AT&T earnings propelled by iPhone activations, connected devices like e-readers, GPS systems
Updated: AT&T said Wednesday that it added 1.9 million wireless subscribers in the first quarter as the company continued to benefit from smartphone adoption and a bevy of connected devices such as e-readers …
Context & Ripple Effects
AT&T's first-quarter report shows its wireless engine running on two fuels at once: the exclusive iPhone, which Silicon Alley Insider counts as 2.7 million activations last quarter, and a newer tailwind from non-phone devices like e-readers and GPS units attaching to the network. The 1.9 million net adds land against a backdrop of visible network stress — iPhone-toting crowds blew out AT&T's Austin convention-center network at SXSW in 2009, and service was reportedly dire at April's Coachella festival.
AT&T has been spending to keep pace: it began rolling out its 3G MicroCell signal booster nationwide in mid-April, planned capacity measures around SXSW this year, and even froze employee vacations for June ahead of an expected new iPhone launch. It also loosened one constraint on data demand by allowing SlingPlayer Mobile over 3G in February.
First-order effects
- Earnings and subscriber growth now depend on iPhone momentum plus attached e-readers and GPS devices, making each new iPhone launch — and AT&T's June vacation freeze suggests one is coming — a company-wide readiness event.
- Network congestion around dense gatherings has become a recurring operational problem AT&T must budget against, hence the MicroCell booster roll-out and event-specific capacity plans.
Second-order effects
- Rivals can attack AT&T's most visible weakness — iPhone network performance — while competing for the same smartphone buyers, pressuring AT&T to outspend on backhaul and small cells rather than compete purely on price.
- Connected devices open a second volume channel beyond handsets, pushing carriers toward metered or tiered data pricing as machine attachments grow without matching voice revenue.
Third-order effects
- If the pattern holds, carrier reporting will shift from raw subscriber counts toward revenue per active device, with tablets, e-readers, cars and other machines becoming a structural pillar of wireless growth rather than a footnote.
- Sustained smartphone-driven load growth points the industry toward continuous capex escalation and eventually tiered data plans as the default answer to flat-rate economics.
The trend: Wireless growth is decoupling from voice subscriptions as smartphones and a widening fleet of connected devices turn carriers into data-capacity businesses measured by revenue per active device.