Last Updated May 28, 2009 1:41 PM EDT
AT&T not only admitted that its network wasn't doing the iPhone (or any other smartphone) justice, but promised to remedy the shortcoming in very short order. The carrier announced plans to start testing LTE -- the acronym for Long-Term Evolution, the generation of broadband transmission that will succeed 3G -- in 2010, and to begin full-scale deployments in 2011. This schedule puts AT&T on a par with, if not slightly ahead of Verizon's LTE roll-out plans.
AT&T also promised to start bolstering its current 3G network immediately. But its $18 billion investment in infrastructure can start paying dividends for current handsets as well, because the same technology needed for LTE can be used to boost the performance of its 3G network, as the infrastructure relies on the same technical standards.
Those same technical standards also underlie the GSM network, which has over 3 billion users world wide, and could help AT&T generate incremental revenue from international travelers to the U.S. Fabricio Martinez, a consulting practice leader with network management tools vendor Aircom, told me that LTE "belongs to the same family [as GSM], so AT&T can have roamers all across the globe using their network when they come to the States... AT&T is well-positioned for a global play."
WiMAX, the technological rival to LTE, doesn't offer that potential source of revenue to carriers, like Sprint, which have thrown their lot in that basket. The adoption of WiMAX also puts limits on where owners of the Palm Pre can use their phones.
Because LTE is part of the current 3G and 2G network family, AT&T's investment won't alienate other handset makers it partners with, like Research in Motion and Nokia. According to AT&T, devices will be able to
switch among 4G LTE, 3G and 2G service areas to maintain the fastest-available connection. This availability will be critical for customers in the early years of LTE deployment across the industry, when access to LTE service will be geographically limited.The one challenge AT&T faces in its roll-out of LTE is backhaul, or transmission bottlenecks, similar to the early days of cell phones where you couldn't get a signal at certain times of the day because the networks were saturated. Daryl Schoolar, an analyst with In-Stat, told me "backhaul is what holds [the network] together, and it's been overlooked."
According to Martinez, this offers an opening for several international carriers like Deutsche Telekom, BT and France Telecom, some of which have miles and miles of dark fiber in the U.S., to resell capacity to both AT&T and Verizon.