VZW: As 3G phones multiply, so do data revenues
Verizon Wirelessí data sales jump 49% as Verizon increases install base of 3G phones to 58%, but AT&T outpaces VZW despite lower 3G penetration
Verizon Wireless has been one of the most aggressive operators in terms of getting 3G into the hands of its customers. It was the first U.S. operator to rollout 3G, launching a nationwide EV-DO network in 2005, and since then it's been pushing its EV-DO handset portfolio relentlessly. The strategy has born results.
In its earnings call today, Verizon reported that 23% of its Q1 service revenues now come from data. Overall, two-thirds of its year-over-year revenue growth is owed to data. Its average revenue per user (ARPU) ascribed to data comes in at $11.94 a month for retail customers (3% of VZWís subs are wholesale customers), the highest of all of the major operators. Driving those impressive numbers is VZWís 3G handset penetration: from Q1 of 2007 to the end of March, Verizon increased the percentage of subscribers with EV-DO handsets from 40% to 58%. More than half of its subscribers have 3G devices even if they donít necessarily use 3G services. Three-quarters of Verizonís overall subscriber base is using some form of data service, though, even if itís mere SMS.
ďAs strong as these results are, we see continued momentum and excellent future growth opportunities ahead in wireless data,Ē said Verizon chief financial officer Doreen Toben. ďWe're feeling very good about our position to capitalize on the enormous opportunities in wireless data for years to come.Ē
AT&T, however, is chipping away at Verizonís data lead even though its 3G efforts are years behind. AT&T only finished a nationwide rollout of its UMTS/high-speed downlink packet access (HSDPA) networks last year, and is still expanding its network. Its 3G device penetration at the end of the first quarter was only 16%. Verizonís data ARPU is still more than a dollar higher than AT&Tís $10.79óthough that does not break out wholesale customersóand Verizon Wireless still has a higher percentage of its revenue coming from data (22.7% compared to AT&Tís 21.5%), but AT&T is gaining. Its Q1 data revenues grew 57.3% year-over-year, while VZWís grew 48.9%.
Much of AT&Tís wireless growth is coming from the 2G network, not the 3G network, and one device is largely responsible, the iPhone. Though AT&T doesnít break out numbers for the iPhone specifically, the more than 2 million devices sold so far all come with $20-a-month EDGE data contracts, which is driving AT&T data revenues through the roof. The Apple Safari browser has already become the leading mobile browser on the market despite the iPhoneís relatively low penetration, and AT&T has seen actual Internet usage shoot up more than 100% since the iPhone was introduced in June. Several news reports, however, have pointed to the strain that the iPhone has take on AT&Tís EDGE networks.
At Verizonís earnings call today, the company also gave some insight into how its new unlimited voice plan was performing. In the single month of the 1st quarter the $99 plan was available, saw 13% of its new postpaid single-line adds sign up for the plan, compared to the 4% of customers who signed up for $99 or above plans before the unlimited promotion.
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© 2014 Penton Media Inc.
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