Attention income investors: Now’s a good time to look into AT&T (NYSE: T), recently yielding just over 5 percent. The shares took a hit after third-quarter earnings indicated competition is taking a toll on customer growth and margins. But that earnings report overlooks some key long-term advantages on which the company will soon begin to capitalize.

Federal spending on broadband. President Obama has emphasized the need to boost our broadband Internet access countrywide. Despite the fact that the US remains a leader in the Internet space, we badly lag other major countries when it comes to high-speed access. South Korea, in particular, has dusted us with access speeds that are more than four times faster and connectivity costs that are 67 percent less.

To boost US competitiveness, President Obama has proposed spending $18 billion on a coast-to-coast wireless broadband network that will connect 98 percent of the country within five years. The administration believes we need this connectivity to boost the competitiveness of US business and education.

AT&T would be a major beneficiary of federal spending on broadband, since it already offers broadband service to about a third of the US (both business and residential).

Expansion of AT&T’s next-gen network. AT&T could gain an edge on its competitors by picking up additional spectrum that the president has proposed auctioning off to help pay for the broadband initiative. AT&T has been aggressively expanding its 4G LTE network throughout the US. It plans to spend $8 billion this year on network upgrades and expansion, with the goal of reaching 300 million people by the end of 2014.

While AT&T has made more progress on that front than most of its competitors, airwave capacity constraints have been the sticking point in rolling out 4G LTE at a faster clip. If AT&T can pick up additional capacity at auction, look for the pace of the 4G LTE rollout to pick up.

Rapid growth in AT&T’s U-verse product: a fiber optic infrastructure that allows for faster, richer television, voice and Internet service. U-verse was introduced to compete with FiOs from Verizon (NYSE: VZ), and it has grown at a faster pace.

While FiOS uses fiber connections from point to point, U-verse relies on “fiber to the node” technology, which allows AT&T to continue using its existing copper wire infrastructure. This means AT&T can roll out its service faster and charge consumers less for it. And it still has the option of developing a fully fiber network funded with revenue from existing customers. As a result, U-verse became profitable for AT&T much sooner than FiOs did for Verizon.

On a valuation basis, AT&T is more attractive than Verizon, its largest US competitor. While Verizon is currently trading at almost 15 times forward earnings, AT&T is commanding a multiple of just 10. But of the two, I see AT&T as the stronger business; a bit more than twice the size of Verizon, AT&T has fewer competitive issues.

The growth in AT&T’s free cash flow has been stronger than that of its competitors, but it pays out less of its earnings in dividends. AT&T has used both of these advantages to consistently raise its annual dividend, which has averaged 5 percent annual growth the past five years.

Given the company’s strong operating history and attractive future prospects, this recent bout of pessimism is an excellent opportunity to lock in a better than 5 percent yield on AT&T.