WiFi Hotzones: AT&T’s Half-Baked Network Savior

AT&T Inc. (NYSE: T) is expanding its WiFi hotzone pilot project from Times Square to Charlotte, N.C., and Chicago, in hopes of alleviating congestion on its 3G network. It’s a good start, says one analyst, but it’s only a fraction of what the beleaguered carrier should be doing with WiFi. (See AT&T Adds WiFi Hotzones.)

“Just putting [WiFi] in downtown areas is half-stepping,” says broadband consultant Craig Settles. “It solves a purpose, but only half-way.”

The purpose it solves for AT&T is clear, given its well reported network troubles. AT&T has been turning to WiFi to help relieve congestion for awhile now, and its customers have responded favorably. AT&T public WiFi hotspots attracted more than 68.1 million connections in the second quarter, up from only 15 million a year ago.

Settles says this isn’t enough.

If AT&T were to partner with the communities instead of just plop WiFi down, these hotzones could become much wider networks that would benefit AT&T, the city, and users all at once. Instead, they really only benefit its data-heavy iPhone and iPad customers.

“If you are going to do it, don’t do it in isolation,” Settles says. He concedes that Charlotte is a good choice, because it’s in a heavily rural state, but he believes that if AT&T opens the hotzones to rural areas that lack broadband access, it will reach new customers -- not just upgraders as most of its iPhone adds were. (See Apple Outdoes Itself with iPhone 4.)

If AT&T doesn’t push the limits of its WiFi service, however, it will be nothing more than a huge McDonald's, Settles says. And no one wants grease all over her keypads.

AT&T isn’t making any promises for additional hotzones -- it’s billing the program as a pilot to “gather more information and customer feedback.” But the program makes a lot of sense for the carrier even if the move isn’t altruistic.

It’s no secret that traffic on AT&T's 3G network has grown by 5,000 percent in the last three years, and could go higher with the onslaught of Apple Inc. (Nasdaq: AAPL) iPhone and iPads. AT&T CFO Rick Lindner told investors on the company’s second-quarter earnings call that between 400,000 and 500,000 iPad owners signed up for 3G data plans since the 3G/WiFi version became available on April 30. Of these, more than 75 percent chose the largest monthly data plan (2 gigabytes).

Because of this, AT&T has also been working to improve its 3G network with additional cell towers in New York and San Francisco, but it's faced regulatory roadblocks on the West Coast. San Fran is currently about 90 days behind the schedule in NYC, Lindner said on the call. (See AT&T's Q2 iBoost.)

“As our chief technology officer said in remarks a few days ago, we are moving heaven and earth to execute our network plan,” Linder said. “We’re adding additional third and fourth carriers, adding fiber backhaul and Ethernet to cell sites. We’re deploying in-building and venue solutions where appropriate, and we are doing more with WiFi, including piloting WiFi hotzones like the one we’ve turned up and have running in Times Square.”

AT&T is also a member of the Wireless Broadband Alliance (WBA), a consortium that includes BT Group plc (NYSE: BT; London: BTA), Comcast Corp. (Nasdaq: CMCSA, CMCSK), Deutsche Telekom AG (NYSE: DT), and even WiFi-holdout Verizon Wireless . The group, which combined spans 100,000 WiFi hotspots, is working to drive wireless broadband deployment and essentially to create one enormous WiFi hotspot by interoperating among carrier networks. (See AT&T, Comcast, VZ Join WBA.)

Dave Fraser, CEO of WiFi vendor and WBA member Devicescape Software Inc. , says that even when Long Term Evolution (LTE) networks come online, WiFi will remain integral to AT&T and other carriers' plans, as they will never be free of data overload woes.

“The basic resource is licensed spectrum, so when you have a certain amount of bandwidth to be carried, enough traffic will saturate that,” Fraser says. “4G is a good step forward, but there’s no way there’s enough bandwidth to handle all the applications coming. We haven’t even scratched the surface.”

— Sarah Reedy, Senior Reporter, Light Reading Mobile

paolo.franzoi 12/5/2012 | 4:28:55 PM
re: WiFi Hotzones: AT&T’s Half-Baked Network Savior


Did they provide any info on the increase of WiFi connections as it relates to the takeover of the Starbucks WiFi service?



vaultman 12/5/2012 | 4:28:54 PM
re: WiFi Hotzones: AT&T’s Half-Baked Network Savior

How could it be possible to cover rural areas with WIFI? Why do we need 3G or 4G if we can simply cover everywhere with WIFI?

CJSettles 12/5/2012 | 4:28:54 PM
re: WiFi Hotzones: AT&T’s Half-Baked Network Savior

To expand a little on one of my points. The idea of building WiFi networks to offload heavy iPhone and smartphone data traffic is a great idea. But it's an idea that could be implemented in a limited fashion, and thus only helps AT&T and a city's various stakeholders in a limited way. It's analogous to giving school districts USF money (eRate) to build great broadband networks, but after 4:00 these are useless asset because rules prevent the network from being used by the rest of the community.

Conversely, if the pilot projects lead to full-scale networks in urban and rural areas that community stakeholders and AT&T build out jointly, AT&T can pick up a lot of new customers, unload a greater amount of data traffic and also communities benefit. They get highspeed bandwidth in places where it doesn't currently exist without having to carry the full financial burden that's a challenge for many communities.

I tend to be cautious in my optimism AT&T will take the second path because large telco and cable incumbents have had such incredible knee-jerk reactions (and still do) to any form of municipal involvement in broadband projects. But hope springs eternal.   


paolo.franzoi 12/5/2012 | 4:28:53 PM
re: WiFi Hotzones: AT&T’s Half-Baked Network Savior


It's not possible vaultman.  My WiFi does not reach the other end of my house.  What most of us know is that these kind of things separate analysts from those who spout horse manure.




CJSettles 12/5/2012 | 4:28:52 PM
re: WiFi Hotzones: AT&T’s Half-Baked Network Savior

By rural areas, I mean small towns and parts of rural communities where you have some level of concentration of homes/businesses. If you look at Prestonburg, KY and Franklin County, VA in this list of 10 community broadband projects - http://bit.ly/Ejg6L - these are both rural communities where WiFi and fixed wireless are meeting the bill. Wireless isn't perfect everywhere, particularly WiFi, but it can be part of a bigger solution if creative minds work at it. And you work with or around the challenges such as indoor coverage issues.

paolo.franzoi 12/5/2012 | 4:28:51 PM
re: WiFi Hotzones: AT&T’s Half-Baked Network Savior


Your point basically is that AT&T should fund these kind of rural projects where they could just do DSL...which would cost them a lot less money to do since you are only covering the footprint of the CO. 


Why would they do that?  If there is not the ROI to drop a CO DSLAM in, there is surely not the ROI to build an entire wireless network with its additonal complexity and cost.



CJSettles 12/5/2012 | 4:28:50 PM
re: WiFi Hotzones: AT&T’s Half-Baked Network Savior

This depends on your perspective. If a network cost $100,000 to build (using this number just for demo purposes), AT&T could spend a portion of that, a rural town could spend a portion of that and write it off as infrastructure for the public good, and merchants could spend portion of that because if helps boost business downtown. Each party, including AT&T pays less than full freight, and people have incentive to subscribe to AT&T b/c rural people like iPhones too.

This is hypothetical, yes. There is a lot of work to be done, yes. There are operating expenses to consider. However, my point is, there are possibilities and unknown opportunities here if people would just take blinders off and explore the possibilities. AT&T, by going with their standard, closed minded approach, guarantees that those options won't be explored.

America's supposed to be a place where we make new opportunities and dream things never before accomplished that were thought impossible. But we're being screwed by companies pursuing the path of least resistance to their profit margins.   

paolo.franzoi 12/5/2012 | 4:28:47 PM
re: WiFi Hotzones: AT&T’s Half-Baked Network Savior


Actually, building out a WiFi network would not help the iPhones unless there was already a cellular network.  At that point, one would have to think that AT&T would be better off upgrading its cell network than it would be to duplicate its investment in WiFi for these small communities.

From an urban perspective, you might be able to offload enough to make this WiFi network worth it.  But in a small community, the reverse would be true. 

And the last thing you would want to do it fund a huge number of very odd relationships with small communities.  They would want to have some control over the network technology which would hamper the ability of the carrier to create a ubiquitous network and network technology base.  It would add bucketloads of cost to their network.  What they want is plug standard technology deployable everywhere.



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