Why Doesn’t AT&T Quit The Wireless Business

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AT&T Inc.’s   (NYSE:T) doesn’t have much time left to keep its promises to fix what it bills as the “nations’ fastest mobile broadband network.”  It may not be worth the bother.

As Consumer Reports noted today, AT&T’s service is dismal. It was the worst-rated of any cellular provider in a survey conducted by the magazine and the only wireless company whose customer satisfaction ratings fell “significantly” from last year.   The results were devastating given that AT&T  invested nearly $6 billion in wireless-related initiatives over the first three quarters of 2010, a 55 percent increase over the first three quarters of 2009.

“More than half of the AT&T customers surveyed owned an iPhone, the Apple smart-phone that is currently available exclusively from the carrier,” the magazine says in a statement. “Consumer Reports data, reflecting all versions of the phone, found that iPhone owners were much less satisfied with their carrier and rated data service (Web and e-mail) lower than owners of smart phones on other carriers that, like the iPhone, have a host of apps to encourage heavy data use. ”

The company cannot afford more screw-ups.  Verizon is widely expected to begin selling the iPhone starting early next year.   Fed up with lousy service, many AT&T customers would be eager to bolt.  Verizon also began rolling out its 4G LTE service on Sunday.  Sprint-Nextel Corp.   (NYSE: S) also announced a $5 billion upgrade to its network and continues to launch it 4G WiMax service as well.

Shares of New York-based AT&T have barely budged this year, underscoring the growing frustrations investors have with the company.  The executives there talk a good game though.  Consider the remarks that AT&T Chief Information Officer John Donovan gave at the CTIA convention last year.

“I’m not ignoring the criticism of our network,” CNET quotes Donovan as saying “I’m well aware of what’s being said in the press, in blogs, and on Twitter. But I don’t base my network plans on what I read on blogs. No one knows more about the wireless data customer experience than AT&T.”

Talk is cheap.  Customers and shareholders want AT&T to shape up or unload the wireless business on someone else.

Jonathan Berr