AT&T: The MacGyver of Wireless Networking?

By Anders Bylund | More Articles
December 29, 2010 | Comments (3)

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You can call AT&T (NYSE: T ) many things, but "stale" isn't one of them.

The much-maligned wireless network of the nation's second-largest mobile carrier is under construction as Ma Bell works on her next-generation LTE rollout. Until then, the company is plugging some leaks in its proverbial dam by deploying inventive workarounds.

This week, AT&T proudly announced that it is expanding the use of Wi-Fi "hotzones" in a selection of densely populated areas, thus giving data-hungry users in a crowd a way to reach the Internet without connecting to its 3G towers. You don't even have to find the nearest locations for AT&T Wi-Fi partners like Starbucks (Nasdaq: SBUX ) or McDonald's (NYSE: MCD ) to get your fill, because these zones blanket large swaths of real estate with their high-speed radio waves.

AT&T says that its pilot programs have "received great customer response," and I suppose we can assume that the solution will be around for a while if this next wave of implementation proves equally popular. Why pour money into expensive 3G and 4G technologies if cheap-and-cheerful Wi-Fi jury-rigging is good enough? If this solution becomes permanent, restaurants and coffee shops might eventually lose the customer-magnet advantages of having their own Wi-Fi hookups.

If your carrier of choice is Verizon (NYSE: VZ ) , Sprint-Nextel (NYSE: S ) , or any other non-AT&T provider, you're not getting a free ride in Times Square or downtown San Francisco courtesy of AT&T. The connectivity will only be available to customers with "qualifying" AT&T plans.

Verizon does have its own network of Wi-Fi hotspots, though access to that service is included with DSL and FiOS Internet plans rather than with wireless access subscriptions, thus limiting the addressable market something fierce. T-Mobile wants you to pay for its hotspot plan, while Sprint prefers to sell you a personal, portable hotspot that connects to its 4G networks.

Is this a smart, face-saving move by AT&T, or just a vain attempt to plug leaks in the Hoover Dam with chewing gum and duct tape? Discuss in the comments below.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. Starbucks is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (3) | Recommend This Article (8)

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Report this Comment On December 29, 2010, at 8:07 PM, PluckyPicks13 wrote:

Isn't it better to have wifi available when the future if cell phone plans is to have tiered pricing plans for data usage? With traffic growing @ somewhere in the neighborhood of 5000% since the IPhone they had to do something to offset the demand and get a return on their huge capital investments in the 10s of billions for the past two years.
Let's not forget that their GSM technology allows for 'multitasking' unlike CDMA and GSM is upgradable where the other is not. This makes their path to LTE a much less daunting task and gives the end user experience consumers have come or will come to expect.
So for me, wifi hotspots are just another added value as a customer.
Oh, and by the way, I liked that show too!
Report this Comment On December 30, 2010, at 1:17 AM, TheDumbMoney wrote:

Much of AT&T's problems have been caused by skyrocketing hipster iPhone demand and usage in coastal California and other urban areas, which just happen also to be areas that are the most highly regulated and filled with hipsters who support that regulation and red tape, all the while downloading ever more things on their iPhones. So, it is not a question of whether this is a band-aid. It is a question of what other options are there in the short term. When regulations, lawsuits, and slow-moving state agencies prevent a company from doing what it otherwise would do to upgrade its networks in conventional ways, it has got to do something. AT&T still should have foreseen this when it took on the iPhone, and that failure has hurt AT&T's brand, because 99% of people don't understand the sources of the problem. Other networks are facing similar problems, too, but the only reason they are not facing it to the same extent AT&T is facing it is because they are not the original, exclusive iPhone provider in the U.S. Put another way, do you think ANY company could have grown its network, particularly in California, even remotely as fast as iPhone sales and usage have grown in the last three years. No? I thought not. one only wishes they had done this earlier.
Report this Comment On December 30, 2010, at 3:31 AM, exdividendday wrote:

I researched 8 wireless communication stocks with highest dividend yield. Find out the real MacGyver:
http://long-term-investments.blogspot.com/2010/11/9-wireless...
The average dividend-yield of my list amounts to 5.95 percent while the average P/E ratio is 13.67. Price to sales ratio is 1.71 and price to book ratio 3.33.

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