On 27-May-09, AT&T announced a slew of wireless network upgrades [1], all designed to make its 3G networks perform better, while laying the groundwork for its future 4G (fourth-generation) data service due in a couple of years. The iPhone 3G - and a near-term update to that model - is clearly the driving factor.

All reports indicate that iPhone users consume a ton more bandwidth than other smartphone users, likely because the iPhone from its start had many more network-intensive features that work better than competitors' (such as the Safari browser versus RIM's BlackBerry browser). One report said that 2G EDGE traffic skyrocketed in San Francisco following the mid-2007 original iPhone launch.

Given that tethering - using a phone like a broadband modem to provide Internet connectivity to a laptop - will also be part of iPhone 3.0 software (for older and newer devices alike), more capacity is needed for that bump in usage, too.

In the United States, iPhone 3G uses AT&T's HSPA (High Speed Packet Access) network, which supports raw data rates up to 3.6 Mbps and effective rates as fast as 1.7 Mbps to phones and laptops. With millions of U.S. iPhone 3G users, AT&T's network has in places and at times become stressed out.

Add to that AT&T's plan to start rolling out later this year the 7.2 Mbps flavor of HSPA - requiring new phones and laptop cards - and you can see why the company needs to elaborate on how its data network will continue to improve.

The announcement has a ton of technical detail in it, rare for corporate communications, but it can be distilled into a few salient changes.

Cellular Expansion -- Cellular networks are deployed in, well, cells: a honeycomb of overlapping base stations. Each cell has some kind of backhaul that carries voice and network bits back to a central network, and radio gear that operates in various licensed frequencies.

AT&T's plan chips away at all the pieces that overwhelm cells with traffic:

• Better indoor coverage. AT&T has licensed spectrum in two major bands: around 850 MHz and 1900 MHz. Lower frequencies travel farther than higher frequencies when using the same transmitter power, and 850 MHz penetrates into homes and buildings far better than 1900 MHz. AT&T said it already uses 850 MHz for 3G service across half its coverage area, and will be adding it to more markets. (The 850 MHz frequencies were tied up with analog and early digital services until a year ago.)
• More cellular bandwidth for 3G. By adding 850 MHz transmitters, AT&T is also adding more available frequencies in those markets. That means fewer phones, laptops, and other devices use each channel, making more capacity available for each user and allowing more users overall. (This is actually quite similar to adding Wi-Fi base stations to reduce overloading of Wi-Fi, just with many more channels and much more complexity.)
• More backhaul. AT&T will add more capacity to its cells, bringing in more fiber-optic cabling and other forms of bandwidth. Clusters of cellular base stations on a tower might once have had a T-1 line (1.544 Mbps) of backhaul back when GPRS (about 50 Kbps) and EDGE (about 200 Kbps) were the fastest rates. Now, a cell could have 10 Mbps or more of capacity, and be constrained entirely by backhaul. AT&T needs more backhaul also for its 4G LTE (Long Term Evolution) service which it will start testing in 2010, and offer commercially in some areas in 2011. LTE can have raw data rates from 20 Mbps to 100 Mbps, depending on a lot of factors; individual users could see 4 to 8 Mbps downstream. (LTE will use a new set of frequencies and new licenses for those.)
• More cell towers. The company plans to add 2,100 more sites. In remote areas, more sites mean more coverage at fastest rates. In dense cities, more towers mean that each base station can reduce its power and make smaller cells, which means fewer users on each base station.
• Tiny base stations called femtocells. AT&T hasn't kept it much of a secret that it has a femtocell in testing, which is a base station designed to work in a home or small business, and which plugs into a subscriber's own bandwidth. Femtocells have tiny coverage areas, but improve indoor coverage and don't consume AT&T's bandwidth. AT&T's 3G MicroCell (pricing not announced) will handle 3G voice and data. If it follows Sprint's lead, the femtocell will come with an unlimited voice plan for calls made or received via the base station. Sprint's plan is $100 for the femtocell with a 2-year contract, $5 per month for service, and $10 or $20 (individual or family) for unlimited U.S. calling.

These changes should dramatically boost 3G coverage, quality, and availability, all complaints that have been leveled against AT&T's network. On the flip side, the company's recent earnings announcement showed it has the lowest churn (new customer to lost customer ratio) in the industry. The network has already improved, but it must improve further.

Wi-Fi Fills in Network Gaps, Boosts Bandwidth -- AT&T is also no stranger to Wi-Fi, and at the Wall Street Journal's All Things D conference, the company's CEO, Randall Stephenson, spoke rather strongly [2] about how Wi-Fi is a way to bridge customers' expectations for true broadband when they go mobile before future 4G networks are in place to meet those expectations.

The advantage of Wi-Fi for AT&T is clear when you combine a perceived disadvantage with a known advantage. Wi-Fi typically operates over very small areas: tens of thousands of square feet. A cell base station can cover over hundreds of thousands of square feet. But the current HSPA speed is limited to 3.6 Mbps raw or 1.7 Mbps effective, whereas 802.11g Wi-Fi (found in smartphones) tops out at a raw rate of 54 Mbps or roughly 20 Mbps effective. (Cellular carriers use shorter-range base stations called microcells and picocells to cover dead areas and inside buildings, too, but the main network is built of cells that cover large areas.)

Last year, AT&T purchased Wayport, a firm that AT&T used as a contractor to run Wi-Fi hotspots that AT&T had signed up. Wayport had its own contract with McDonald's, where it has built out nearly 10,000 locations in the United States. In February 2008, AT&T also acquired the contract for Starbucks, which covers about 7,000 U.S. outlets.

In all, AT&T now says it has 20,000 hotspots in its domestic network, all of which are available at no cost to any AT&T DSL or fiber subscriber via a laptop or other device, as well as any 3G LaptopConnect mobile broadband subscriber. The hotspots are also included in iPhone and some BlackBerry (with Wi-Fi) service plans as well.

AT&T's current system of gaining access at a hotspot from a smartphone requires using a gateway page, entering your phone number, waiting for a (free) SMS message, and then following a link. The company promises seamless roaming in the future, though, which might be integrated into the upcoming iPhone 3.0 software. (For now, I recommend the $1 Devicescape software for iPhone, Easy Wi-Fi for AT&T [3], which automates the login process to a single click.)

Note, too, that while AT&T is giving away access to its hotspot network to its existing subscribers, and conserving cash by moving bandwidth use onto that network, it also sells hotspot access [4] to non-network subscribers ($20 per month) and day trippers ($4 per day). AT&T also works with roaming partners like T-Mobile, with some fee settlement involved for each session. (The $20-per-month plan includes 20,000 domestic and 50,000 non-U.S. hotspots.)

The press release has a fascinating side note that AT&T is serious about using Wi-Fi, because it "can create permanent or temporary extended Wi-Fi zones in areas with high 3G network use, like a grouping of hotels or a festival."

This again demonstrates the benefit of throwing Wi-Fi into the mix. At a fixed location, availability everywhere in the country isn't important, just at the venue. With Wi-Fi's short range, AT&T could install 50 Wi-Fi access points covering several city blocks or a large park with 20 Mbps per point - that adds up to 1 Gbps across the network.

A cell base station, by contrast, would cover the entire area, and have just a few Mbps available. (Cell carriers do send out portable cell base stations, too: COLTs [5] - "cellular on light trucks" - and COWs - "cellular on wheels.")

Signaling the Next iPhone -- Without reading too many tea leaves or following too many rumors, AT&T's announcement signals a few likely developments for the next iPhone 3G.

The next model, which may be announced at WWDC and released shortly afterwards, will almost certainly have a 7.2 Mbps HSPA chip. Such technology is widely available, and I can't see Apple releasing a new iPhone without it, given AT&T's upgrade plan.

The iPhone could also have an 802.11n chip in it - not the full-blown radio found in a Mac, but a simpler version called single-stream N, in which speed is boosted as much as 50 to 100 percent, and which has dual-band (2.4 and 5 GHz) support. This would help iPhones perform better on 802.11n networks, and would probably be paired with AT&T upgrading its hotspot network to 802.11n as well. (See my Wi-Fi Networking News article, "Does the iPhone Need 802.11n? [6]" for the technical details.)

If the iPhone has an improved camera and allows video recording (according to rumors), that's more data to be transferred, and boosting both Wi-Fi and 3G speeds, as well as 3G network capacity, makes a ton of sense as well.

At the very least, AT&T has laid the foundation for a much more robust and higher-capacity network. Its smartphone contracts don't specify a maximum limit of monthly 3G usage, and that means the sky - or its capacity - is literally the limit.

[1]: http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=26835
[2]: http://d7.allthingsd.com/20090527/randall-stephenson/
[3]: http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewSoftware?id=296273148&mt=8
[4]: http://www.att.com/gen/general?pid=5949
[5]: http://www.corp.att.com/ndr/exercises_2007q4_photos.html
[6]: http://wifinetnews.com/archives/2009/03/iphone_80211n_necessity.html

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