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Moving From 3G to 4G LTE (And What It All Means for AT&T)

AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) are in a similar boat at the moment. Apple's (Nasdaq: AAPL  ) just-launched iPhone 5 will be available through these two carriers only, and the resulting advancement from 3G contracts to 4G LTE will be lucrative to say the least.

Why does this data-speed upgrade bode so well for a company like AT&T? Statistics show that for the average smartphone user, data consumption increases by more than 100% when 3G speeds are bumped up to the 4G level. Considering that AT&T makes money on every bit (and byte) of data consumed, it's safe to say that profits will be staggering. Furthermore, since 4G is a higher-margin type of data plan, expect to see the restructuring of contracts as data picks up.

Although AT&T's U.S. coverage pales in comparison to that of Verizon, the launch of the iPhone 5 will be a catalyst that could provide a huge tailwind going forward.

Right now, to understand the future for AT&T (as well as Verizon) is to understand the opportunities and potential risks that the iPhone 5 will introduce in the telecom arena. The stakes are high, and the opportunity is huge, so we've just released an exclusive report covering all you need to know about the iPhone 5. By picking up a copy of our premium research report on Apple, you'll learn everything you need to know about the launch and receive ongoing guidance as key news breaks. To get started, just click here now.

Anand Chokkavelu has no positions in the stocks mentioned above. Andrew Tonner owns shares of Apple. The Motley Fool owns shares of Apple. Motley Fool newsletter services recommend Apple. 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. The Motley Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (2)

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  • Report this Comment On September 14, 2012, at 5:29 PM, qazulight wrote:

    The I-phone 5 with LTE will allow AT&T the wiggle room to focus even more resources on the LTE build out. I do not know, but I suspect that the sooner AT&T can get LTE to be the mainstay of its wireless network the less money AT&T will have to spend on maintenance and spectrum.

    I believe, I do not know, that AT&T has some fallow spectrum in the rural areas, this spectrum is the coveted low frequency spectrum abandoned with the shut down of the analog network (I know this spectrum has been re-used in New York and possibly in all the major markets) a move to LTE in these rural areas with this low frequency spectrum would allow AT&T to provide greater coverage without adding cell towers.

    A quick study of AT&T's current wireless network leaves me singing Johnny Cash's Cadillac song. A move to LTE will remove a lot of redundant equipment from the towers and the Central Offices and create a corresponding drop in maintenance and power consumption.

    The I-phone and its competitors make these moves both necessary and possible.

    I might add that I bought a Nokia 900 because I wanted LTE and could not wait for the I-Phone 5, after a rough initial transition, I don't think I would be interested in going back. I know my wife's I-phone four seems slow and gaudy compared to my Nokia. But, I will have no desire to give up my smart phone no matter who makes it.



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