Investors were not happy about the plan to invest more in the wired operations, which are only marginally profitable. AT&T shares fell $1.18, or 3.4 percent, to $33.75 in morning trading as broader indexes fell about 1.8 percent.
Speaking to investors in New York, AT&T Chief Financial Officer John Stephens said the investments in wired and wireless infrastructure would be "mutually supportive," with faster wires helping to serve cell towers. For the same reason, the company has, for now, rejected the idea of selling off phone lines in outlying areas the way Verizon Communications Inc. has.
Dallas-based AT&T is the country's largest wired phone company, serving 33 million traditional phone lines in 22 states. It's the second-largest wireless carrier, after Verizon Wireless.
Like other phone companies, AT&T is having a hard time competing with cable companies in home broadband. Broadband served over phone lines, or DSL, can no longer compete with cable modems for speed, except where phone companies have made expensive upgrades of their lines to replace them with optical fiber. AT&T calls this upgraded DSL "U-Verse," and uses it to provide TV services in addition to broadband.
U-Verse is available to 24.5 million homes, and AT&T said it will expand that number to 30.3 million. It's going to upgrade phone lines with a less expensive technology to serve an additional 24 million homes. In all, these upgraded lines will serve three-quarters of homes in AT&T's service area.
For the rest of the phone lines, AT&T plans to move customers to wireless as much as possible, recognizing that its wire service can't compete with cable in these areas.
To help serve these outlying areas, AT&T plans to build out its "4G LTE" wireless network to cover 300 million people, up from the 250 million people it had initially planned to cover. Of the $14 billion investment, $8 billion will go to the wireless network.
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