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AT&T (T) Wasting $19B On Network Upgrades?

Only 20% of AT&T customers are "very satisfied"


Battling back criticism about slow or faulty networks, AT&T (NYSE: T) is on a PR blitz of late, struggling to tout the expensive updates made to its services. But for all the billions being poured into its upgrades, customers say they’re just not seeing the results.

AT&T Mobility has spent more than $8.2 billion for its wired and wireless networks – estimating $19 billion on capital expenditures in 2010 – that included a slew of fixes: 600 new cell sites, 925 upgraded cell sites to 3G services, some 6,500 additional radio carriers, and 32 Distributed Antenna Systems. It’s also readying a nationwide HSPA+ upgrade by year’s end, in which customers could see download speeds of 7 Mbps.

As for thanks, the company’s Facebook page has been inundated with negative comments about its services. And with more heat from the blogosphere, one thing is certain. The dropped calls and spotty service continue to plaque the image of the nation’s second largest carrier.

For the tens of billions AT&T is pouring into better service, most surveys show customers aren’t seeing any benefit. Recent research from ChangeWave shows that of 4,028 consumers surveyed, only 20% of AT&T Wireless customers were “very satisfied” with the service provider. That compares to 50% for Verizon (NYSE: VZ), 33% for Sprint (NYSE: S) and 25% for T-Mobile.

JD Power and Associates also ranks AT&T as second to last in call quality and fewest problems, with a consumer performance rating of two out of five.

What’s likely keeping a large segment of these unhappy customers is the exclusive partnership it has with the iPhone and iPad. This may quickly change if Verizon is let in on the deal, which if the rumor mill is correct, could happen by next year. In the meantime, Sprint’s 4G capabilities is said to be luring away T customers as well.

AT&T’s CTO John Donovan said earlier this summer that the company would move “heaven and Earth” to make changes that would in quell customer dissatisfaction. But should Verizon nab an i-contract and Sprint’s services remain strong, AT&T’s problems will go from problematic to downright bad.

If the company doesn’t right its image soon, all the money spent will be for nothing. While competitors will watch an increase of customers jumping ship to a network that’s simply more reliable, T investors might have a different perspective as they watch a different set of numbers go in the opposite direction.

As of this writing, Burke speaker did not own a position in any of the stocks named here.

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