The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
(T) will launch the first LTE-enabled Windows Phone, the
(NOK) Lumia 900, for $99.99 on April 8. At this price point, not only is the high-end smartphone half as expensive as the latest iPhone 4S but it is also slightly less expensive than the two-year old iPhone 4.
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Over the weekend, the carrier even ran a promotional rebate scheme of $100 to pre-order the Lumia, effectively making it available for free with a two-year contract. AT&T has even claimed the LTE-enabled Lumia will be its biggest product launch ever, surpassing even the iPhone. With
(VZ) getting aggressive with its LTE plans, it does seem that the second largest carrier in the U.S. does not want to be left behind.
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AT&T's burgeoning capital expenses...
Verizon has already made its aggressive LTE intentions clear by announcing it plans to introduce only those phones this year that support its high-speed network. Moreover, it has also increased its year-end LTE coverage target to 260 million Americans from the 250 million target earlier. Currently, it is well ahead of AT&T, whose LTE network covers roughly 75 million Americans compared to Verizon's 200 million. AT&T plans to double that coverage to 150 million by the year end, but even then it will fall well short of Verizon's projected coverage target.
In order to catch up, AT&T has been investing heavily in its LTE infrastructure, rapidly rolling out in new markets to make up for its relatively late entry into the space. Over the past two years, AT&T has invested heavily in its HSPA+ and LTE networks, and we don't see that reducing anytime soon.
...to be offset by rise in data ARPUs
With AT&T's LTE coverage expected to lag Verizon's well into the next year, the former is looking to make up for less coverage with the launch of popular smartphones and marketing them well. The launch of Lumia and a strong line-up of LTE-capable smartphones soon after should ensure that the carrier can at least partially recover these costs through increased adoption of its LTE phones.