Mr. Donovan likened the service to toll-free calling for the mobile-broadband world. The move comes as carriers are hunting for new ways to make money on the rising data traffic on their networks, while mindful of limits on what consumers are willing to spend.

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AT&T reported a big loss earlier on Thursday, thanks to the charge it had to take for the massive breakup fee owed T-Mobile once that deal fell apart.

However, the company predicted lots of good things to come for the year ahead, including continued growth in its smartphone business, driving a further 2 percent gain in monthly average revenue per user, as well as growth in the total number of customers.

As far as its LTE network plans, the company said it intends to at least double the number of people able to receive its service this year. AT&T’s LTE service is currently up and running in 26 cities, covering 74 million people.

The company also noted that it had a record year for mobile broadband sales.

Speaking on the call, CEO Randall Stephenson said he hoped that all of that good stuff wouldn’t get lost in the news about the breakup fee, or focus on iPhone sales. But, speaking of iPhone, Stephenson said he had to point out that AT&T remains ahead of its rivals on selling Apple’s smartphone.

“We outsold them in every single quarter,” he said.

Looking forward, Stephenson said to expect earnings per share to grow in the mid-single digits, even with no improvement in the economy.

“We’re going to continue to be very aggressive in growing our mobile broadband franchise,” he said.

The biggest issue for the company and the industry is the need for additional spectrum.

“This growth cannot continue without more spectrum,” Stephenson said, taking a bunch of shots at the Federal Communications Commission for its rejection of spectrum deals, as well as the lack of progress on auctions.

“Despite all the speeches from the FCC, we’re all still waiting,” he said. “It’s clearly time for Congress and the FCC to step up.”

The result, Stephenson said, is that AT&T has to resort to things like tiered pricing, higher prices and throttling its most demanding users. (Subtext: So if you don’t like your high bill, blame Washington.)

7:14 am: CFO John Stephens is reviewing things. A few notes: Churn did increase a bit, but postpaid revenue per user climbed as it has been, with its level $6 higher per month than any of its rivals.

7:16 am: 9.4 million smartphones sold in the quarter, nearly twice as many as in the third quarter, with smartphone customers now 57 percent of its postpaid subscriber base. iPhone helped a ton, but the company notes its Android sales were twice those of a year earlier.

7:20 am: The company expects service margins to improve in 2012 thanks to continued strong smartphone sales and the higher-priced data plans announced last week.

7:30 am: On to Q and A.

With T-Mobile, AT&T had hoped to grow its prepaid business, something the other carrier was good at. Stephenson said that the company doesn’t see growing that business in the next six months, but will look to do so once it frees up 3G spectrum by moving more traffic to LTE.

“When you are spectrum constrained you get very focused on the markets you want to pursue,” Stephenson said, noting that for AT&T that has been the high end of the market.

7:34 am: On spectrum, Stephenson noted that the company actually feels OK on its ability through the LTE transition. It’s after that point that AT&T feels it needs more bandwidth.

“Our biggest issue is understanding what we are allowed to do,” Stephenson said.

Stephenson said the company isn’t sure how potential deals will be evaluated and who it is allowed to do business with.

7:45 am: What about voice? Are you seeing a decline, especially among young people?

“Without a doubt,” Stephenson said. “It’s almost uncool to talk on the phone.”

7:53 am: More shots at D.C. Spectrum rules “so fluid you could drink through them with a straw.”

7:58 am: What about the Verizon deal with cable companies? Would you support it at FCC?

Stephenson: I don’t know. I think it will be interesting to see what the FCC does.

It appears to be a logical transition. I obviously will be watching very closely. We won’t be a participant in terms of comments, just watching as a very interested bystander.

If nothing else, Stephenson said it will offer another data point on what kinds of deals might be allowed.

8:00 am: We’re wrapping up.

Last question is on smartphone sales. Every time the company forecasts where it thinks smartphone sales might go, they go higher.

Last quarter, 80 percent of new sales to postpaid customers were smartphones. Smartphone customers also become an opportunity for selling other devices and services.

There’s also more opportunity for businesses to really take advantage of mobile services.

“I think we are very early in the cycle in terms of businesses,” he said.

And we’re done.

The Federal Communications Commission’s 78-page request asks AT&T 50 detailed questions about its spectrum holdings, its network and its contention that it needs T-Mobile’s airwaves to provide nearly seamless mobile broadband service across the U.S.

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Sprint on Tuesday is officially announcing that its WiMax-based 4G service is available in San Francisco and San Jose, while AT&T said it is creating a Wi-Fi “hot zone” along San Francisco’s Embarcadero that spans the city’s waterfront. Subscribers to AT&T wireless or high-speed home Internet service can access the Wi-Fi areas for free.

AT&T is also creating more hot zones in New York, bringing improved data service to at least a small part of two major cities where the carrier is often criticized for poor service. The move offers an additional data option, but covers only a small area and won’t really help with dropped calls–a chief complaint among iPhone users in both places.

In New York, the company is expanding the Times Square hot zone launched earlier this year and adding additional ones near Rockefeller Center and St. Patrick’s Cathedral. It also has pilot Wi-Fi zones in Charlotte, N.C., and near Wrigley Field in Chicago. AT&T says more than 350,000 wireless connections have been made in the three trial areas so far.

“Our initial AT&T Wi-Fi hotzones have received great customer response and supported high data traffic,” AT&T Chief Technology Officer John Donovan said in a statement. “The pilot demonstrated the clear benefits of having fast and readily-available Wi-Fi options for our customers and our network, and so we have decided to deploy hotzones in more locations.”

As for Sprint, it said WiMax service is now available in San Francisco, San Jose, Palo Alto and Oakland, joining 70 other markets across the country.

“The Bay Area is responsible for creating so much new technology and today we are bringing the power of 4G to our customers in that region who are hungry for fast mobile broadband,” Sprint 4G chief Matt Carter said in a statement.

Clearwire, which sells Wi-Max under the Clear brand and shares technology with Sprint, is also officially launching 4G service in the Bay Area on Tuesday.

Earnings rose to $3.01 billion, or 51 cents a share, from $2.4 billion, or 41 cents a share, a year earlier. Revenue was $30.86 billion. Earnings per share and revenue both met analysts’ expectations. (Click summary below to enlarge.)

AT&T (T) activated 3.1 million Apple (AAPL) iPhones in the fourth quarter, one third for new customers.

“We had a solid 2009 and led the industry in the biggest growth driver–mobile broadband,” AT&T CEO Randall Stephenson said in a statement. Looking ahead, he added, “Our fundamental outlook for the business is quite positive.”

That’s the conclusion of a new study by Strategy Analytics, which found that consumers are not so taken with mobile connectivity that they’ve completely lost site of household budgetary constraints. Especially if they’ve got broadband at home; just 10 percent of the 1,100 households surveyed would be willing to cut wired broadband service to save money.

Said Strategy Analytics VP David Mercer, “These results suggest that, while American consumers consider home broadband service to be a vital utility, they see mobile data service as simply a ‘nice to have.’”

That might be the case now, but I wonder for how long. Wireline broadband is far more mature than mobile broadband, so it makes sense that it’s viewed more as necessity than luxury. But as devices like the Apple (AAPL) iPhone and Palm (PALM) Pre become more ubiquitous, it seems inevitable that “nice to have: will become “must have.”

[Image credit: Mobile Phone Throwing World Championships]