AT&T Inc. is expanding Wi-Fi access for its subscribers in New York and introducing it in San Francisco, adding data capacity in two cities with heavy wireless network use from the iPhone and other devices.

The phone company is to announce Tuesday that it will expand Wi-Fi hot spots in New York's Times Square just ahead of New Year's revelers cramming there for the annual countdown to midnight. It is also deploying its first hot spots in a public, outdoor area of San Francisco, the Embarcadero waterfront district.

For years, AT&T has operated a wide network of hot spots in hotels, airports, Starbucks coffee shops and other indoor locations. The new "hot zones," as AT&T calls them, are different in that they cover public, outdoor spaces are and cluster together many access points to cover a larger area.

The zones provide fast data service for AT&T subscribers and divert traffic from the company's cellular network. Many AT&T smart phones, including the iPhone, connect automatically to AT&T Wi-Fi when it's available.

IPhone users are legion in both New York and San Francisco and tax AT&T's network heavily. The company made it a priority this year to improve wireless service in the two cities.

The Dallas-based company set up a hot zone in Times Square in May, and later in downtown Charlotte, N.C., and Chicago's Wrigleyville neighborhood.

Chief Technology Officer John Donovan said those pilots have been successful, so the company is expanding coverage around Times Square and setting up zones around nearby Rockefeller Center and St. Patrick's Cathedral.

Donovan said the company plans further Wi-Fi expansions, including in sports stadiums.

Wi-Fi is a cost-effective complement to wireless broadband over AT&T's regular, 3G cellular network, Donovan said, but it doesn't replace investment in that technology. The motivation for the zones is to improve the subscriber experience where a lot of people gather, he said.

AT&T's smart-phone and landline broadband subscriber can use the zones for free, and usage doesn't count toward monthly data limits.