AT&T Mobility (NYSE:T) expects to see a significant increase in data traffic once its LTE network buildout is complete next year, but the company is ready to rake in revenue when that happens, according to AT&T CFO John Stephens.
Speaking at the Oppenheimer Technology, Internet & Communications Conference in Boston, Stephens said AT&T will experience a "step up" in traffic once its LTE buildout is finished by the end of next year. "As usage grows our revenue is going to grow," he said. "We'll have demands on our capex. But we'll have revenue that's tied to that demand."
The AT&T finance chief noted that the company's capital expenditure budget for 2012 is in the $20 billion range, and that AT&T has so far spent $9 billion. The company expects to expand its LTE network to cover 150 million POPs by year-end. (In contrast Verizon Wireless (NYSE:VZ) expects to cover 260 million POPs with LTE by year-end and Sprint Nextel (NYSE:S) expects to cover 123 million.)
As usage increases, Stephens said, AT&T will be able to make money off of that because more and more customers are signing up for its usage-based data plans. He said that right now 62 percent of its smartphone users, or 27 million customers, are on usage-based plans, and that two-thirds of them have chosen higher-priced data buckets. Since customers who still have grandfathered unlimited plans are subject to throttling (AT&T throttles HSPA users after 3 GB of usage and LTE users after 5 GB of usage), they are not going to be the ones driving additional usage.
Stephens also discussed other AT&T initiatives, including the company's recently proposed $600 million acquisition of NextWave Wireless and its 2.3 GHz WCS spectrum. That spectrum, combined with WCS spectrum AT&T wants to buy from Comcast and Horizon Wi-Com and AT&T's WCS proposal with Sirius XM, would give the carrier almost a 20 MHz nationwide WCS footprint that it can use for LTE in the next three to five years. Stephens said AT&T has proposed 32 minor spectrum acquisitions so far this year and that 12 of them have been approved so far.
The subject of toll-free data plans also came up again, and the concept is one that AT&T executives have repeatedly championed. Stephens noted that right now when a customer buys an ebook on one of its devices, the content provider, such as Amazon for the Kindle, pays AT&T to deliver the ebook. Stephens said AT&T is open to expanding that model to other content providers and those that make money off advertising by, say, delivering content to users at off-peak hours and not having that content count toward a customers' data bucket.
Stephens also said that through AT&T's "foundries," or innovation centers, it has been inviting developers to write HTML5 applications, and he said there is more of a push behind HTML5 than often appears in the media or at industry events. "There is very active participation and investment by us and others in the industry on HTML5," he said.
Finally, AT&T unveiled a new campaign aimed at discouraging customers, and especially teenagers, from texting while driving. The campaign, called "It Can Wait," is aimed urging all Americans to pledge to stop texting while driving. AT&T said it will use social media, TV advertisements and TV and music celebrities to deliver the message. The carrier has pledged to spend "tens of millions of dollars" on the campaign in 2012 and will make it an ongoing commitment in future years.
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