As cell phones take on more and more features, wireless carriers are struggling to keep up with data demands.

Whether wireless customers are watching videos on YouTube or uploading puppy pictures to Facebook, they want reliable speed. Upgrading the network is essential to meeting the needs of these customers, and each wireless carrier has its own plan of attack. Some are upgrading their existing third generation (3G) networks with better software before moving on to next generation networks. Others already have fourth generation (4G) networks up and running. In addition to transmitting high-definition video, these networks could alleviate traffic problems on existing networks, making service better for everyone--even folks who don't plan on buying a new 4G-enabled device.

According to AT&T spokesperson Seth Bloom, wireless data traffic grew nearly 7,000 percent between the third quarter of 2006 and the third quarter of 2009. "We've been working tirelessly to support this growth," Bloom says.

In 2008 and the first three quarters of 2009, AT&T invested approximately $19 billion on its wireless network. "We know there is work to be done, especially in New York and San Francisco. We have a plan to improve the experience; we are implementing the plan, and we are confident that it will work."

While cell phone networks are constantly being upgraded and expanded, analysts say customer complaints have helped drive improvements over the last few years. iPhone customers were particularly vocal, with some complaining that the existing AT&T network didn't provide enough coverage, speed, or reliability to meet their needs. "AT&T simply didn't have capability to keep up with demand," says Robert Rosenberg, president of the Insight Research Corporation.

AT&T and T Mobile both recently announced that they have completed upgrading their existing 3G cell towers with new software called High Speed Packet Access (HSPA) 7.2. The software speeds up existing 3G networks and allows for speeds of up to 7.2 Megabytes per second (Mb/s). That's twice as fast as the old 3G network.

Godfrey Chua, a research manager who covers wireless and mobile infrastructure for research firm IDC, says the upgraded networks will technically be able to run faster, "but all the same challenges will still exist." For example, if there are too many people accessing the same cell tower, people won't actually experience the top speeds. Ultimately, this would mean that the wireless company would need to add more towers.

"Deploying more base stations is the most expensive part of expanding your network," Chua says. "It's also a challenging task, for sure." A company can do all kinds of planning and research to determine the best location for a new cell tower, only to discover the city won't allow it.

Certainly, it takes more than software to ensure the speed boost is felt by customers. Backhaul--that section of the network that carries signals from the cell tower to the telecommunications backbone--needs to be increased to support the faster speeds enabled by HSPA 7.2. Additional backhaul is already being deployed by AT&T in Charlotte, Chicago, Dallas, Houston, Los Angeles, and Miami as a part of the upgrade. Once these changes are complete, users should see a significant increase in data transmission speeds. Bloom says the added backhaul should also help prepare AT&T for its 4G network.