AT&T LTE launch to closely follow Verizon debut

AT&T (NYSE:T) has always said it wasn’t going to rush into long-term evolution (LTE), waiting until a robust handset and application ecosystem was in place. But apparently AT&T isn’t plan on dawdling either. AT&T president and CEO of operations John Stankey today said that AT&T is already actively designing its 4G network and plans to launch LTE commercially by mid-2012—a timeline that could put it just six months behind arch-competitor Verizon Wireless (NYSE:VZ, NYSE:VOD).

Speaking at a Bank of America Merrill Lynch analyst event today, Stankey said 2010 would be a formative year for LTE, characterized by a few high-profile launches but little in the way of subscribers or devices. By 2015 though, the global LTE market will have grown to 300 million subscribers. By launching toward the middle of next year and scaling its build-out to cover 70 million to 75 million subs by year end, AT&T will come in just ahead of that global surge, Stankey said.

“We believe customers want a robust experience. In a mobile environment you can’t have a robust experience unless you’re tied to the device,” Stankey said. “Whether it’s the battery life, the quality of service on the device, the applications that come with it, the form factor of the device—all those things have to play with the network. So our implementation timelines and our goals around this are set to make sure we’re entering at the sweet spot. As you can, we expect in 2010 that there will be very small numbers of subscribers worldwide, and it grows over time. We’re entering right in that middle sweet spot. We want to do it in a way that allows the customer to have a good experience, one that’s consistent with the 3G experience.”

Verizon plans to launch LTE commercially by the end of the year, most likely later in the fourth quarter, but it also plans to make a big splash. It’s only targeting 25-30 markets, but they’ll be big markets, collectively covering 100 million pops, or almost a third of the US population. Clearwire (NASDAQ:CLWR), which has been building out its WiMax network since early 2009, is targeting 120 million pops covered in the same timeframe.
While AT&T may be moving its launch date closer to Verizon’s, its plans are more conservative. Presumably VZW will expand its LTE footprint considerably in 2011, meaning it may have filled in much of its metro market footprint while AT&T is still ramping up its network.

Stankey revealed that AT&T has LTE deployed in two test markets today, Dallas and Baltimore—which happens to be the first US 4G market, launched by Sprint (NYSE:S) in 2008—but is actively working with radio access vendors Ericsson (NASDAQ:ERIC) and Alcatel-Lucent (NYSE:ALU) to design and implement LTE infrastructure in its 2011 launch markets.

Stankey said it takes six-to-eight months to rollout a network from conception to commercial launch, so AT&T is by no means sitting on the sidelines. “Right now there are people actually doing the designs, issuing them to vendors, doing configuration changes on new cell towers to put new antennas up, getting power up, all of those things necessary to have meaningful launch by the time we hit 2011,” he said.

AT&T will spend about $700 million this year on LTE infrastructure, which makes up only part of the heavy wireless investment AT&T has committed to in 2010, Stankey said. AT&T will deploy 2000 new cellsites in 2010, double the total number of wireless carriers, upgrade its already fast 7.2 Mb/s high-speed packet access (HSPA) to HSPA+ and provision fiber to many of its cell sites—improvements that will all benefit the 4G network and the overall customer mobile data experience.

AT&T spent $8.2 billion in capex for the first half of the year, some 40% of went to wireless improvements. But the last half of the year will be on focused heavily on the mobile network, Stankey said. AT&T expects to spend $2 billion more in 2010 on the wireless network than it did in 2009.