After three years of dropped calls, sluggish downloads and terrible press, AT&T (T) announced on Monday that an upgrade of its wireless network in four of the five boroughs of New York City is officially complete.

According to AT&T, the project — which involved expanding the capacity of its 3G network — has steadily improved service in Manhattan, Brooklyn, Queens and the Bronx over the past six months. Whether its customers agree remains to be seen.

Staten Island — which is considerably less congested than the other New York City boroughs —  was apparently just fine the way it was.

The popularity of Apple’s (AAPL) iPhone (more than 50 million sold), and the tendency of its users to suck all available bandwidth out of the airwaves in densely populated cities, has been a huge problem for both Apple and its exclusive U.S. carrier.

According to AT&T, San Francisco — the other American city famous for bad coverage — is still a work in progress.

Below: AT&T’s press release.

AT&T Expands Wireless Capacity for 3G Mobile Broadband Network in
Manhattan and Throughout NYC

Additional Spectrum Allocated for 3G Voice and Data Applications

AT&T* today announced the completion of a local initiative to increase
the wireless capacity of its third generation (3G) mobile broadband
network in Manhattan as well as the Bronx, Brooklyn and Queens. As a
result of this upgrade, customers in these areas are expected to
experience improved 3G wireless voice and data connectivity and
performance, especially during peak hours.

The network enhancement includes the addition of new layers of
frequency, also known as “carriers,” to more efficiently manage
available spectrum and increase 3G capacity. The additions have been
applied to nearly all cell sites in Manhattan and in other areas as
needed throughout the Bronx, Queens and Brooklyn. The result is an
increased allocation of network resources for AT&T’s 3G network to
support ever-growing demand for mobile broadband services.

“Our goal is pretty simple: in the city that never sleeps, we’re working
24/7 to make sure our customers have a great experience every time they
make a call, check e-mail, download a song or video, or surf the
Internet on their AT&T device,” said Tom DeVito, vice president and
general manger for AT&T in NY and NJ. “Adding more capacity to cell
sites is just one way we are doing to that.”

AT&T recently deployed a WiFi hot zone in Times Square to help AT&T
customers stay connected in “America’s Crossroads,” one of the busiest
locations in the world.

Wireless data traffic on the AT&T network has grown more than 5,000
percent over the past three years, largely attributed to the increasing
popularity of advanced smartphones and the performance of AT&T’s 3G
network, the nation’s fastest. Our network teams are enhancing network
capacity, capabilities and performance to keep up with unprecedented
demand for mobile services.

In New York City, we’ve added a layer of high-performing 850 MHz
spectrum to deploy more radio capacity and enhance in-building coverage
throughout the city. As of the first quarter of 2010, we’ve seen two
consecutive quarters of strong voice quality improvements in New York
according to internal measurements. In Manhattan, quality improved 47
percent quarter over quarter.

Additionally, as of the first quarter of 2010 our national 3G average
data download speeds are up 25 percent versus a year ago based on
internal data.

Earlier this year, AT&T completed a software upgrade at 3G cell sites
nationwide that prepares the nation’s fastest 3G network for even faster
speeds. The deployment of High-Speed Packet Access (HSPA) 7.2 technology
is the first of multiple initiatives in AT&T’s network enhancement
strategy designed to provide customers with an enhanced mobile broadband
experience, both today and well into the future.  Faster 3G speeds are
scheduled to become available this year and in 2011 on a market by
market basis as AT&T combines the new technology with the increased
deployment of high-speed backhaul connections to cell sites, primarily
with fiber-optic technology. Late this year, we plan to upgrade our
network to HSPA+, the latest generation of our 3G platform.

AT&T’s 3G mobile broadband network is based on the 3rd Generation
Partnership Project (3GPP) family of technologies that includes GSM and
UMTS, the most widely used wireless network platforms in the world. AT&T
has the best international coverage of any U.S. wireless provider,
delivering voice service in over 220 countries and data service in more
than 195 countries. AT&T also offers voice and data roaming coverage on
130 major cruise ships, as well as 3G services in 115 countries.

*AT&T products and services are provided or offered by subsidiaries and
affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.

[Follow Philip Elmer-DeWitt on Twitter @philiped]