AT&T: We Can Handle iPad

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AT&T Thursday assured that it would be able to handle data traffic from the iPad, mainly because they expect users to rely on Wi-Fi rather than its 3G network to access the new Apple tablet computer.

AT&T executives discussed the carrier's exclusive deal for the iPad during its earnings conference call. The wireless operator reported strong fourth-quarter results driven by the iPhone, with profit up 26% from a year ago.

It had profit of $3 billion, or 51 cents a share, on revenue of $30.9 billion -- roughly flat from $31.1 billion a year ago.

During the quarter, AT&T added 2.7 million net subscribers, the second-highest quarterly total ever. The carrier activated 3.1 million iPhones, with more than a third from customers who were new to AT&T. Overall wireless revenue was up 9.2% to $12.6 billion.

While the iPhone continues to power AT&T's wireless growth, the addition of the iPad was the big news on the eve of its earnings report. Despite rumors AT&T and Verizon Wireless might share the device, AT&T came away with the iPad to itself, albeit with some key conditions that Apple may have used its sway to impose.

In addition to its 3G network, iPad users on AT&T will have the option of free access to its extensive Wi-Fi network. The data plans cost $14.99 per month for 250 MB and $29.99 per month for unlimited use, less than half what AT&T and other carriers typically charge for netbooks. Furthermore, the plans don't require contracts and the iPad is unlocked, allowing people to switch to other GSM-based carriers.

So it's a much more open arrangement than AT&T has with Apple for the iPhone. Given the criticism that AT&T has faced for failing to deliver reliable service for the iPhone in cities like New York and San Francisco, that may come as welcome news to prospective iPad users in major metro areas.

But in the conference call, AT&T CFO Rick Lindner expressed confidence that Wi-Fi access would help alieviate any added strain from the iPad on its 3G network. With its 9.7-inch touchscreen geared to things like gaming and watching video, the device could prove especially challenging for AT&T to handle.

"We believe, though, the device, based on where it will be used -- in homes, in offices, coffee shops, bookstores, airports, and so forth -- will be used a substantial amount of time in a Wi-Fi environment," he said. "And so we'll have to monitor this usage as the device gets out there. And if it's substantially different, we'll adapt to it."

Addressing complaints about spotty iPhone coverage, AT&T Mobility head Ralph de la Vega also said last month that the carrier was upgrading its network in key cities this year to provide better service. He also hinted he carrier might adopt usage-based fees to reduce consumption by the heaviest bandwidth users.

Lindner said AT&T expects broadband demand from the iPad to land somewhere between the iPhone and "a laptop kind of environment." Wall Street analysts estimate between 4 million and 5 million iPads to be sold in its first year on the market.

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