bashed every time they are compared to other providers. I've been with Sprint for ~10 years and they have always provided me with good service and coverage with reasonable rates. I can not remember the last time I had no service or a call was dropped. Maybe it's because I live in a metro area, but I have nothing bad to say about them.
Have you used the Sprint network lately?
My guess is that you have not.
Sprint used to be bashed because of customer support and rightly so but they have made a lot of effort to improve in that area.
Sprint used to have a not great selection of phones. Right now they have a few really good phones like the Blackberry Tour, the Samsung Moment, the HTC Hero, the Palm Pre, and Palm Pixie.
Their prices are cheaper than Verizon and AT&T and the didn't cripple their phones like Verizon did as far as Bluetooth, WiFI, and even loading software.
They are CDMA which is a downer if you are going to travel outside the US but so is Verizon.
Oh and you get to roam on the Verizon network. I have never been without service on my phone for more than five minutes anywhere in the US.
I would say that unless you MUST have an iPhone or you really want a Droid that Sprint is a really good choice.
The crappy old Sprint has been gone for a while but then you will find people that hate every carrier.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
I do my best. And yes, I've been doing it for a while...
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...
No brain, no pain.
But my iPhone would probably just drop the call.
SJW: Someone who has run out of real oppression, and has to fake it.
I couldn't agree more. I've been on Sprint for five years. I also can't remember the last time I had a dropped call or no service, and the "everything" plan can't be beat. I talk to the Apple fanboys at work toting their iPhones, and they try to compare who has the least number of dropped calls - they can't believe that I don't have any at all, ever.
Sprint purchased/"merged" with Nextel. Nextel has always been the bottom-feeder network when it came to infrastructure. Sure, they are in more places, but that's because they snatched up all the "going under" real estate from failing telco's before they went away. It's a cheap way to build (or have others build) your network, but the quality was inconsistent, in disrepair and only really looked good on paper. The only real reason why Nextel did as well as they did is because they had that all-important "Push To Talk" button, which was a very simple interface for specialized marketplaces. Fleet vehicles, remote staff, servicemen, etc. relied on that feature, so the network was basically a non-consideration as long as it worked "most of the time". Both Sprint and Nextel had very strong and secure reputations in the marketplace, but for VERY different underlying reasons.
Sprint needed to invest quite a lot to upgrade the equipment from Nextel's acquisitions, but now that they have, they have an amazing, demonstrable footprint of coverage. To say that Sprint gets bashed, they bought that reputation honestly through acquiring Nextel. Both companies ultimately benefited from the merger, but it was and is a long and expensive road for them both.
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."
Those who do study history are doomed to stand helplessly by while everyone else repeats it.
My big complaint with Sprint is cross carrier SMS and MMS. Everyone I know finds Sprint extremely unreliable about sending or receiving anything which comes from or goes to Sprint's network. I've literally waited an hour for text message to appear on the phone next to me. They also seem to drop a huge number of messages; again, cross carrier. At one point, I'd guess perhaps as high as 80% drop rate - though that high is not what I'd call typical.
I don't know if other carriers are purposely causing problems for Sprint or if Sprint is purposely causing problems for other carriers, or they are just well beyond their capacity. But, unless things improve and you SMS or MMS heavily with people on other carriers, I could never recommend Sprint.
Also, one last note, Verizon has not crippled any Android phone features. While Verizon has a terrible history here, thus far they've been true to their word on Android. Now hopefully Verizon's upcoming Android 2.1 update will fix various bugs and incompatibilities vs every other Android phone available. If not, then I'd recommend people staying away from Android+Verizon.
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).
No, let me clarify here.
Nextel's network was *necessarily* built from the ground up, because *it is not Cellular*. It's not licensed as cellular by the FCC. It's on frequencies completely disparate from cellular.
Nextel was created and expanded by buying out Specialized Mobile Radio licensees in the mid 80s, and using their freqs to build what is, effectively, a digital trunking radio system (iDen) with autopatch capabilities.
> Sure, they are in more places, but that's because they snatched up all the "going under" real estate from failing telco's before they went away.
That? Just didn't happen. Nor anything that remotely resembles it.
> Both companies ultimately benefited from the merger, but it was and is a long and expensive road for them both.
And they're not done walking it. While I disagree with you on the technical points of how they came to be, it is in fact the case that they out-expanded themselves, growing their footprint without expanding their backbone to match.
At least, that's my diagnosis, and until someone with facts steps up to contradict me, I'll continue to tell people that.
On reflection, I guess I'm saying they have to take *even more* of the blame for their current state -- and it's not just me; I have 8 customers who've ditched Nextel in the last 10 years; big ones; some 25 radios -- than your "cobbled together from people's leavings" assertion would justify.
<title>Analyst: AT&amp;T needs to spend US$5B to catch up | ITworld</title>
That title is so &ed it goes to 11.
Anyway, I bit the bullet and bought an iPhone. In the Financial District in downtown SF I couldn't make a call consistently much less anything else! I was livid.
To make matters worse, my work gave me a Blackberry. A SPRINT Blackberry, and it had better coverage in SF, Denver, and DC. sigh...Unreal.
I still can't believe I pay MORE to AT&T for this honor...
Computer Science is Applied Philosophy
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.
It doesn't hurt to be nice.
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 datapoint as a customer who switched from Verizon to AT&T in the last 9 months is that I get *better* coverage with AT&T in my primary area (Twin Cities), fewer dead spots and the data service on my iPhone is faster than it was on my Motorola Q on Verizon.
My complaints about AT&T are really centered on the coverage in rural areas of MN and North Dakota -- I'm lucky if I get a solid 1x, many no service areas, and wifi is needed for any data services you'd normally expect to use on 3G. But I think that whole area is pretty much Alltel territory and nobody uses anything but Alltel up there. Verizon roams there just fine and there's decent EVDO coverage in many places AT&T wheezes on a weak 1x signal.
Really? How in the world did you find a Sprint plan costing more that AT&T using the iPhone? Especially when the Sprint "everything" plan is $99/month? That's quite a feat...
You can say Sprint's customer service sucks, and yes, lots of folks had issues there. But as far as cost of plans go, I'm by NO means on the high end AT&T plan, and I'm nowhere near my Sprint bills...
Computer Science is Applied Philosophy
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.
You sir, are just plain wrong.
Wikipedia: Enhanced_Data_Rates_for_GSM_Evolution
Wikipedia: Evolution-Data_Optimized
In a survey (Gearlive) Verizon's 3G had an average download speed of 1,940 Kbits/sec (about 2Mbps/sec). Compare that to AT&T edge speed tests (Engadget) where AT&T's edge network ran 264Kbits/sec.
Thus, as far as I can tell from a theoretical perspective (based on the technology) Verizon's 3G is three times faster (3Mbps compared to 1Mbps) than AT&T's EDGE. In the real world the difference is worse though, with Verizon showing over 7 times faster performance (1940 Kbits compared to 264 Kbits). As someone who has used both, let me say that matches with my own personal experience.
VZW is on EV-DO Rev. A which supports 3.1Mb transfer speeds NOT 2-300kbps and is MUCH faster than EDGE. HSDPA actually supports up to 18Mb not the 20 you claim. However as seen below you will never see anything close tot hat in the real world.
Also PC World did a piece in June comparing REAL world transfer speeds (http://www.pcworld.com/zoom?id=167391&page=1&zoomIdx=1)
AT&T averaged: 717 Kb/sec
Sprint averaged: 745 Kb/sec
VZW averaged: 890 Kb/sec
For reliability...
AT&T: 66%
Sprint: 84%
VZW: 83%
Please get out of here with your misinformation.
What makes you think that Sprint didn't expand their backbone? They are one of the largest Tier 1 bandwidth providers in the U.S. and own the majority of long haul fiber.
Most people that bash Sprint and Nextel had it in rural areas or in areas that were fairly new. Sprint's biggest problem has always been that they move slowly so you get new phones only periodically and only periodically they expand coverage. When they do expand coverage they provide proper coverage. Also, if you move to an area that doesn't have coverage they will let you out of your contract.
Besides that Sprint has a tendency to cost a little bit more but over that last two years that has really dramatically improved. For the business side they are still very pricey though, so much so my company switched to AT&T and now we're battling with dropped calls and inconsistent reception. Good fun! Problems we never had with Sprint but we're saving a couple of grand a month on service.
I was with sprint for 2 years. Half my calls dropped, My phone wouldnt even ring some of the time. the customer service was horrid, they tried to charge for over $250 in download services i never used (The said i used it when i was in denver when i have never been west of the mississippi, not to mention how i got from denver to making a call in new york in about 1 hour, I must have a concord availible to me!), it took over 8 hours on the phone to get the charge canceled even though it was obviously bogus. In my opinion sprint deserves every piece of its crappy reputation and more. I am with verizon now.
All misspellings and grammatical errors in the above post are intentional and part of my artistic expression.
My 2 cents...
I'm a software consultant, averaging about 80% travel with a typical meantime of about 2 weeks before changing locations. I've been doing this for about 6 years. For the first two years I was desperate for a mobile data solution because (most of the time) hotel internet connections are absolutely horrendous.
For the last 4 years I've tried both AT&T and Verizon for mobile data, and I've got to say Verizon has beat AT&T into the ground in every respect. When I was on AT&T, I achieved an honest-to-god HSDPA connection for a grand total of three wonderful weeks. But three weeks out of a 2 year span do not make for a happy consultant.
With Verizon, I've consistently received a 3G connection time and again. The only time I didn't receive a 3G connection was when I was stuck for two weeks in the middle of northern Wisconsin.
Verizon's 3G IS slower than AT&T's 3G, that much is true. But unless you live in one of the very few areas that AT&T chooses to bless with its almost mythical HSDPA, its not worth it. Verizon's 3G has a vastly superior coverage and maintains about 800Kb/sec. AT&T's EDGE (2G) will get you about 100Kb/sec if you're lucky.