By Benny Evangelista, San Francisco Chronicle

Pushing beyond mobile phones, AT&T is expanding its cellular network to connect commercial smart devices, from water meters that detect excess toilet flushes to soda dispensers that learn what people prefer to drink.

The company has tested the technology in San Ramon, CA and this week it announced plans to expand its upgraded network throughout the United States by this summer and into Mexico by the end of 2017.

With the Gartner research group projecting as many as 20 billion Internet-connected devices of all types installed around the world by 2020, the potential revenue stakes are high for AT&T and its wireless rivals Verizon, Sprint and T-Mobile, which are locked in price wars to retain mobile-phone customers as the market reaches saturation.

“They see this as a real pathway to growth over the next decade or more,” said Bill Menezes, Gartner principal research analyst for wireless services.

That compares to the mobile wireless business, which is “flattening,” Menezes said. “What you see there is a lot of customers moving from one carrier to another. That’s a business where you’re not going to see a ton of growth.”

AT&T Labs began testing its upgraded network, called LTE-M, in October, with its first commercial pilot project in and around its San Ramon facility. That includes special testing rooms lined with a foam-composite material to isolate radio signals. The company has opened a second test area in Columbus, Ohio.

The low-power, wide-area network uses the same transmission equipment needed for AT&T’s standard LTE wireless phone network. But adding the new capabilities requires only a software upgrade, which will speed the introduction of the technology, said David Allen, director of advanced product development for the company’s Internet of Things division.

“One of the goals is that we can scale this for the Internet of Things,” he said.

One test partner is Capstone Metering, a Plano, Texas, firm that makes smart water meters for public utilities. The upgraded network is designed to connect devices that use small amounts of power, which applies to products like underground water meters with batteries that are supposed to last up to 10 years.

Capstone tested a meter on a San Ramon home this week and immediately reported the signature of a toilet leak — precisely 1.6 to 1.9 gallons of water used every 27 minutes, meaning the toilet kept refilling itself.

“We couldn’t do that two years ago,” said Capstone CEO Scott Williamson. “We have the ability with the technology to tell you when you’re washing your hands. It’s data that you need to know if you’re trying to manage and conserve water.”

AT&T also worked with shipping pallet company RM2, which plans to use the network to track some of its latest products, and with PepsiCo, which has a smart soft drink dispenser called Pepsi Spire.

The dispenser can tell Pepsi what the more popular drinks are in different regions or countries, acting as “its own focus group no matter where it is,” said Darren Koenig, Pepsico’s senior director of digital innovation and Internet of Things.

Verizon operates a downtown San Francisco innovation center that’s working on a similar program, called ThingSpace.

Menezes said AT&T, Verizon and wireless networking companies like Sigfox see potential in connecting a wide universe of inanimate devices that don’t need to transmit a lot of data and,

unlike human customers, “are not going to move from carrier to carrier in order to grab an extra 10 percent in savings.”

Benny Evangelista is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @ChronicleBenny