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AT&T CEO defends network issues

Speaking at D: All Things Digital, Randall Stephenson says the quality of the cell phone network has improved, but still has a ways to go.

AT&T CEO Randall Stephenson, on stage at D: All Things Digital, fielding questions from moderator Walt Mossberg. Ina Fried/CNET

CARLSBAD, Calif.--AT&T CEO Randall Stephenson was the first person on the D: All Things Digital hot seat Wednesday, called on to address quality issues that have hampered the company's 3G cellular roll-out.

Moderator Walt Mossberg showed some data from polling that the conference did that found that not wanting AT&T was the No. 1 reason non-iPhone owners gave for not buying Apple's phone.

Stephenson defended the carrier saying that the No. 1 reason people leave all carriers is "network quality."

"You see our churn dramatically coming down," Stephenson said. "We feel like we are closing the gap on this. Are we there yet? No."

Stephenson's talk is just getting started and I'll update this post shortly.

Update 8:30 a.m. PDT: Stephenson talked about the power of the fourth generation networks that are coming on a limited basis next year, but not broadly until 2012. Stephenson said the company needs to do something to boost speeds before the so-called LTE networks arrive.

"Between now and then is a long time," he said. AT&T announced on Wednesday that it will upgrade its current network to a faster version that roughly doubles the theoretical speed of the network. (However, only new phones designed to use the new version will get the speed boost.)

"We are going to go ahead and deploy some rather aggressive wireless broadband," Stephenson said.

Update 8:45 a.m. PDT: Asked about the economy, Stephenson said it has impacted AT&T, particularly it's wireline business. Stephenson said people tend to cut home phone lines more often then they cut back on cell phone or TV service. "Wireless is the priority of this business," he said, noting that he is encouraging his company to offer mobile versions on any service it can.

On the home front, the company knows it needs to boost the rates at which it can deliver video content to the home. "There are going to be more and more requirements for bandwidth," he said.

Stephenson said AT&T is testing a "pair bonding" technique that should offers speeds in the 40 to 50 megabits per second range. Mossberg pressed him for a time frame.

"I think I can call you this year," Stephenson said.

Update 8:50 a.m. PDT: Mossberg pressed Stephenson on whether cell phone bills are likely to go up or down over time.

"It probably depends on who you are," he said, adding that wireless costs are actually variable, despite the fact that most people pay a flat fee for data. Right now, he said, the margins on the iPhone service and wireless service in general are good. At the same time, he noted that each bit of data that goes on the network has a cost, suggesting that variable pricing could be an option down the road.

"The market will dictate that more than anything else," he said.

Update 9:05 a.m. PDT: An attendee asked about the decision not to allow Slingbox' iPhone player to use the 3G network. Stephenson said that the reality of the networks makes open-ended live video streaming problematic.

"You start congesting the network with data and voice quality goes down," he said.