On Friday, I went on a tour of AT&T Inc.’s Philadelphia “command center,” a rare peek inside a secure facility that handles a terabit of information every second.
It was a way for local AT&T managers to show how the telecommunications company plans to spend $19 billion nationwide on its wireless and wireline networks and other capital projects in 2011.
On Sunday, Dallas-based AT&T showed another way that it hopes to spend its capital: It intends to buy T-Mobile USA from Deutsche Telekom AG for $39 billion in a cash-and-stock transaction.
Our phones may be getting smaller, but most things about the telecommunications business remain enormous. U.S. wireless consumers yakked for more than 2.3 trillion minutes during the 12 months ended June 30, or 6.3 billion minutes per day, according to the CTIA, a trade association for the wireless industry.
The trade group also estimated that more than 1.8 trillion text messages were sent and received during that same 12-month period, or 4.9 billion per day. (My guess is that half of them were: “Pick up milk.”)
“A lot of us don’t think about once we hit ‘send,’ what happens? It’s just magic. And that’s a good thing,” said Tiffany Baehman, vice president and general manager of the Greater Philadelphia market for AT&T.
There was little magic in evidence on the tour of the Philadelphia command center, but lots of noisy, brute-force technology that keeps a large part of AT&T’s network running. The routers, switches, and other equipment are housed in rooms immersed in a din that I found just this side of uncomfortable. The heat thrown off by the equipment is constantly counteracted by air-conditioning produced by three enormous cooling towers.
Mark Hudson of AT&T global network field operations described how “all the tributaries” of text messages, video downloads, voice-over-Internet protocol messages, and good old wireline phone calls funnel their way through the facility, where he has worked for the last 12 years. “It’s a massive river of data,” he said.
As our March downpours have shown, rivers can swell and burst their banks. However, even with all the bandwidth that the iPhone and other smartphones guzzle, Hudson is unfazed that the river of data will swamp AT&T’s command center, which he said has plenty of room to expand its capacity.
Financial analysts and many iPhone users may beg to differ, given all the reports of dropped calls. But the company continues to commit billions to capital expenditures annually, and now AT&T chief executive officer Randall Stephenson wants to absorb T-Mobile’s 34 million subscribers and the wireless spectrum it controls. The $25 billion cash portion of the offer far surpasses AT&T’s capital expenditures budgeted for this year.
It’s the kind of audacious move you’d expect from a money machine that reported net income of $19.86 billion, or $3.35 a share, on revenue of $124.28 billion in 2010.
The Federal Communications Commission will take the better part of a year to chew over whether what’s good for AT&T is good for the country at large. But win or lose, I’m pretty sure news of the final decision will zip through the machinery in a noisy room in Philadelphia.