Is Verizon's network big enough for the Droid X?

The Droid X smart phone.

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Kai Ryssdal: The market rally today was largely driven by healthy corporate profit reports, UPS and Caterpillar, in particular. Even when the economy's shaky, companies are under enormous pressure to meet Wall Street's expectations often down to the very penny per share, even when the economy is shaky.

That explained the announcement from the Securities and Exchange Commission about Dell Computers today. The company's going to pay $100 million to settle charges of accounting fraud -- fraud directly related to meeting Wall Street's profit targets. Founder Michael Dell's going to pay a $4 million civil penalty out of his own pocket as well.

AT&T beat the Street with it's quarterly profits this morning. Up 26 percent on a boom in new iPhone users the past three months. Great for the company; maybe not so great for users of AT&T's data network.

Marketplace's Steve Henn reports.


Steve Henn: Verizon may not have the iPhone, but for years, it's marketing made that case that it has a better mobile network.

Verizon commercial: No other wireless carrier has more 3G coverage than big red.

But Andy Hargreaves with Pacific Crest Securities says soon Verizon's Big Red network might not be big enough.

Andy Hargreaves: You have bandwidth demand accelerating at a pace that they can't keep up with.

According to Verizon executives, customers who buy the new Google Droid use five times more data than other smart phone owners on their system. And that spells trouble.

Hargreaves: You can make a very very good case that the network is broken.

Or will be soon. And Hargreaves says Verizon's problem isn't unique. The next generation of smart phones could cripple wireless networks.

Hargreaves: The network as its built right now just won't support what people are trying to do with it.

The average iPhone user sucks down 10 to 15 times more bandwidth on AT&T's wireless network than a conventional mobile phone customer. iPhone owners use more than twice as much network space as someone on, say, a Blackberry. That means that the three millions new iPhone users AT&T just signed up create a strain on the system that's roughly equal to adding Cairo or New York City to their network.

Glenn Fleishman: There will always have to be management of what we are going to do. We can't all watch HDTV on our mobile phones.

Glenn Fleishman runs Wi-Fi Networking News. He says despite spending billions over the past three years on upgrades, AT&T can't keep up. So...

Flieshman: You can make it more expensive for people to consume data.

And that's exactly what AT&T did. And rumors are rampant that Verizon is likely to follow suit by the end of the month.

In Silicon Valley, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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