NEW YORK, USA: AT&T, the exclusive US carrier for Apple Inc's iPhone, who also announced data plans for iPad, is expecting a huge demand and pressure on its network.

AT&T expands cable capacity in APAC

AT&T saw an addition of 2.7 million net subscribers in the fourth quarter, which was nearly 1 million more than expected.

Every new AT&T customer puts more demands on its network. Consumers have complained about service problems in cities such New York and San Francisco, where there are a high proportion of data-hungry iPhone users surfing the web on the go.

The strain that wireless devices like smartphones and e-readers have placed on AT&T's network is such that the company announced that it will increase capital spending by about $2 billion this year, targeting improvements in its wireless service.

Given the the strain on its network, AT&T's announcement yesterday that it will support Apple's iPad tablet is being viewed as a mixed blessing.

AT&T will increase capital spending by up to 10 percent from 2009 to a range of $18 billion to $19 billion. The roughly $2 billion increase includes spending on wireless network capacity and wires connecting mobile towers.

AT&T said it would expand wireless margins this year to the low 40 percent range from below 39 percent in the fourth quarter, and it set a long-term goal of margins around 45 percent. Verizon already produces margins in this range.

Analysts said, in fact, that the quarter's subscriber surprise came from the number of customers that AT&T added with wireless links to devices such as Amazon.com Inc's Kindle, Sony Corp's (6758.T) Reader Daily Edition, and the Barnes & Noble Nook. In this "emerging devices" category, AT&T brought about 1 million users aboard.