AT&T Spending Big Bucks to Answer Cell Critics

Ma Bell twice the network it used to be in San Francisco

By Scott Budman
|  Tuesday, Nov 17, 2009  |  Updated 11:11 AM PDT
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AT&T Spending Big Bucks to Answer Cell Critics

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AT&T wants you to like them again.

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AT&T is finishing a $65 million upgrade to its Bay Area wireless network. The question: Can that possibly be enough to fend off the competition and appease angry customers?

The project, which begain in 2008, will upgrade 850 cell towers AT&T has here and add 40 additional towers.  The company claims the new equipment will result in better 3G quality.

"In the last 45 days, we've doubled capacity in the city of San Francisco," said AT&T spokesman John Britton.

About time, if you ask Silicon Valley's iPhone users, whose data-hungry habits have strained AT&T's network here perhaps more than any other region. Data usage increased 2,000 percent between January 2008 and September 2009.

AT&T has been riding high for a few years now on its iPhone partnership with Apple.  With big earnings and lots of subscribers, Ma Bell is clearly benefitting from the Apple "halo effect," where everything Steve Jobs touches seems to do well and make a lot of money.

That said, AT&T is facing two threats: One, competition. The Palm Pre couldn't dent the iPhone's dominance, and whether or not the new Droid smartphone can, Verizon is making hay with advertisements blasting AT&T and its spotty service.

It's hard to bash the iPhone. But AT&T's spotty service is an easy target. The number of blogs with AT&T complaints are growing by the day, and nowhere is that more noticeable than here in Silicon Valley.

This is the birthplace of the iPhone, so you'd think the network here would work particularly well, right? In our dreams, we see ourselves as a wireless utopia, where hotspots beckon us to reach into our pockets, and fire up our iPhones, BlackBerrys, and Nokias.

The reality: On some parts of AT&T's network, 30 percent of calls are dropped, and jaded Apple store workers counsel disappointed iPhone buyers that this is normal.

The Bay Area rollout is part of a nationwide effort to improve cell phone service.  AT&T says it's adding 1,900 cell towers across the country as part of the rollout. AT&T spends $17 billion to $18 billion a year on all its networks, wired and wireless.

Will new cell towers help AT&T's reputation?  The company would no doubt love to keep its relationship with Apple strong, not to mention please those who have been along for the iPhone ride. But Verizon is calling, angling for new customers, and just maybe its own iPhone.

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