The Mobile Internet Report Key Themes*

AT&T Plans to Increase Capacity in Key Markets by Adding
Spectrum + Backhaul + Upgrading Network to HSPA 7.2
Most of AT&T’s Network Issues Have Been Focused in Two Key Markets:
San Francisco and New York
San Francisco – In aggregate, we expect capacity to increase by ~2-4x sometime before
the end of CQ2:10E. Insufficient radio access network (RAN) capacity, in addition to
relatively slow zoning approval process, has been the major constraint in AT&T’s San
Francisco network. The ramp in traffic has required more spectrum + faster networks
than planned. AT&T has effectively doubled capacity with the recent 10 MHz deployment
in the 850 MHz band. AT&T is currently upgrading its network to HSPA 7.2, which should
double RAN capacity again via a software upgrade with minimal capex. It is also
transitioning to fiber backhaul, doubling backhaul capacity.
New York – RAN capacity constraints have been the major issue here as well, and
improvement should be continuous throughout C2010. Deploying 10 MHz of spectrum in
the 850 MHz band in CH2:09 has reduced some congestion, bringing total 3G spectrum
to 20 MHz. In the next few months, upgrading radio network controller (RNC) equipment
will push utilization capability beyond 75-80% (without the network breaking down) and
make room for up to 30 MHz of total spectrum. Throughout C2010E, we expect AT&T to
upgrade the New York network to HSPA 7.2 + provision for additional backhaul capacity.
Source: Morgan Stanley Research.
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