AT&T took another step toward filling out its 4G wireless broadband strategy with the announcement yesterday that it plans to spend $1.9 billion to buy wireless spectrum from chipmaker Qualcomm.
The new spectrum will be used to help build the carrier's next generation LTE network. This is the same technology that Verizon Wireless is using to build its 4G network.
In some ways, AT&T may seem a little late to the 4G wireless party. Competitors Verizon Wireless, Sprint Nextel, and T-Mobile USA have already been touting their fourth generation networks.
Verizon just launched its service earlier this month. And Sprint has been offering 4G service using a technology called WiMax for more than two years. Even T-Mobile USA--the smallest of the major four national wireless operators--is claiming to offer 4G wireless. For the most part, AT&T has been quiet about its 4G plans.
But now the company is making nearly a $2 billion investment in the new network. To help shed some light on AT&T's 4G strategy and what consumers might expect, CNET put together this FAQ.
What is AT&T's strategy for 4G, and is it really lagging its competitors?
In terms of marketing, AT&T is definitely behind its competitors in getting its 4G message out. But in terms of technology, the company isn't really that far behind its competitors. It's just taking a slightly different route.
In short, AT&T has decided to upgrade its existing 3G network before it deploys LTE. This is the same strategy T-Mobile USA is taking as well. AT&T and T-Mobile are both GSM carriers, using HSPA 3G technology. HSPA 3G has an easier path toward LTE, so it makes sense for these carriers to invest in these networks as long as they can before building an LTE network. Meanwhile, Verizon Wireless and Sprint Nextel, which are CDMA-based carriers, use a 3G technology called EV-DO that doesn't have as clear an upgrade path to 4G. So this is why these carriers have decided to move to next-generation technologies. Verizon is using LTE, while Sprint is using WiMax.
What technology has AT&T already deployed?
In 2009, AT&T upgraded to HSPA 7.2 technology. This 3G technology provides a theoretical download speed of 7.2 Mbps. The company completed that upgrade and is now working to upgrade the network yet again with HSPA+ technology. The technology it is using can theoretically offer between 14 Mbps and 21 Mbps downloads.
In November, AT&T's CTO John Donovan said the company had completed 80 percent of its network upgrade to HSPA+. And now AT&T claims it offers this faster service to 250 million potential users.
Are there products that take advantage of these new faster speeds?
So far AT&T has introduced only USB modems that offer HSPA+ speeds. But there is a good chance the company will offer HSPA+ handsets early next year. T-Mobile, which touts its HSPA+ network as 4G, was the first carrier in the U.S. to launch HSPA+ phones in the U.S.: the G2 and myTouch 4G.
If LTE is the next evolution in AT&T's roadmap, how much faster will it be than HSPA+?
AT&T has not said how fast it expects the new service to be, nor has AT&T published its own estimates for actual speeds on its HSPA+ network. If you look at competitors using similar technologies, the actual speed of its HSPA+ is likely around 3Mbps to 7Mbps. Verizon, which is the only major U.S. carrier that has deployed LTE, is reporting average download speeds around 5Mbps to 12Mbps.
When is AT&T launching its LTE network?
The network is expected to launch commercially in mid-2011. AT&T is already testing the service in Dallas and Baltimore. The company has said it plans to cover 70 million to 75 million potential customers with the service by the end of 2011.
AT&T plans to spend $1.9 billion on new spectrum from Qualcomm. How will this new spectrum be used in building the LTE network?
AT&T plans to use the spectrum as a supplement to the spectrum it's already using for 4G services. Specifically, it plans to use "carrier aggregation technology" to enable supplemental downlink capacity. Carrier aggregation technology has been discussed as a technique to be used in the next generation of LTE, known as LTE-Advanced. Using this technology, LTE Advanced could provide peak download speeds of 1Gbps.
In a separate announcement, Qualcomm said it intends to integrate carrier aggregation technology into its chipset road map. The company said demand for the technology will be driven by more consumers downloading rich content onto their phones.
Will the addition of new wireless spectrum help AT&T deal with its dropped call issues on devices like the iPhone?
Unfortunately, it will not help solve the dropped call issues. Neither Verizon Wireless nor AT&T will use LTE for voice services anytime soon. For now, voice traffic will remain on the carriers' existing 2G and 3G networks.
I thought the FCC said there was a spectrum shortage. Where did this spectrum come from?
The spectrum AT&T is buying from Qualcomm was originally used for analog broadcast TV. It is in the 700MHz band of spectrum, which is the same band of spectrum that the FCC auctioned off a couple of years ago. Verizon Wireless bought a nationwide license of similar 700MHz spectrum. And that is what Verizon is using to build its 4G LTE network.
This 700MHz spectrum is considered valuable because it can travel long distances and penetrate walls.
Qualcomm is a cell phone chip company. What was it doing with this spectrum?
That is correct, Qualcomm is a chip manufacturer. And it used the spectrum to build a mobile broadcast TV network it calls Flo TV. The service tied into Qualcomm's business because the company made the chips that went into devices to receive the TV signals.
The Flo TV service covers more than 300 million people nationwide. Qualcomm reportedly invested $683 million to build the network. It started as a wholesale provider, allowing carriers like AT&T and Verizon Wireless to resell its mobile TV service. It eventually launched its own device with service using its network.
But neither mobile TV business ever got enough subscribers to sustain the business. And so the company announced earlier this year that it would shut down the service in March. CEO Paul Jacobs said the company would evaluate options for the spectrum, which included selling the spectrum license to another carrier.
What spectrum is AT&T currently using to build its LTE network?
Currently, AT&T is using 700 MHz spectrum holdings as well as spectrum it acquired in the FCC's Advanced Wireless Services spectrum auction.
Why is AT&T taking its time with the 4G rollout?
New networks take time to build. So part of AT&T's strategy is to make sure that its legacy 3G network is as fast as it can be before investing in a new generation of network. This will help the company in two ways. For one, it helps the company wring out as much use as it can from its existing network investment. And second, Donovan believes it gives AT&T a competitive advantage over rivals such as Verizon.
According to a recent blog post defending AT&T's strategy, Donovan said AT&T's decision to take HSPA to its limit is in part to get better network coverage.
"Our HSPA+ network and upgraded backhaul is expected to deliver speed performance similar to initial LTE deployments. That matters, because when we begin commercial deployment of LTE in mid 2011, customers on our LTE network will be able to fall back to HSPA+. As they do, they'll receive a more consistent mobile broadband experience that supports simultaneous voice and data connections and higher speeds than the others can provide outside their LTE footprint."
Does this strategy make sense? Or will AT&T be left behind as Verizon Wireless, AT&T's main rival, gets at least a six month jump on the market?
The answer likely lies in how quickly the LTE device market evolves and matures. Verizon, the first major U.S. operator to launch LTE, isn't expected to announce handsets for the new network until early January at the CES tradeshow in Las Vegas.
It will be interesting to see how these handsets compare with other hot smartphones on 3G networks in terms of battery life and functionality. The 4G network will definitely offer more speed for these devices. But early versions of these products are likely to be somewhat clunky in network handoffs and could have serious battery life issues.
By the time, the device kinks are worked out, AT&T could be launching its own service. And as Donovan points out, if AT&T introduces LTE/HSPA+ handsets, it could very well offer the fastest and widest footprint of ultra fast 4G wireless broadband. Verizon's customers will experience 4G speeds where LTE is available, but dramatically drop down to EV-DO in places where LTE is not available.
The real trick is whether AT&T can execute on its strategy. And a big part of that will be getting the right kinds of devices on its network as quickly as it can to compete against rivals.
But AT&T might have another problem to deal with once it loses its exclusive contract for the Apple iPhone. While the exclusive deal for the iPhone has helped AT&T win millions of new subscribers, it's also hurt the company's reputation. Poor network performance has caused the company to place last in customer satisfaction in a recent Consumer Reports survey. Perhaps a speedier network with a wider footprint than its competitors could help it rebuild its reputation.