AT&T mobile data growth still strong but leveling out

As competitive pressures forced down wireless voice prices, operators have increasingly relied on data to boost their total revenues and ARPU. With little gain in data ARPU last quarter, AT&T's overall postpaid APRU fell a fraction of a percentage point from $59.59 in the fourth quarter to $59.21, though year-over-year postpaid ARPU saw a 2.1% improvement. For the first time in 12 quarters, AT&T didn't see a 50%-plus gain in overall data revenue, posting instead a 38.6% increase to $3.2 billion.

Lindner attributed the deceleration to several factors. In an effort to save money during the recession, many customers went from a pay-per-use data or messaging plan to a subscription plan, which helped them reduce their monthly bills. On the enterprise side, companies have stopped paying for employees' data or SMS plans, also in order to save costs, Lindner said. But he added that AT&T is also suffering from its own success: After growing its data customer base so quickly in the last few years, it's becoming more difficult to produce the big percentage increases ever quarter. "We're also the victim, a little bit, of the law of big numbers," he said.

Data accounted for 27.2% of AT&T’s service revenues, up from 21.5% a year ago earlier. Unlike in previous year, AT&T can credit much of that growth to broadband data plans rather just increased SMS and MMS usage. Those data plans, however, have driven up the amount of capacity consumed on its 3G networks, leading to complaints—particularly after the initial flood of new 3G iPhones—from customers of slow data connections. Recently AT&T has been addressing the issue, adding greater capacity and more channels to the high-speed packet access (HSPA).

AT&T Mobility vice president of technology realization Scott McElroy, in a recent interview with Telephony, revealed that AT&T is using software upgrades at the cell site to double AT&T’s HSPA peak capacity to 7.2 Mb/s, freeing up bandwidth for more users on the network. In addition, AT&T has added a second or third HSPA carrier at many cell sites and is building out 3G at 850 MHz as well as 1900 MHz, giving the network greater range and in-building penetration.

Later this year, AT&T plans to begin implementing a major upgrade which will migrate its 3G networks to evolved HSPA, or HSPA+, further tripling network peak capacity to 21 Mb/s. Finally the operator plans to build a new 4G network using long-term evolution (LTE) technology, with trials beginning in 2010 and a commercial launch planned for 2011.