AT&T Faces Short-Term Challenges

Those of us who remember the anti-trust suits and Baby Bell splits of the early 80’s are no stranger to mega-mergers, but this was one for the record books. Late last week it was announced that the telecom giant had managed to pull off one of the largest mergers in recent history with its acquisition of T-Mobile. Similar purchases by the telecom firm went unnoticed, but the trend was a familiar one. AT&T is having huge bandwidth problems and all of their acquisitions point to their aggressive approach to solving the problem. With infrastructure purchases.

In a surprise announcement on March 23rd, AT&T CEO Ralph Vega admitted that AT&T would face huge short-term challenges if they were not able to rapidly absorb and deploy the assets that were formerly under T-Mobile control. In such cities as New York and Los Angeles and San Francisco, the telecom giant had faced harsh criticism about the carrying capacity of its overburdened network, made worse (they claim) by the sudden adoption of a wide range of wireless devices that ate up bandwidth. Critics point to a lack of investment in infrastructure, which should have been predicted far in advance.

But the signs are clear, and they vindicate the position of angry users, fed up with dropped calls and weak signals. AT&T has a carrying capacity problem. Vega proclaimed that the dark days were over, and claimed that the move signaled a partial resolution of the spectrum challenges they are currently facing. That is all well and good as long as they are able to migrate their platform onto T-Mobiles current infrastructure quickly. If they are unable, AT&T might be in trouble.

It wasn’t so much the content brought to the net on the back of cheap web hosting that was causing the problem, it was the web hosting that pushed bandwidth intensive content from media-rich providers such as movie websites and large scale file sharing networks. Time will tell if T-mobile can save the day for AT&T.