AT&T to invest $14 billion to expand networks

By Brendan Sasso - 11/07/12 01:27 PM ET

AT&T announced on Wednesday that it will invest $14 billion over the next three years to dramatically expand its wired and wireless broadband networks.

The massive investment will provide 4G LTE coverage to 300 million people by the end of 2014, the company said. The expansion of the high-speed wireless technology will help AT&T keep pace with industry leader Verizon, which currently has a larger LTE network.

LTE enables users to more easily stream videos and download apps on their mobile devices.

AT&T also said it will expand its wired IP broadband network to 75 percent of customers within the 22 states it currently covers by the end of 2015.

The company said the investment in its wireless network will cost $8 billion and the wireline investments will cost $6 billion. In total, the company will invest $22 billion in its network over the next three years.

“This is a major commitment to invest in 21st Century communications infrastructure for the United States and bring high-speed Internet connectivity — 4G LTE mobile and wireline IP broadband — to millions more Americans,” AT&T CEO Randall Stephenson said in a statement. “We have the opportunity to improve AT&T's revenue growth and cost structure for years to come, and create substantial value for shareowners."

Julius Genachowski, chairman of the Federal Communications Commission, said the AT&T announcement "is proof positive that the climate for investment and innovation in the U.S. communications sector is healthy."

“As our National Broadband Plan said, extending wired and wireless broadband across America is the ‘great infrastructure challenge of the 21st century.’ America’s 21st century economy and our global leadership depend on meeting this challenge," Genachowski said.

Sen. John Kerry (D-Mass.), a senior member of the Senate Commerce Committee, said the announcement "bodes well for jobs and innovation."

"AT&T is making a great bet on America and we should all applaud it," he said.

Consumer advocacy group Public Knowledge applauded the move, but said it proves that AT&T's failed attempt to buy T-Mobile last year would have been bad for consumers.

AT&T promised at the time that if regulators approved the merger, it would invest $8 billion upgrading its network. That investment and the thousands of jobs it said the move would create were central to AT&T's case in favor of the deal.

Opponents of the deal argued that even without buying T-Mobile, AT&T would have to make billions of dollars of investments to keep pace with Verizon. The Justice Department and the FCC ultimately blocked the deal, concluding that it would stifle competition in the wireless industry.

Harold Feld, Public Knowledge's senior vice president, said that by blocking the deal, it appears regulators caused AT&T to increase the size of its investment.

"Last night's election validated the Obama Administration's commitment to reviving antitrust and pro-competitive regulation politically. Today's actions by AT&T validates those policies on Wall St.," Feld said. "As we move into a new Administration, we hope that those who genuinely want to grow the economy will finally take this lesson to heart. Protecting competition is not only good for consumers, it's good business."

—Updated at 3:38 p.m.