AT&T expects record smartphone numbers in Q3

AT&T (NYSE:T) CEO Randall Stephenson said the carrier will report a record number of smartphone sales in the third quarter, and also defended the company's pace on moving to LTE.

Speaking at the Goldman Sachs Communacopia XIX Conference, Stephenson said "we're on pace to set a record for integrated devices," adding that Apple's (NASDAQ:AAPL) iPhone 4, Research In Motion's (NASDAQ:RIMM) BlackBerry Torch and the Android-powered Samsung Captivate have been solid drivers for the company.

He said AT&T is seeing a great deal of growth among the high-end, data-centric portion of its customer base. He said the company's move to tiered mobile data pricing--$15 per month for 200 MB and $25 for 2 GB--has made "a lot of people move into the data market who had not been in the data market before." Stephenson added the company has over 7 million connected devices on its network and about half a million Apple iPad tablets. The AT&T chief added that 53 percent of AT&T's postpaid subscriber base use a smartphone, but he foresees that number moving toward 80 percent in the future.

Turning his attention to the company's LTE buildout, Stephenson hit on many of the same points that AT&T Operations CEO John Stankey made at an investor conference last week. AT&T will launch commercial LTE service by mid-2011, and will cover between 70 million and 75 million POPs by the end of next year. Verizon Wireless (NYSE:VZ), meanwhile, intends to launch 25-30 commercial LTE markets in the fourth quarter of this year, covering 100 million POPs. Verizon has said it plans to double the number of its LTE markets 15 months after its initial launch this year.

Stephenson said AT&T is taking its time with its LTE deployment because it wants to first finish upgrading its HSPA network. AT&T has been busy moving from HSPA 7.2 to HSPA+, and continues to upgrade backhaul to cell sites it has upgraded to HSPA 7.2 technology. AT&T plans to have HSPA+ deployed nationwide by the end of the year, which AT&T has said can deliver real-world downlink speeds of close to 7 Mbps. Stephenson said the company's main focus is to ensure customers "have a broad, ubiquitous, high-bandwidth experience." He said that an LTE network--even though it can deliver speeds of 7-10 Mbps downlink--will not be ubiquitous, at least initially, and that customers will not want to fall back to speeds of 700 Kbps from LTE. So, he said, AT&T is working to ensure that customers nationwide will be able to fall back to speeds of 2-3 Mbps before AT&T deploys LTE.  

Finally, Stephenson touched network component shortages. He said that, even if AT&T wanted to spend more money on its network, it couldn't because of supply constraints.

For more:
- see this Dow Jones Newswires article (sub. req.)
- see this Reuters article

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