AT&T Inc. (T) is expected to wrap up its network improvements for New York by the third quarter, with San Francisco to follow three months later, according to the company’s operations chief.

The Dallas telecommunications giant is working to upgrade its network in the two key media markets, which were hit by intense traffic primarily caused by the Apple Inc. (AAPL) iPhone. But the company has been delayed by component shortages and zoning issues, which have been particularly cumbersome in San Francisco.

The improvements are critical to AT&T repairing the reputation of the network, which suffers from the perception that its coverage lags behind rival Verizon Wireless. It also will enable the company to offer additional features, such as tethering for the iPhone, which allows a handset’s cellular signal to be used like a modem.

Other AT&T smartphones allow tethering.

“It’s taking longer than we’d like,” said John Stankey, chief executive of AT&T Operations, in an interview with Dow Jones. “The dynamics of San Francisco are different.”

The New York improvements are proceeding on schedule, he said, adding that the work in San Francisco is roughly 90 days behind as a result of the logistical complications.

Last month, the company said the number of dropped calls on its third-generation, or 3G, network fell 6% in Manhattan and 9% in the New York metropolitan area, but acknowledged that San Francisco was behind. Earlier Wednesday, Ralph de la Vega, who runs AT&T’s wireless and consumer businesses, told investors that the New York metrics have “improved significantly.”

via CORRECT: AT&T Sees NY Network Upgrades Wrapped Up By 3Q, SF By 4Q – WSJ.com.

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