AT&T to spend $2 billion to improve its wireless

NEW YORK (AP) — Stung by complaints about dropped calls and slow wireless downloads, AT&T Inc. is going to spend an additional $2 billion to improve its network this year.

The country’s largest telecommunications company has faced an aggressive ad campaign from Verizon Wireless that attacks the quality and range of AT&T’s network.

On Thursday, AT&T executives spent an unprecedented amount of time on their fourth-quarter earnings conference call to defend the wireless network and detail how they plan to make it better.

They acknowledged that wireless traffic, particularly from the iPhone, means that performance in San Francisco and Manhattan are below AT&T’s targets.

AT&T said problems have been reduced in the last three months. And to keep tackling the service issue, it is ramping up its capital spending this year, from $17.3 billion last year to between $18 billion and $19 billion. Though it didn’t break out how much will be invested in wireless, it said the increase over last year would be about $2 billion. It will add more cell towers and connect the towers to faster, fiber-optic lines.

“Wireless is our No. 1 investment priority,” said John Stankey, head of AT&T’s Operations division.

In the fourth quarter, AT&T added a near-record 2.7 million wireless customers, defying expectations. However, 1 million were non-phone devices, largely consisting of e-book readers. AT&T has deals to support the latest version of Amazon.com Inc.’s Kindle, Sony Corp.’s Reader and Barnes & Noble Inc.’s Nook.

AT&T probably gets relatively little revenue from each e-reader device. Analyst Craig Moffett at Sanford Bernstein puts it at a few dollars per month. But AT&T is taking clear leadership in providing service for non-phone devices, which are seen as the next big growth area for wireless.