AT&T can afford to dramatically step up investment in high speed access, some have argued, based on AT&T’s (News - Alert) overall profits. Some might argue, to the contrary, that  AT&T has precious little room to significantly ramp up capital investment in its fixed networks, though.

The reasons are simple enough. Given its need to pay dividends, with flat revenue in its fixed network business, and a majority of fixed network revenue earned by serving business customers, AT&T actually has relatively little room to invest substantially more than it does at present, to support the whole fixed network consumer business.

To be sure, how much to invest in the consumer business is a choice AT&T has to make. The issue is how much headroom AT&T really has.

By way of contrast, AT&T arguably has more headroom in its mobile business, which is growing faster and has profit margins twice as high as in the fixed network businesses.

In its fourth quarter of 2013, AT&T generated $18.4 billion in mobile revenues, against $14.5 billion in operating expense, representing profit margin of 21 percent

AT&T also generated about $14.7 billion in total consumer and business fixed network revenues, against operating expenses of about $13.3 billion, for profit margin of 9.5 percent.

The consumer fixed network business generated $5.6 billion in revenue. By way of contrast, revenues from business customers totaled $8.8 billion.

In other words, the great bulk of any higher investment in the fixed network, to support the consumer business, supports $5.6 billion of AT&T quarterly revenue, out of a total of $33 billion worth of revenues.

In other words, the consumer fixed network business represents about 17 percent of AT&T’s total revenue. How much capital should AT&T deploy in support of a business of that size?

And even if the decision is made to step up investment significantly, what are the expected financial returns from such an investment, compared to what AT&T might earn if it invested instead in its mobile business?

To be sure, AT&T is at risk of losing even what it has in the consumer fixed network business if it under-invests. But if other key competitors also invest substantially more, as where AT&T faces both a cable operator and Google (News - Alert) Fiber, it is questionable whether AT&T even generates incremental revenue: it might only keep what market share and revenue it already has, at best.

The point is that the consumer fixed network business might not be a place where AT&T really can afford to over-invest.