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AT&T Faces 5,000 Percent Surge in Traffic

AT&T's chief technology officer today highlighted how the recently maligned carrier is addressing skyrocketing demand for mobile data as it experiences a 5,000 percent surge in mobile data traffic.

As AT&T (NYSE: T), the exclusive carrier for the Apple (NASDAQ: AAPL) iPhone, has embraced smartphones and their applications as well as other devices including netbooks and e-readers, mobile data traffic has grown nearly 5,000 percent on the AT&T network over just the past three years, said AT&T CTO John Donovan, who was speaking at the CTIA IT & Entertainment conference.

Donovan outlined how AT&T is addressing this unprecedented challenge by investing $38 billion over two years on its wireless and wired networks. "AT&T is focused on delivering an ideal combination of more mobile data capacity and faster 3G speeds, with these capabilities being deployed over a very short timeframe to maximize customer benefit," said Donovan.

AT&T is 90 percent complete in its deployment of high-quality 850 MHz spectrum for 3G, which adds overall network capacity as well as improved in-building coverage.

"We're also delivering increased 3G speed by deploying HSPA 7.2, with six markets scheduled for completion by the end of this year and 25 of the nation's top 30 markets planned for completion by mid-2010, Donovan said.

"And we're building the foundation for 4G by adding thousands of new backhaul connections that will benefit customers both today and tomorrow. AT&T will begin LTE trials next year and deployment in 2011, matching industry timelines for development of equipment and devices."

AT&T, while netting revenue and new subscribers from the wildly popular series of iPhones, has had some difficulty keeping pace with data-intensive demographic that comes with Apple's handsets.

Still, as Donovan said, the nation's No. 2 carrier is moving to address issues relating to its over-taxed network, and also altered its pricing plans to appease disgruntled customers when the iPhone 3GS launched. It also delivered on the promise to offer MMS (multimedia message service) to iPhone users by the end of September, though it has yet to support tethering, a new feature of the iPhone OS.

AT&T's explosion in data use mirrors the overall trend in the wireless industry.

Wireless data service revenues showed impressive year-to-year gains, climbing to more than $19.4 billion for the first half of 2009, according to the CTIA's semi-annual industry survey. The jump represents a 31-percent increase over the first half of 2008.

In addition, wireless data revenues were more than 25 percent of all wireless service revenues, and represent what consumers spend on non-voice services, according to the CTIA report.

According to the survey, text messaging continues to be enormously popular, with more than 740 billion text messages carried on carriers' networks during the first half of 2009 -- breaking down to 4.1 billion messages per day. That's nearly double the number from last year, when only 385 billion text messages were reported for the first half of 2008.

Wireless subscribers are also sending more pictures and other multi-media messages with their mobile devices, says the CTIA report. More than 10.3 billion MMS messages were reported for the first half of 2009, up from 4.7 billion in mid-year 2008.

As of June 2009, the industry survey recorded more than 276 million wireless users. This represents a year-over-year increase of nearly 14 million subscribers.

The survey also found that more than 246 million data-capable devices are in the hands of consumers today. More than 40 million of these devices are smartphones or wireless-enabled PDAs and more than 10 million are wireless-enabled laptops, notebooks or aircards.