April 22, 2011 at 1:18 PM ET
In a recent filing to the FCC regarding its acquisition of T-Mobile, AT&T finally copped to a problem some of its users already knew: its network wasn't equipped to deal with the popularity and demands of the iPhone and its users.
Reading through the filing, it looks like gobbling up T-Mobile couldn't have come at a better time for AT&T, which "faces network capacity constraints more severe than those of any other wireless provider," in large part to an astronomical mobile data volume surge of 8,000 percent from 2007 to 2010. (Not coincidentally, the iPhone and iPad years.) It never mentions the iPhone by name and only mentions the iPad once in this release, which seems to imply that tablets could be an even bigger nightmare for the company if it does not take T-Mobile under its vast wing:
A smartphone generates 24 times the mobile data traffic of a conventional wireless phone, and the explosively popular iPad and similar tablet devices can generate traffic comparable to or even greater than a smartphone.
To put it in perspective: "In just the first five-to-seven weeks of 2015, AT&T expects to carry all of the mobile traffic volume it carried during 2010."
AT&T states that this $39 billion deal will be a boon for consumers, who will see a drop in the number of dropped and blocked calls, not to mention higher data speeds and better in-building coverage.
Which is the closest it's come to admitting its' network wasn't ready to handle the bandwidth demands of its iPhone and iPad users.
The acquisition will give customers of both companies several improvements, including improved voice quality, thanks to the "additional spectrum, increased cell tower density and broader network infrastructure." AT&T will immediately "gain cell sites equivalent to what would have taken on average five years to build without the transaction, and double that in some markets." This way, AT&T won't have to clutter up America with more cell towers, since its network density will increase by approximately 30 percent in some of its most populated areas.
As more justification for this massive merger, AT&T writes in the filing: "The network synergies of this transaction will free up new capacity — the functional equivalent of new spectrum — in the many urban, suburban and rural wireless markets where escalating broadband usage is fast consuming existing capacity."
As to cries of monopoly, AT&T also had an answer to that: "The FCC found last year that approximately three-quarters of Americans live in localities contested by at least five facilities-based wireless providers," so there should no worries that it'll be the only choice in town.
We take that with a grain of salt, since AT&T's own news release practically implies a Manifest Destiny:
When the parties announced this transaction in March 2011, AT&T initially stated that it would deploy LTE to 95 percent of the U.S. population. After conducting a more refined analysis of the combined network, AT&T is increasing the scope of this commitment to 97.3 percent. This deployment will help fulfill this Administration’s pledge to connect every part of America to the digital age, and it will create new jobs and economic growth in the small towns and rural communities that need them most.