AT&T Needs $5 Billion to Catch Up to Verizon: Analyst
AT&T would need to spend about $5 billion US on its wireless network to catch up with the coverage offered by Verizon Wireless, a financial research analyst said Tuesday, as reported by PCWorld
Gerard Hallaren, director of research at TownHall Investment Research, said that AT&T spent only about $21.6 billion US from 2006 through September 2009 compared with $25.4 billion for Verizon Wireless over the same time period. Even when looked at on a per-subscriber basis, Verizon has spent far more: $353 per subscriber compared with $308 for AT&T, Hallaren said. Verizon Wireless has 89 million subscribers compared to AT&T's 82.5 million.
That failure to invest in its infrastructure has been the major cause of AT&T's poor network performance, the analyst says. Although AT&T's wireless business is its top money maker - its "absolute engine of profitability," as Hallaren puts it, bringing in 57% of its income - the majority of the carrier's spending goes towards its wired infrastructure. It put major investment into the U-Verse internet/television/telephony service, and Hallaren says his analysis is that AT&T will probably not get a good return on that investment. U-Verse brings fiber into neighborhoods and uses copper for the connection to individual homes, while Verizon's FiOS brings fiber all the way to the home and delivers better performance.
Verizon, the number one carrier in the US, and AT&T, the number two, have been in a heated ad campaign over the last year, with AT&T suffering from poor customer perception of their services. AT&T's wireless service came in last in terms of customer satisfaction in a Consumer Reports survey last month.
image via Gizmodo