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AT&T to NYC: You can hear us now

Crain's New York | 03.28.11

The following article appeared in Crain's New York on March 27, 2011:

AT&T refuses to be kicked around anymore, and certainly not in New York. As part of an initiative implemented long before last week's merger deal with T-Mobile, the No. 2 wireless carrier will soon announce a series of just-completed upgrades to its broadband service in the media capital. These improvements target the major complaints of AT&T's smartphone customers in Gotham: dropped calls and slow downloads.

The campaign also includes sponsorship of major city events and the hiring of a high-powered consultant to reinforce the Dallas-based company's message.

AT&T has long been the butt of jokes by the Daily Show's Jon Stewart and other late-night comics about its spotty iPhone service. The ribbing has only intensified since Verizon began offering Apple's iPhone in February. AT&T had been the exclusive carrier.

Overall, the current effort aims to improve AT&T's service and to repair its image in the biggest, loudest market in the country.

Its executives don't expect overnight success. "First we catch up, then we anticipate and plan for the future," said Hal Lenox, president of AT&T New York. "That's what this is all about."

Improvements have been made to cell sites up to West 72nd Street and East 86th Street in Manhattan, and in parts of Brooklyn and Queens. A "fourth lane" has effectively been added to what had been a three-lane highway for 3G, or broadband, traffic, explained Mike Maus, AT&T's executive director of network services for New York. That extra lane means fewer dropped calls, faster downloads and better performance during peak-use periods, he added.

The upgrades also allow reception farther inside buildings, Mr. Maus said.

The latest upgrades follow ones made over the past year that resulted in 50% fewer dropped calls for smartphone users in Manhattan, according to Mr. Maus. He attributed AT&T's reputation for poor service to an 8,000% growth in data traffic since the iPhone was launched in 2007.

"We are on the leading edge of what devices and networks can do, and sometimes it gets a little rough out there," Mr. Maus said.

More than a little rough, many customers might say. In a Consumer Reports satisfaction survey published in January, AT&T received the worst ratings of the major carriers in nearly every category.

"AT&T has problems across-the-board," said Consumer Reports Electronics Editor Paul Reynolds. "It's not just the network," he added, citing categories that included customer support and value.

Analysts say AT&T was not prepared for the enormous traffic generated by the rapid growth of iPhone use and didn't match Verizon's investment in wireless infrastructure-about $7 billion-until last year.

AT&T's revenues rose 1% in 2010, to $124.3 billion; slightly less than half of that came from its wireless division. Net income was up 64%, to $20 billion.

The company also had the misfortune of having its network overwhelmed in New York, of all places.

"You don't want your brand taking this constant pounding in a media-saturated market," said Avi Greengart, research director for consumer devices at Current Analysis.

50% FEWER dropped calls on AT&T in Manhattan over the past year
AT&T executives say they are investing in all areas, from retail outlets to customer service, not just the network, and in all markets, not just New York.

The company has argued that the combination of assets from its proposed $39 billion merger with T-Mobile would give it an enormous boost in cell sites. The merger would also speed up introduction of the company's 4G network.

But federal regulators could take up to a year to decide on the deal.

In the meantime, observers say, AT&T must get the word out about its improved service.

"Verizon has been much more successful with its message of network quality," which helped it "attract and retain network customers," said Charles Golvin, a wireless analyst with Forrester Research.

The two giants have vied for first place in recent years. Verizon took the lead in 2009 following its acquisition of Alltel, while the iPhone helped AT&T keep pace.

Verizon currently has 101.1 million wireless subscribers; AT&T has 95.3 million.

To help get its message across in the media capital, AT&T has hired consultant Bradley Tusk, who managed Mayor Michael Bloomberg's 2009 campaign. The company is also in talks to be the lead sponsor of SummerStage, which presents events across the five boroughs. And it will provide free Wi-Fi for the Harlem Week festival, which runs throughout August.

The company acknowledges that it needs to do better.

"We've found ourselves in the ditch to some degree," Mr. Maus said. "We have to pull ourselves out."

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