AT&T: We Really Do Suck in SF & NYC

Updated: AT&T (s T) this morning said its earnings rose 25 percent in the fourth quarter thanks to its wireless business, and told consumers, if not investors, what they wanted to hear by detailing plans to spend $18-$19 billion in capital expenditures, with a $2 billion increase aimed at the wireless network and backhaul. The carrier, which has the dubious honor of being the exclusive provider of the iPhone, has been the target of much ire on the part of its customers due to the poor performance of its network, especially in major cities.

Yet in Apple’s (s aapl) own earnings call on Monday an executive at the iPhone maker said AT&T had shown it its plans for improving its network, and that Apple was pleased. It must have been, as yesterday Apple said that AT&T would once again provide a data plan for its latest gadget, a tablet called the iPad. For a detailed look at AT&T’s past network improvements and how the iPad may affect its network, check out out our GigaOM Pro item from yesterday (subscription required).

So far, network performance hasn’t been up to par, and AT&T included charts today in its earnings presentation detailing how far off the mark service is in Manhattan and San Francisco. Additionally AT&T released stats showing that in December 2008 more than one out of every 100 calls was dropped. Now almost one out of every 100 calls is dropped, but such calls are still heavily concentrated in a few major cities (or wherever a bunch of people with iPhones gather). Update: However an AT&T executive stressed on the earnings call, that according to third party data, its dropped call rate of 1.32% is only two tenths of one percent behind the national leader.

Fixing the problem will require more capital expenditures, and AT&T said it will spend $2 billion more in wireless network upgrades and backhaul to connect its towers and base stations to the Internet (although not all of that will be fiber). It’s also adding more radio network controllers or swapping old ones out in certain areas to better use the spectrum, and is still deploying its HSPA 7.2 upgrades to deliver faster speeds and more capacity.

Such measure, plus the efforts AT&T made last year, will help, but carriers need to start looking at how to manage their networks holistically now that these large data-consuming devices are coming onto them. So while AT&T is bandaging its wounded network, and could succeed, carriers around the world need to think about how to manage data so they avoid such injuries in the first place.