AT&T sets 2009 spending

MARCH 11, 2009 By Stephen Hardy -- AT&T says it will spend between $17 billion and $18 billion on its network this year.

MARCH 11, 2009 By Stephen Hardy -- AT&T (search Lightwave for AT&T) announced yesterday it will spend between $17 billion and $18 billion on its network this year. The carrier described the amount as "in line with its 2007 capital expenditures of $17.7 billion and expected to exceed the planned investment of any other U.S. telecom company." However, the figure is still smaller than the $19.7 billion AT&T spent last year.

Two-thirds of the money will go toward enhancing AT&T's fixed and mobile broadband capabilities. The carrier announced it also plans to add 3,000 jobs to support its video, mobility, and broadband efforts. These gains will be offset by staff reductions in other areas, principally wireline.

"Demand for broadband continues to grow as new applications emerge and customers embrace them, leading to data traffic on our network growing more than 50% year over year on average," said Randall Stephenson, AT&T chairman and chief executive officer. "We expect demand will only escalate when the larger economy rebounds, and AT&T's continued strong network investment will help ensure that we're fully ready to support the next wave of economic growth. We recognize the continuing importance of investing in critical network infrastructure, which plays a key role in driving commerce, innovation, and job growth."

AT&T emphasized its planned wireless investments in making the announcement. However, the carrier says it also will enhance its wired broadband access and IP/MPLS backbone networks. This includes its U-Verse fiber-to-the-node network. AT&T expects the network to pass 30 million living units in 2011, up from 17 million currently.

The company also plans to invest in "multiple new subsea fiber-optic cables." Meanwhile, R&D efforts within AT&T Labs will focus on 4G Long-Term Evolution technology, 100-Gbps backbone technology, and "a range of emerging IP applications."

The announcement stated that the carrier "completed" deployment of 40-Gbps backbone technology last year. Paul Bonenfant, communications components analyst at Morgan Keegan & Co., asserted in a note this morning that the use of the past tense does not necessarily mean that AT&T's spending on 40-Gbps technology has come to a halt.

"In our experience, carrier network deployments are rarely 'complete,' especially for newer technologies like 40G," Bonenfant wrote. "We think this commentary suggests that AT&T's 40G backbone footprint is largely in place, with plenty of headroom left for additional capacity (40G wavelength/transponder) expansion."

Meanwhile, the market intelligence firm Strategy Analytics hailed AT&T's announcement overall. "Our research suggests that, while perhaps not 'recession proof,' consumer broadband is nonetheless quite resilient to outside economic influences; we think it will emerge relatively unscathed," said Ben Piper, director of the Strategy Analytics Multiplay Market Dynamics Service. "AT&T's investment demonstrates a willingness to anticipate and prepare for the demand uptick when the economy makes its eventual rebound."

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