What to make of AT&T’s vanishing spectrum crisis

[Commentary] Is AT&T failing to keep its story straight about the need for more spectrum, or is it just that the popping of the spectrum bubble has taken them by surprise as well?

Recently the nation’s second largest operator has seemed to back off from some of its more aggressive claims about how fast data traffic was growing. AT&T’s senior management told investors on two separate occasions last month that “The base increase of data consumption right now is growing 40 percent a year,” and “LTE does give us a 30 percent to 40 percent lift in network efficiency, but at current growth rates, that equates to only about a year’s increase in traffic”. Remarkably that 40 percent figure is not only far less than the growth rates projected by Cisco and assumed in the Federal Communications Commission’s October 2010 working paper, but it also contrasts dramatically with the figures AT&T itself presented when it announced the planned takeover of T-Mobile in March last year.

Why might AT&T’s data volumes have fallen so far short of the growth expected less than a year ago? Two obvious explanations stand out: it seems that offload to Wi-Fi is becoming far more successful than many expected, and AT&T is now cracking down on the top 5 percent of users of its unlimited iPhone data plans.

[Farrar is President of Telecom, Media and Finance Associates, a consulting and research firm]