AT&T’s second quarter results were highlighted by substantial increases in revenue from mobile data services as the company signed up millions for smartphones (THE smartphone, the iPhone) and other mobile Web-enabled devices such as near-free netbooks. AT&T revenue from wireless data services, which also includes text messaging, increased 37%.
It added 1.2 million contract wireless subscribers in the quarter. It activated 2.4 million iPhones, about one-third being new AT&T Mobility customers. One result is that other carriers, probably the financially troubled Sprint, are likely to have fewer subscribers. Apple this week said it could not produce enough iPhone 3GS handsets to meet demand.
Helping increase data revenues were downloads of applications for iPhones and the iPod touch. AT&T said that on average iPhone users spend about 60% more per month than typical wireless subscribers.
AT&T, the exclusive US distributor of iPhones, and Apple sold more than one million iPhone 3GS models in the first three days of its debut, according to Apple. AT&T said the June 19 launch of the Apple iPhone 3G S was the biggest sales day ever for its retail and online stores. AT&T now has 79.6 million wireless subscribers, second only to Verizon Wireless.
AT&T’s traditional phone business continues its inexorable decline after more than a century of sustained growth in revenue and profits. It lost 921,000 residential wireline phone subscribers in the quarter. Revenue from the wireline operations declined 6.1% and profits declined 36%.
Helping its wireline business was its U-verse pay-TV service, which added 248,000 customers to reach 1.6 million. U-verse helps AT&T sell other services. More than 75% of U-verse TV subscribers also get two or three other services from AT&T – broadband, wireline voice and wireless.
AT&T’s total pay-TV subscribers including U-Verse and DirecTV, which AT&T resells, is now 3.8 million. AT&T now has 1.6 million U-verse broadband subscribers. Counting U-verse and traditional DSL broadband subscribers, AT&T added 112,000, up from 46,000 net adds in the year-ago quarter.
AT&T also provides a count of all its broadband connections including both wireless, which includes only customers with its 3G Laptop Connect cards, and wireline, both DSL and U-verse. The total broadband count increased by 209,000 in the second quarter to reach 16.9 million.
All of them, wireline and wireless, can also access the Net at AT&T’s 20,000 US Wi-Fi hotspots and 100,000 worldwide.
AT&T is turning on the after burners to get more data-centric subscribers. It plans to start selling subsidized netbooks for $200 in all 2,200 of its retail stores. Customers sign up for a two-year contract at $40 or $60 a month, depending on the data usage, a total upwards of $1,440 over the two years.
Verizon Wireless and Sprint have implemented similar promotions.
It’s all leading to a day when revenues from data will exceed that from phone calls and another day when the number of wireless broadband devices will exceed the number of wireline broadband subscribers. And no economic recession can slow the trend down, as AT&T showed this week and as, no doubt, Verizon Wireless will also show.