Mobile broadband growth encouraging amid bad economy

An encouraging sign during this slumping economy is the fact that two of the nation's largest mobile operators, AT&T and Verizon Wireless, announced healthy growth in wireless broadband services.

While Verizon Wireless saw weakness in its net adds in the fourth quarter, adding 1.4 million subscribers, its data ARPU increased by nearly 30 percent from the fourth quarter 2008 to $13.99. For 2008, data revenues came in at $10.7 billion, representing an increase of 44 percent over 2007. During 2008, data accounted for 27 percent of total wireless service revenues, and two in every three of Verizon Wireless's retail customers now have a CDMA 1X EV-DO-enabled device.

Likewise, AT&T, which added 2.1 million subscribers, saw wireless data revenue jump 51.2 percent over the year-ago quarter to $3.1 billion, making it the 12th consecutive quarter with wireless data revenue growth above 50 percent. Data revenue made up 26.6 percent of AT&T's fourth quarter wireless service revenues, up from 19.9 percent in the year-ago quarter.

Thanks to smart phones like Apple's iPhone 3G, which again accounted for the bulk of subscriber additions for AT&T, people are spending more on data. So far, these services aren't seen as a luxury. In fact, some studies indicate they may be supplanting laptops. A recent J.D. Power and Associates report said the increasing demand for advanced features in smartphones means users are spending more money on data plans and services, even in a struggling economy. They are spending about $80 a month, according to the study.

I don't believe the trend will reverse itself even if the economy sinks further. Operators won't let that happen. The flat-rate mobile Internet model combined with the proliferation of mass-market mobile Internet devices should keep propping up mobile data consumption, making smartphones the preferred way to access information and entertainment.--Lynnette