We Can iHandle It, AT&T Says

Update | 6:59 p.m. Correcting Mr. Stankey’s title.

As I wrote earlier, buyers of the iPad will grapple with the question of whether spending the extra cash for a model outfitted for wireless data over AT&T’s overtaxed network will be worth it.

But it’s not just tablet computers, which some analysts estimate could sell in the low millions this year, that AT&T has to worry about. In its most recent earnings release, the company said it activated an additional 3.1 million iPhones on its network during the fourth quarter. And at the Consumer Electronics Show in January, AT&T announced plans to begin supporting two Palm smartphones, as well as several Android-powered smartphones, this year, all of which have the potential to gobble down as much bandwidth as the iPhone.

During a call to investors and analysts on Thursday, John Stankey, president of AT&T’s operations division, said the company was gearing up for the introduction of new smartphones and the iPad on its network.

“We’ve got an aggressive plan to benefit everyone,” Mr. Stankey said.

The company said that this year it plans to pour an additional $2 billion into its wireless network and the wired data infrastructure that supports it, bringing its total expenditure into the range of $18 billion to $19 billion. As part of that spending, the company said it would be adding 2,000 new cell sites and upgrading existing cell sites with fiber-optic connectivity to help increase capacity, among other things. The company also pointed to its recent efforts to roll out its 7.2 HSPA update to existing 3G cell sites, which it says will double the speed of data transfers.

In addition, AT&T said it worked closely with Apple to plan for connectivity demands related to the use of the iPad. But it said it largely expects the iPad to be used in coffee shops and at home, where users can rely on Wi-Fi, as opposed to dragging down the company’s 3G network.

In some of the cities where AT&T customers complain heavily about spotty service and dropped calls, like San Francisco and New York, Mr. Stankey said the company was “closing the gap.”

Mr. Stankey said there were periods during the week when nearly 70 percent of the phones active on the company’s network in New York were data-intensive models. To counter that, in the next three months, the company plans to increase the amount of 3G radio capacity by more than one-third in the more high-traffic areas of Manhattan, adding additional radio network controllers on existing cell sites.

Mr. Stankey said zoning problems in San Francisco had hindered the company’s ability to improve its network there, but he said the company was working to improve performance.

AT&T’s rush to shore up its infrastructure underscores the swelling demand being placed on wireless networks. It also demonstrates how crucial wireless data revenues are becoming for those companies as people shift from voice calls to data services like Web browsing, e-mailing and texting.

As I reported in Thursday’s paper, analysts expect carriers will generate more than half of their revenue from data in three or four years, up from less than 30 percent today.

In the last year alone, AT&T’s mobile broadband use jumped 200 percent, Mr. Stankey said, which helped push the company’s wireless data revenues up 26 percent, to $3.9 billion, in the fourth quarter.