• The Wall Street Journal, Monday, May 11, 2009 1:17 PM

The iPhone is proving to be quite expensive for AT&T, says The Wall Street Journal's Martin Peers. According to comScore, iPhone users download games and use the Web at two to four times the rate of other smartphone users, yet AT&T charges subscribers the same $30 fee per month for data that it charges other smartphone users.

However, certain apps that are popular with iPhone customers are complete bandwidth hogs, says Peers, citing a recent analysis by Alcatel-Lucent that found that North American wireless network use during an average midday hour consumed 32% of data airtime but 69% of bandwidth, compared to email, which used 30% of airtime but 4% of bandwidth. This could be a problem as the iPhone subscriber base grows (it is currently 7.5% of AT&T's total), forcing AT&T to add cell towers to its network.
Meanwhile, Peers points out that the falling cost of voice minutes and lower-end customer additions has been more or less offset by the growth of SMS messaging and other data services for the major carriers, putting them in a challenging revenue growth situation. Will new revenue from entertainment services drive growth? "Doubtful," says Peers; he suggests that the carriers abandon unlimited data pricing plans, or they'll "be stuck between a rock and a hard place."

Read the whole story at The Wall Street Journal »