AT&T to Invest $8B to Boost Wireless

November 19, 2012

Verizon Wireless has been airing an ad showing various charts that all show it well ahead of other carriers in LTE deployments. AT&T is out to change that, as soon as it can. In order to accelerate the growth of its 4G LTE network, the carrier has pledged to spend $8 billion during the next three years on wireless initiatives. Another $6B will go for wireline IP broadband networks to support growing customer demand for high-speed Internet access.

Barron’s said the planned spend should “juice towers.” The investment plan – Project Velocity IP (VIP) – means 10,000 new towers and 40,000 small cells for the wireless infrastructure industry.

“Revenues in our key growth areas — wireless data, U-verse and strategic business services — are all growing at a strong double-digit rate,” said Randall Stephenson, AT&T chairman and CEO. “Project VIP expands our potential in these key platforms and makes them available to many more customers.”

AT&T’s Project VIP consists of several individual wireless and wireline initiatives, including plans to expand its 4G LTE network to cover 300 million people in the United States by year-end 2014, up from its current plans to deploy 4G LTE to about 250 million people by year-end 2013. In AT&T’s 22-state wireline service area, the company expects its 4G LTE network will cover 99 percent of all customer locations.

While the expansion is good news for the tower industry, the mainstream press scoffed at AT&T’s announcement, calling into question the carrier’s credibility because of its statements while trying to merge with T-Mobile. AT&T had told the FCC that expansion beyond 80 percent coverage would not be possible unless the Commission did not green-light the merger.

CNN’s headline screamed, “AT&T caught in a brazen 4G-LTE lie after fight for doomed T-Mobile wireless merger.” AT&T responded that the expansion was made possible by the spectrum deals that it has entered into in the last year.

“AT&T has acquired spectrum through more than 40 spectrum deals this year (some pending regulatory review) and has plans to buy additional wireless spectrum to support its 4G LTE network,” according to a press release. “Much of the additional spectrum came from AT&T’s plan to use WCS spectrum for mobile broadband. Between its current holdings and transactions pending regulatory approval, AT&T expects to have about 118 megahertz of spectrum nationwide.”

As part of Project VIP, AT&T expects to deploy small cell technology, macro cells and additional distributed antenna systems to increase the density of its wireless network, which is expected to further improve network quality and increase spectrum efficiency.

“Within the announced $14 billion capital allocation, prioritization of next generation wireless is consistent with consumer demand,” Ted Abrams, wireless consultant, told AGL. “Tens of thousands of small cells will be deployed to augment wireless network capacity. Commitment to this small cell initiative is expected to occur in addition to the planned construction of many thousands of distributed antenna nodes and targeted growth in conventional site count.”

The carrier reported download speeds as fast as 12 mbps over LTE networks with HSPA+ networks clocking in at 2 mbps to 6 mbps.

“AT&T’s 4G LTE network offers speeds competitive with, if not higher than, what is available on wired broadband networks today. And in many places, AT&T’s 4G LTE service will be the first high speed IP broadband service available to many customers,” according to a press release.

Supporting the network expansion is going to tax AT&T’s microwave and fiber IP backhaul capability. Some of that IP connectivity will come from the ILEC topology in areas served by AT&T’s landline plant. Outside those areas, AT&T will opt for the best ratio of CAPEX and OPEX in working with CLECs, MSOs, and dark fiber providers, Abrams said.

“All this investment will challenge the capacity of site and service providers at the same time planning is underway for the nationwide FirstNet build, making wireless the most exciting sector in American business,” Abrams said.