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May 29, 2009

AT&T has confirmed that it will upgrade its 3G network to HSPA version 7.2 beginning in November, and that it hopes it will be completed by 2011.

The announcement was expected, after many unsuccessful attempts made by the company to upgrade its network to LTE technology.

AT&T CEO Randall Stephenson said some network upgrades are needed as current wireless providers across the industry aren't able to deal with the rapidly growing data demands of smartphones and netbooks.

When asked whether AT&T’s network was implemented for the demands of the iPhone 3G when it was rolled out, Stephenson cited the company’s investment in its infrastructure and low churn rate as proof that AT&T’s network was up to the challenge. But others disagree.

James Brehm, senior consultant for Frost and Sullivan, said he thinks Stephenson’s claims of readiness are justified somewhat.

“I think they were ready. They had HSPA in a lot of markets and they didn’t churn. The exact opposite happened: people churned to get the iPhone,” said Brehm.

In the past few months, both Verizon Wireless and AT&T have announced plans to roll out LTE technology. Verizon has committed to rolling out at least thirty markets in less than two years from now.

Brehm said that the differences in strategy between AT&T and Verizon reflect differing philosophies between the two wireless operators.

“In 2008, we spent a little over $9 billion in procuring the 700 MHz spectrum,” Stephenson said.

He added that “all of this is about network quality and reliability. And when you look at our results over the last year-and-a-half, you see our churn rate dramatically coming down. In fact, you see the rest of the wireless industry rather flat,” he said.

Brehm admitted that he thinks Verizon’s claims might be a bit aggressive, but he doesn’t think Verizon needs LTE right now, but certainly well before 2011.

“Verizon is planning for the long term future, there's no question about that. AT&T is a bit more conservative, and they’re planning for the near future, with plans to move to LTE technology after they’ve achieved HSPA 7.2,” Brehm added.

“I’m not sure that LTE is needed by Verizon. Their EV-DO capacity is not even touched. They’ve got enough speed right now. They’re just getting ahead of the curve by rolling out LTE right now. But I would say, AT&T and Verizon will be fairly neck-and-neck in the long term,” Brehm said.

“It’s going to give them that capability, while at the same time fully complementing the carrier’s current offering of smartphones, saying it was by far the most extensive,” said Brehm.

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Source: Verizon Wireless.