AT&T To Upgrade Network To Make Way For iPad?

Despite AT&T’s pubic disdain for Verizon’s maps, they’ve decided to spend $2 Billion upgrading their 3G coverage.

During AT&T’s Q4 earnings call, AT&T’s Operations Director John Stankey admitted that the provider’s existing 3G coverage is inadequate. This $2 Billion in capital expenditures will cover new 3G cell towers with fiber-optic lines to connect them to faster data streams. In addition, AT&T plans to continue their roll-out of HSPA 7.2 (also known as 3.5G) across the US in preparation for AT&T’s planned 2011 introduction of LTE (4G). Stankey said that, “Wireless is our No. 1 investment priority.”

This announcement comes on the heels of the iPad’s debut, yet another 3G device AT&T’s overstretched network will have to handle.The big question here is whether or not this infrastructure cash infusion will do enough to help AT&T catch up to Verizon. Last week, it was reported that AT&T’s infrastructure was approximately $5 Billion behind Verizon’s. While this targeted $2 Billion cash infusion will certainly help, will it be enough to stop Verizon’s smug ad campaigns?

Yes and no. The $2 Billion will certainly improve AT&T’s service in areas with spotty 3G coverage, like New York City and San Francisco. However, it won’t be enough to match Verizon’s coverage across the US. There is a silver lining for AT&T customers, though. In his remarks today, Mr. Stankey mentioned that wireless expansion is now AT&T’s biggest capital expenditures priority.

This is not how it’s been in the past. Despite the fact that the wireless business accounts for nearly 60% of AT&T’s revenue, it was also only receiving about 1/3 of AT&T’s capital expenditures. With this shift in priorities, though, AT&T will hopefully spend money on their wireless network commensurate to its revenue. This improvement in network quality will hopefully (for AT&T) be enough to keep its customers and handle the additional network demands of the iPad.