Today AT&T said it would buy Wi-Fi hotspots operator Wayport for $275 million in cash. Not only is this an exit for the 12-year-old Irving, Texas-based company that raised more than $130 million, but it also gives AT&T 80,000 Wi-Fi hotspots all over the country world. As AT&T brings in more WiFi-enabled phones that encourage a rich web experience, those hotspots will help offload bandwidth-clogging traffic from its 3G network.
AT&T already requires iPhone users to use their Wi-Fi connection to download files from iTunes and prohibits bandwidth-intensive applications such as P2P sharing. Part of the reason for this is the limitations of its HSPA network. While fast, it isn’t designed to handle the continuous streams of data a song download or video upload requires. 3G is still designed for voice traffic, which is intermittent and much less bandwidth intensive. The network has a data overlay, but that, too, is designed for bursts of data rather than continuous streams. If too many people that require continuous streams of data get on, it clogs the network, leaving other subscribers unable to access it.
Buying Wayport and offering 20,000 hot spots (including in airports and McDonald’s restaurants) in the U.S. allows AT&T to provide its customers with more places to do their bandwidth-sucking applications. Already, AT&T is willing to let iPhone and BlackBerry users access its Wi-Fi hotspots free at Starbucks. It also means AT&T can hold out a bit longer before deploying its 4G LTE network, which is designed for data.
3G is not the problem, it is AT&T Mobility’s underprovisioned backhaul network. Upgrading the backhaul so that it actually matched the radio capacity was how AT&T magically increased the speed of their EDGE network for the original iPhone roll out. They could do the same thing with the HSPA network, but WiFi is probably a lot more cost effective.
Jesse
I totally agree with you. These guys are in denial. If anyone who has used AT&T’s wireless network like I have in the recent months, they know how pathetic it has become here in San Francisco. I am sure other parts of the country are equally terrible. Their backhaul must be choking by now.
It always amazes me how when I travel anywhere in Europe or Asia I get almost-flawless GSM service and in most cases HSPA, while in the US there’s such poor coverage, tons of dropped calls, and terrible data throughput. The FCC is totally sleeping at the wheel!
That fix to the AT&T network is a seven billion dollar expense I hear from well placed sources. While it will likely occur, it won’t be this year. The iPhone user’s data plan revenue is what pays for it mostly.
There seems to be a figures dance, some sites reporting as much as 10k hotspots, others only 3k hotspots. In any case, the move is highly strategic – I would agree with those who say AT&T is trying to get people off their 2G/3G networks and onto WiFi for data usage. Otherwise, how do they justify a cost of $92.000 per hotspot?
As a recent convert to AT&T via the iPhone 3G, I’ve been amazed as to how poor their reception quality is across the country including my hometown of Pittsburgh. Om mentions how bad reception is in San Francisco, but I’m in Cupertino – home to a certain technology vendor – and reception is downright awful. Deadzones and echoing seem to be the norm within a mile radius of One Infinite Loop. Really bizarre…
Not sure where the numbers were off … Wayport had over 10k hotspots through McDonalds as well as many more through airports and hotels. I suspect this is a double play for ATT, they get to both offer wifi to customers and put themselves at the forefront of that market while offloading data from the 3g network. Lets just hope they treat their new employees well. Given that they’ve been using Wayport as their provider for the entire attwifi deployment, handling nothing internally, they’ll certainly need that expertise for a while until the company is integrated.
i agree that the at&t network is not too good. verizon is much better. have used 3g on both… the focus at at&t is on the device, whereas verizon does focus on the network….
even with their u-verse service, at&t is pretty lousy. the box frequently freezes..
we need some more competition in wireless and broadband for all these companies to get their act together..
I disagree, AT&Ts approach at keeping the device in mind is what has forced them to strive for an alternative source of revenue, the iPhone data plan, ect nd this will generate more possibilities for the company, including spreading out the distribution of their services through better or multiple networks nd this will smooth out both support AT&T as a company and all consumers, or business folk alike.