AT&T chief says network is getting stronger

July 18, 2012, 12:25 AM UTC

By Miguel Helft, senior writer

FORTUNE — For AT&T’s long-suffering wireless customers, CEO Randall Stephenson has some good news.

“I feel as good about our network today as I have in 5 years,” Stephenson said during an interview at Fortune’s Brainstorm Tech conference in Aspen, Colorado.

Stephenson said that AT&T (T) has focused heavily on improving coverage in major cities like New York, San Francisco and Chicago. The company is now turning its attention to smaller markets and less populated areas.

But Stephenson said that the continuing growth in data traffic would lead to constraints in bandwidth. Data traffic has grown an astounding 20,000% in recent years. “Our current planning assumption is that that continues for 4 years, 5 years,” Stephenson said.

MORE: The private-public tech valuation gap

Stephenson said part of the problem with capacity constraints stems from the government’s unwillingness to make spectrum available faster. He also blamed speculators who own spectrum and are leaving it unused hoping that prices will go up.

There’s one upside — at least from AT&T’s point of view: the pricing model for data has gotten better. Translation: the days of $30 per month for unlimited data are over and consumers will pay higher prices. That, in turn, will lead to curbs in data consumption and delay bandwidth constraints, Stephenson said.

Stephenson did not deny rumors that AT&T could soon charge customers for customers who use Apple’s (AAPL) FaceTime video chatting technology. He said the two companies are in discussions on how to best deliver the service. “It’s too early to talk about pricing,” he said.

MORE: Trying to work with Facebook? Good luck.

And Stephenson said he was excited about the appointment of Marissa Mayer as CEO of Yahoo (YHOO), a longtime AT&T partner. “Her reputation is just terrific,” he said.

His advice for Mayer, who he has never met? “Stay a while.”

Follow here for all #FortuneTech coverage.

[cnnmoney-video vid=/video/technology/2012/07/17/bst-att-stephenson.fortune]