AT&T Buys Wayport to Keep iPhone Users Happy

att_header_logoToday AT&T said it would buy Wi-Fi hotspots operator Wayport for $275 million in cash. Not only is this an exit for the 12-year-old Irving, Texas-based company that raised more than $130 million, but it also gives AT&T 80,000 Wi-Fi hotspots all over the country world. As AT&T brings in more WiFi-enabled phones that encourage a rich web experience, those hotspots will help offload bandwidth-clogging traffic from its 3G network.

AT&T (s T) already requires iPhone users to use their Wi-Fi connection to download files from iTunes and prohibits bandwidth-intensive applications such as P2P sharing. Part of the reason for this is the limitations of its HSPA network. While fast, it isn’t designed to handle the continuous streams of data a song download or video upload requires. 3G is still designed for voice traffic, which is intermittent and much less bandwidth intensive. The network has a data overlay, but that, too, is designed for bursts of data rather than continuous streams. If too many people that require continuous streams of data get on, it clogs the network, leaving other subscribers unable to access it.

Buying Wayport and offering 20,000 hot spots (including in airports and McDonald’s restaurants) in the U.S. allows AT&T to provide its customers with more places to do their bandwidth-sucking applications. Already, AT&T is willing to let iPhone and BlackBerry users access its Wi-Fi hotspots free at Starbucks. It also means AT&T can hold out a bit longer before deploying its 4G LTE network, which is designed for data.