AT&T on Thursday's earnings call answered critics concerns about its over-taxed network, which has come under fire in densely populated San Francisco and New York City, saying it plans to bolster its coverage.

Dallas, Texas, AT&T has been long criticized by smart phone users for its low-bandwidth capacity and the high number of dropped calls, especially in such metropolitan areas as New York City and San Francisco, where use of the  iPhone and other smart phones is heavy.

AT&T said it expects improvements in the Bay Area and New York City in the coming months as it deals with a growth spurt in which 3.1 million iPhones were activated in the fourth quarter.

That comes amid speculation that AT&T would lose its exclusive partnership with Apple for the iPhone--which didn't happen for now. Instead Apple further extended its AT&T deal, locking the carrier into new data plan agreements for the iPad.

AT&T reported on the earnings call it now has twice as many smart phone users as its nearest competitor, Verizon, and that the company has seen a 5,000 percent spike in broadband data consumption since introducing the iPhone. The explosive growth in data demand was both unprecedented and unexpected, and explains some of the problems the AT&T network has faced.

The company said it erected close to 2,000 new cell sites in 2009 and has aggressive plans for 2010, including investing over $2 billion to expand and improve the broadband data network. It plans to deploy fiber-optic backhaul, which will increase 3G data speeds even further, as well as focusing on boosting data capacity in troubled areas like New York City and San Francisco.