AT&T (NYSE: T) has long been one of the top wireless carriers in the US. In the second half of 2013 and the first half of 2014 though, the company's taken second place to Verizon Communications (NYSE: VZ) in a Root Metrics survey for the best overall network.
But AT&T is gaining on Verizon's network and the company's strong wireless business proves its customers are a loyal bunch.
Where AT&T stands
In a recent RootMetrics report, AT&T falls a bit behind Verizon in key metrics like reliability, speed, and data and call performance. Overall, AT&T falls just slightly behind Verizon for the best network, but easily outpaces T-Mobile and Sprint.
RootMetrics said in its report that "the separation between Verizon and second-place finisher AT&T was small." But it's still obviously not where AT&T wants to be, and the company is working hard to catch back up.
How AT&T's getting better
Just last month AT&T announced it had hit 300 million points of presence (POPs) for its 4G LTE network -- compared to Verizon's 306 million. For comparison's sake, T-Mobile has the next largest 4G LTE footprint with around 230 million POPs.
In 2012 AT&T set a goal to reach 300 million people with LTE coverage by the end of 2014, so it's coming out ahead of schedule. On top of that, the company's still deploying new LTE coverage on some of its existing 2.3 GHz spectrum starting in 2015.
RootMetrics thinks Verizon pulled away from AT&T in network speeds because of its recent rollout of its AWS (advanced wireless system) with its XLTE network. But also noted AT&T could easily catch up in the second half of 2014.
"Keep in mind that although AT&T was the slower network in this round of testing, things can change rapidly. After all, last year we saw Verizon slowing down, but it has now leapfrogged back into the lead," the report said.
RootMetrics also noted that Verizon was a clear winner in network reliability last year but because of AT&T's "impressive gains" over the past six months, the two networks are virtually even in reliability.
Though AT&T's network falls behind Verizon's for overall performance, AT&T's efforts appear to be paying off when it comes to customer retention. The company enjoys an incredibly low church rate (the rate at which current subscribers leave the company for another carrier) of just 0.86%.
Despite the gains in its wireless business, and nipping at the heels of Verizon's network, AT&T's Q2 earnings fell 7.2%, reminding us that there is more to AT&T than its wireless segment.
But AT&T's focused a lot of its attention on shared data plans and getting its users to sign up for its smartphone upgrade plan, called Next. With so many customers sticking with AT&T, it looks like those strategies are paying off. Right now, 50% of AT&T's new smartphone accounts are on the Next plan, which gives AT&T a monthly payment for smartphones in addition to the cost of the phone plan. The company said the shared data plans and Next program have resulted in a 20% growth in data billings in Q2, and a 3.7% increase in total wireless revenue year-over-year.
Though AT&T might not have the best overall network, its customers appear to be happy with its data plans and the Next program, which should continue to strengthen AT&T's wireless business against the competition.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of 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.