"Soaring Profits" for Broadband Access Providers?

The Phoenix Center says claims by proponents of increased Internet regulation are quite wrong in claiming that firms such as AT&T, Verizon, Sprint-Nextel, Qwest, Comcast, and Time Warner Cable are making "record profits," "substantial profits" or  "soaring profits" that justify further regulation.

Quite to the contrary, those firms are earning at lower rates than the average Standard & Poors 500 firms does, and have done so for the last five years.

The Phoenix Center found that the profitability of the larger broadband access service providers is generally equal to, or below average, for firms in the S&P 500. It would be more accurate to say that profits are "'typical," not "soaring or 'substantial.'

Conversely, content firms like Google and EBay are substantially more profitable than the access providers are,  implying that access providers are not benefiting as much as others in the Internet ecosystem from the surge in broadband adoption and use.

Across all measures of profitability, Google and Ebay are two-to-four times more profitable than the better performing broadband providers.

In fact, the Phoenix Center found that both Wal-Mart and Colgate-Palmolive have much higher profits than the large access providers.

FCC Chairman Julius Genachowski has issued a challenge to the industry for data-driven analysis," according to study co-author and Phoenix Center President Lawrence J. Spiwak. "Accordingly, parties calling for regulation need to present more than just hyperbole about 'soaring' profits -- they need to present facts."

"The evidence shows that BSP profitability is fairly typical of American industry, if not a little low" said study co-author and Phoenix Center Chief Economist George S. Ford, PhD. "Based on available evidence, regulatory intervention based on substantial profitability by large BSPs has no basis in fact."

Verizon and AT&T Equity Performance is a Warning Sign

Communications policymakers in nations where the government does not directly own and control key national carriers in their markets always must balance their preferred regulatory outcomes with the possible responses private firms will make to those initiatives.

Put simply, too much regulatory pressure will lead to reduced investment and innovation, not more. The other issue is that every government considers its national communications infrastructure to be a matter of national interest.

That being the case, most governments will not willingly weaken their own carriers.

So take a look at how AT&T and Verizon equities have fared over the last year or so, compared to the Standard & Poors 500 index. Not so pretty.

What that tells you is that investors believe neither company has much in the way of "growth" ahead of it. In fact, many would argue both companies will increasingly be challenged, in coming years, to stay where they are, given major changes in the underlying business models each company faces.

That suggests policymakers should be cautious about making incorrect assumptions about the underlying financial prospects for the firms that arguably are most important to the national communications infrastructure.

It is not as though either firm were Apple, creating whole new industries and muscling its way into other substantial industries with some regularity. Quite to the contrary, innovation and revenue upside nearly universally are now seen as attributes of the application and handset parts of the communication value chain, not the "access" providers as such.

To be blunt, there may be times when regulatory restraint is the right policy. But there also are times when an industry with national economic and security implications faces enough fundamental challenges that "protection or promotion" is the right policy framework.

It is not the job of other ecosystem participants to worry about the financial health of other segments. But it always is the job of national policymakers to do so, when the issue is the health of the underlying national communications infrastructure.

First-quarter 2010 results posted by AT&T suggest the outlines of the problem. Simply, wireless now is the driver of revenue growth.

But wireless is saturating, forcing mobile providers to find new revenue sources. Also, mobile voice, which has been the segment mainstay, increasingly will come under pressure as landline voice has proven to be a product in a declining lifecycle.

The point is that the appropriate regulatory framework for a fast-growing, vibrant industry is different than for an industry that is fundamentally challenged. That is not to suggest industry executives are unaware of the problems, or that they have failed to show agility in the past; they have.

The point is simply that it might be a grave mistake to assume carriers can bear any burden where it comes to regulations that choke off their ability to create new services and revenues. The financial markets already are signaling their views how the industry is situated.

The Very Best Android Phones For Each Carrier

As it turns out, some think the "very best" Android devices available on any U.S. mobile carrier are made by just one company: HTC. The firm seems to be betting its future on Android, and from the looks of things, is doing a heck of a job rolling out top of the line Android devices for every leading U.S. carrier.

The Very Best Android Phones For Each Carrier

For T-Mobile customers the most future-proof choice is a Nexus One. For Sprint 4G customers, it is the HTC Evo. At AT&T the top device is the Nexus One. Verizon customers should get the HTC "Incredible," at least when it goes on sale on April 29, 2010.

Wireless Carriers Need More Spectrum, But Can They Handle the Borrowing?

Though acquisition of more mobile spectrum is a key strategic imperative for leading U.S. mobile operators,  it is not clear how much capacity and flexibility Verizon Communications and AT&T have within their credit ratings to absorb future spectrum purchases, say analysts at Fitch Ratings.

That is a significant opinion. Despite the apparent belief in some quarters that the largest U.S. telecom providers are so well positioned they can handle any shock to their financial models, Fitch Ratings does not believe that is the case.

In fact, a number of factors, including the cost of acquiring new spectrum, ability to monetize broadband services more effectively and competition from application-based wireless services all pose "longer-term threats to telecom operators' balance sheets and cash flows," Fitch Ratings say.

Fitch believes Verizon Wireless and AT&T Wireless, because of their scale, market power, and financial strength, will be in a better position to cope with these challenges than many lower-margin contestants, should the market environment shift. But increased reliance on wireless communications is an issue for many other contestants as well.

A key issue for cable companies is whether their wholesale arrangement with Clearwire can bundle competitive offerings that can successfully offset the significant threat from next generation broadband wireless networks as the telecom industry transitions more and more traffic longer-term to wireless, Fitch analysts say.

The Federal Communication Commission's "National Broadband Plan" aims to release 70 megaHertz of spectrum available for auction in the 2011 time frame.

Depending on the timing of the auction, the final amount of spectrum available, and the aggressiveness of the bidding, it’s not clear how much capacity and flexibility Verizon Communications Inc. and AT&T Inc. have within their credit ratings to absorb future spectrum purchases.

The good news is that, by the end of 2010, leverage is expected to decline for Verizon and AT&T due to strong free cash generation and management commitment to debt reduction. Both companies’ leverage has been at the high end of Fitch’s expectations due to past acquisitions and spectrum purchases.

Other well-capitalized, smaller operators or new entrants with strong balance sheets and good
free cash flow prospects should be in a favorable position to acquire additional spectrum.

New entrants or smaller companies without good operational cash flow characteristics or
strong balance sheets would likely have a difficult time funding any commitments for
spectrum purchases or buildout requirements.

That suggests the coming spectrum auctions will reshape the competitive environment in significant ways, favoring the well-capitalized contestants and weakening the financially weaker firms.

The transition to 4G networks also would seem to provide an opportunity for operators to
implement a new pricing model for data services. But it is not clear the opportunity is all "upside."

Clearwire, for example, already offers unlimited mobile data usage for $40 per month. Clearwire does not currently cap subscribers’ data usage, where most cellular operators limit monthly data
usage at 5 gigabytes. Since AT&T and Verizon offer capped plans costing $60 a month, Clearwire is using its 4G spectrum to disrupt current levels of pricing.

The company’s management has indicated that Clearwire’s mobile WiMAX subscribers already average approximately 7 GBytes of data usage per month.

Given the current indication by operators that Internet video will be a key driver of traffic on 4G networks, operators will need to create larger “data bucket” plans with tiered pricing, as the current 5 GB 3G plans currently offered for aircards and netbooks would not be sufficiently large enough to handle subscriber demands from streaming video.

Telcos "Playing Politics" With SEC Reports and Accounting Charges? Are You Kidding?

One of the calumnies heaped upon telecom service providers is that their recent Securities and Exchange Commission notifications of charges caused by the new health care legislation are somehow a political ploy. Some even say that AT&T and Verizon, for example, are doing so as a political act, because they "contribute to Republican candidates."

As often is the case, such claims are uninformed. In its most-recent report, the Federal Elections Commission reported that AT&T gave exactly the same amount of money to Democrats and Republicans, splitting about $1.7 million 50 percent to Democrats and 50 percent to Republicans, the FEC reports.

The truly unbalanced spending was by union political action committees. The Operating Engineers Union gave 89 percent to Democrats, the International Brotherhood of Electrical Workers gave 99 percent to Democrats, the American Federation of State, County and Municipal Employees gave 99 percent to Democrats, the Teamsters 98 percent to Democrats, the International Association of Frie Fighters gave 88 percent to Democrats, the Carpenters and Joiners Union gave 90 percent to Democrats, the Plumbers/Pipefiters Union gave 95 percent to Democrats.

If you take a look at the chart, the largest telecom-affiliated PACs split their giving between Republicans and Democrats. If one correlates the spending with which political party occupies the White House, or controls the Congress, the pattern of giving by telecom PACis clear: more spending for candidates representing the party in power.

Click on the image for a larger view. 




http://www.opensecrets.org/pacs/toppacs.php

Operator App Stores Get More Traction Than You Might Think

Though many observers, including many service provider executives, might be skeptical about the long-term viability of operator-sponsored mobile application stores, a new study by Nielsen suggests consumers are favorably impressed with operator app stores, as compared to handset stores such as the Apple App Store.

(click image for larger view)

Many observers believe device app stores will ultimately gain favor, but a new Nielsen survey finds ongoing loyalty to carrier stores.  As of the end of 2009, half of all applications users were accessing carrier app stores according to Nielsen’s new App Playbook service.

That is not to say the Apple App Store has lost any luster in the United States. The relatively new BlackBerry App World Store also was the second most popular app store, in part because of BlackBerry’s industry-leading installed base.

But carrier application stores were not as far behind as some might think. About 84 percent of respondents said they were satisfied with the Apple App Store, while 81 percent said they were happy with the Android Market.

Some 59 percent of respondents said they were satisfied with the BlackBerry App World. About 56 percent reported satisfaction with the Windows Marketplace.

Most mobile carrier stores compare favorably with BlackBerry. About 64 percent of respondents were satisified witht he AT&T Application Store, while 65 percent said they were satisfied with the Sprint Application Store.

Some 66 percent said they were happy with the T-Mobile Application Store and 62 percent reported they were satisfied with the Verizon Application Store.

Nielsen’s App Playbook  surveys more than 4,000 application downloaders in the United States every six months about their mobile application usage.

more detail

Is Another National LTE Network Needed?

Do businesses and consumers in the United States need one more fourth-generation nationwide wireless network, aside from the existing Clearwire, soon-to-be-built Verizon and AT&T networks, as well as regional networks being created by regional mobile providers and cable companies, not to mention high-speed 3G networks running at top speeds of 22 Mbps?

Though no firm answer can be given to that question, we might find out relatively soon whether investors think there is a need for another facilities-based 4G network of national coverage.

Harbinger Capital, which recently merged with SkyTerra, proposes to build a fully integrated satellite-terrestrial network to serve North American mobile users, with a national 4G terrestrial network covering 260 million people by the end of 2013.

The planned network would launch before the third quarter of 2011 and cover nine million people, with trials set initially for Denver and Phoenix. The next milestone is that 100 million people have to be covered by the end of 2012, 145 million by the end of 2013 and at least 260 million people in the United States by the end of 2015. Harbinger told the FCC that all major markets will be installed by the end of the second quarter of 2013.

The original thinking has been that wireless services within a number of vertical markets that are highly dependent upon the ubiquitous coverage and redundancy to be provided by its satellite network would be the core of the business strategy. But Harbinger might think there is a market broader than that as well.

Harbinger actually is required by the Federal Communications Commission to provide wholesale access to third parties, and also to restrict total Verizon Wireless and AT&T traffic to no more than 25 percent of total, to provide more competition in the market.

The big issue is whether there is substantial need for additional spectrum at this point. One might argue that industry requests, as well as FCC proposals, for allocation of an additional 500 megaHertz of spectrum for mobile broadband are clear evidence of need.

But there are other issues of market structure and competition. Assuming hundreds of new megaHertz of spectrum can eventually be relocated, most observers think the buyers of such spectrum would be the largest mobile providers such as AT&T and Verizon.

The Harbinger network, by definition, would largely be a platform for other providers, as it would operate as a wholesale provider.

The key business issue is whether there actually is sufficient business demand for another national 4G terrestrial network, though. Sprint and Clearwire both have relatively lavish amounts of spectrum already, and both have shown a willingness to sell wholesale capacity.

One might argue the key differentiator would be the satellite roaming features that would be available on handsets that normally default to the terrestrial network. But the bigger test will be of investor sentiment, as Harbinger will have to raise billions to build the new terrestrial network.

The 36,000 base stations that Harbinger plans to use, along with the tower sites, backhaul and other gear associated with a terrestrial network will require billions of dollars worth of investment.

Analyst Chris King at Stifel Nicolaus estimates that Verizon’s LTE network will cost about $5 billion to deploy. Clearwire has also spent billions on its network, with analyst estimates ranging from $3 billion to about $6 billion. There is no particular reason to think the ubiquitous terrestrial network Harbinger expects to build would cost less.

Investors will have to be found first, before there is a chance to test the thesis that another facilities-based 4G network is needed.

Healthcare Plan to Cost AT&T $1 Billion

AT&T says it is taking a $1 billion charge for the first quarter of 2010 to account for increases in its costs because of the new health care plan. It isn't clear what the on-going hit to earnings might be.


AT&T says it also will also evaluate changes to its health care benefits for employees and retirees, to avoid paying such charges in the future, of course. 

AT&T Microcell Launch in April

AT&T will begin its national roll out of femtocells, which it brands as the AT&T 3G MicroCell" beginning in mid-April, with new markets activating in cities across the continental U.S. for the next several months.

The AT&T 3G MicroCell improves in-building reception for mobile devices by creating a local mobile repeater site, like a Wi-Fi connection does. The femtocell uses the home broadband connection for access, offloading mobile traffic to the fixed broadband network and therefore avoiding any reception problems in the home or building.

Developed in conjunction with Cisco and in a public trial in select markets since September, AT&T 3G MicroCell is available for a one-time cost of $149.99.

Consumers with AT&T 3G MicroCell will be able to easily activate the device the same day it is purchased.  Customers may define up to 10 mobile phone numbers that can use the femtocell and up to four devices can operate on it simultaneously. There is no recurring cost, but mobile minutes will be deducted from a user's account as they would be if on a mobile macro-cell.

Customers on "Family Talk" plans can pay an additional $19.99 a month to make unlimited calls from the Microcell, without deducting any minutes from their plans.

Consumers who select 3G MicroCell calling plans at purchase are also eligible to receive a $100 mail-in-rebate toward the purchase of AT&T 3G MicroCell. Customers who also purchase a new line of broadband service with AT&T (DSL or U-verse 1.5MB or higher) are also eligible for $50 rebate.

further details

AT&T, Cable Companies, Intel, Microsoft Back Broadband Stimulus Application

A newly-formed coaltion of cable companies, AT&T, Intel, Microsoft and industry trade and non-profit groups have created a "Digital Adoption Coalition" to apply for funding under the "broadband stimulus" program.

The Digital Adoption Coalition includes AT&T, BendBroadband, Bresnan Communications, Bright House Networks, Cablevision Systems Corp., Charter Communications, Comcast, Cox Communications, Connected Nation, Eagle Communications, Inc., Dell, Intel Corporation, Mediacom Communications Corp., Microsoft, Midcontinent Communications, the National Cable & Telecommunications Association (NCTA), One Economy Corporation, Sjoberg’s Cable TV, Suddenlink Communications, Time Warner Cable, US Cable Group, and USTelecom.

To improve broadband access, services, and technology in approximately 250,000 low-income households nationwide, the coalition would work with the U.S. Department of Housing and Urban Development to increase broadband outreach efforts in public housing, project-based Section 8 properties, and multi-family assisted communities.

One Economy, a global nonprofit, filed an application with NTIA on March 15 on behalf of the coalition for funding through the Broadband Technology Opportunities Program (BTOP) to support digital literacy training, discounted computers, and project administration.

T-Mobile USA's New Broadband Network Will Cover 180 Million, Offer Speeds of 21 Mbps or 22 Mbps

T-Mobile USA says it expects to have 100 metropolitan areas in the United States covered by its upgraded high-speed wireless network, which should operate up to about 21 Mbps or 22 Mbps in the downstream direction, by the end of 2010.

The new HSPA-Plus network is a "3G" technology that operates at speeds very comparable to 4G alternatives, and might very well give T-Mobile the fastest national network, for at least a while, by the end of the year.

HSPA Plus will cover roughly 180 million Americans by the end of the year, T-Mobile USA says. The technology is already live in some regions, including the New York metropolitan area, the Washington DC suburbs, and will be coming soon to Los Angeles.

Oddly, many observers continue to insist there is "no competition" in the U.S. broadband market. Aside from cable operators and telcos, there now are going to be four mobile broadband networks in national operation by the end of the year, offering speeds equivalent to, or faster, than is available in many markets from terrestrial providers.

AT&T Now Sells Triple-Play Bundles With Mobile Voice, Rather than Landline Voice

AT&T now allows consumers to buy a $99 triple-play bundle that allows customers to choose wireless as their voice option, rather than a fixed landline voice service.

The not-unexpected move shows both the appetite end users have for such packages, as well as AT&T's decision that now is the time to put more emphasis on gluing wireless users to the landline services, and less emphasis on using broadband and television to slow the rate of wireline erosion.

That isn't to say the original impulse is no longer important. It remains important for many customers. But the new bundles reflect the growing demand for wireless voice in triple-play bundles, rather than fixed line voice service.

AT&T "U-verse Choice" bundles start at $99 a month for three AT&T services, including U-family; U-verse High Speed Internet Pro (up to 3 Mbps downstream); and a choice of AT&T Nation 450 wireless voice or U-verse Voice 250 home phone.

Other packages featuring faster broadband speeds and more wireless or home phone calling minutes or more TV channels for $127 to $150 a month.

Where U-verse service is not available, customers can bundle DirecTV service with broadband and voice.

No Inevitable Need for Usage-Based Pricing, AT&T CEO Says

Usage-based wireless broadband pricing does not necessarily mean an end to unlimited-use plans, says AT&T CEO Randall Stephenson. But it might mean plans that tie usage in some broad way to retail cost of service.

Consider the way mobile plans are sold today. There are some true "unlimited plans" for voice, data and text messaging. But there also are plans with buckets of usage that sell for various lower prices. That same content might well work for future broadband access plans as well.

PC-based wireless broadband users, for example, consume more bandwidth than smartphone users. It might therefore continue to be the case that unlimited use is more practical for smartphones than for PC dongle service.

At the same time, there also are existing precedents for fully unlimited use even for PC devices. Business-grade services such as T1 connections, for example, are unlimited-use services, but also sell for higher prices than typical consumer services.

Anthony Melone, chief technology officer at Verizon Wireless also suggested the U.S. wireless industry might not be able to wait 10 years for additional spectrum of the sort the Federal Communications Commission now hopes to entice TV broadcasters to part with. "They need to have something in the five-year time line."

Perhaps the most interesting comment is Stephenson's take on the continued role for fixed broadband capacity. Stephenson says wireless capacity issues would maintain a role for fixed-line connections "at least in his lifetime."

That suggests even Stephenson can envision a time when fixed connections are not nearly as relevant as they are today.

link to source

AT&T Will Use Yahoo as Default Search Engine on Motorola's Android-Based Backflip

AT&T apparently will launch the Motorola Backflip, its first Android device, pre-loaded with Yahoo, not Google, as the default search engine. The move is one more example of the growing complexity of value chains in the communications business, where access provider, handset manufacturer and application providers have distinct interests.

In a less-direct sense, the moves also are evidence that the days of the old Internet have changed. These days, there are lots of business deals and arrangements that shape user access to experiences on the Internet and World Wide Web, and which demonstrate that there are numerous "gatekeeper" roles now being played by a variety of participants.

Other Google apps, such as Gmail, Google Maps, Google Talk, Android Market and YouTube, remain.

It’s unclear if T-Mobile will ever have to do the same. It’s been about two years since T-Mobile USA launched its first Google phone, and it has yet to replace Google’s search on Android devces with Yahoo, despite having a similar exclusive partnership with Yahoo.

Last year, Microsoft got exclusive right to manage mobile search and advertising on Verizon’s handsets.

While Bing has been installed on several phones, including BlackBerry devices, Verizon’s Motorola Droid and HTC Droid Eris, come pre-loaded with Google’s search as the default.

Default settings still are seen as valuable because many users do not customize their application profiles on smartphones.

New York Times story

24 Carriers, 3 Handset Vendors Launch 3 Billion User App Initiative

A new consortium already including 24 global mobile service providers, Sony, Samsung and LG are creating a new applications community, allowing developers to create apps working across networks serving three billion people.

The new "Wholesale Applications Community" is a recognition of the role application stores now playing in fostering new applications and a great deal of the value of mobile broadband services.

América Móvil, AT&T, Bharti Airtel, China Mobile, China Unicom, Deutsche Telekom, KT, Mobilkom Austria Group, MTN Group, NTT DoCoMo, Orange, Orascom Telecom, Softbank Mobile, Telecom Italia, Telefónica, Telenor Group, Telia Sonera, SingTel, SK Telecom, Sprint, Verizon Wireless, VimpelCom, Vodafone and Wind, as well as Samsung, LG and Sony Ericsson are founding members.

Whether directly or indirectly, by design or by default, the new development community will compete with the Apple App Store as well as other app stores being created by Google and other device and application providers.

The real carrot for developers, if the initiative can iron out any number of important details, is access to a potential audience of three billion mobile users. In practice, discrete markets will be smaller, limited by natural language communities, for example. But it is an ambitious initiative showing access providers are not interested in forfeiting their roles in the application ecosystem to other handset or application providers.

Google Nexus One for AT&T?

A device that's almost certainly an AT&T-compatible version of the Google Nexus One has been approved by the Federal Communications Commission. The version now sold by Google works on all T-Mobile USA 3G spectrum. but not on all AT&T 3G bands.

Versions running on Verizon's CDMA air interface and also for Vodafone are expected at some point.

Both the Nexus One and the newly-approved phone are being made by HTC. And while the name of the product in question isn't given, its model number is: 99110. The model number for the current version of Google's smartphone is 99100. These are so close its seems very likely they are from the same series.

How Important is AT&T's U-Verse?

AT&T books something on the order of $124 billion a year worth of revenue. In the fourth quarter of 2009, AT&T booked U-verse revenues representing an annualized $3 billion. Some will note that this represents about three percent of AT&T's annual revenues.

By way of contrast, wireless already contributes about $56 billion annually. For the quarter, wireless revenues were $12.6 billion and wireless data was about $3.9 billion.

A rational observer might note that U-verse, AT&T's broadband and TV services effort, represents less revenue annually than mobile data does in one quarter. One might also argue that U-verse is not a revenue contributor that really "moves the needle" in terms of overall AT&T revenue performance.

One might also infer that a rational AT&T executive would not spend nearly the time on fiber-to-customer services that he or she would spend on wireless services, given the relatively small contribution U-verse can make to the overall bottom line, even if such broadband services represent the future of the fixed access business.

On the other hand, U-verse services have a much-higher growth profile, growing at about a 32-percent rate in the fourth quarter, where mobile revenues grew at about a nine-percent rate. Wireless data is growing at about a 26-percent rate.

Still, a rational executive might conclude that the gross revenue implications of high wireless data growth rates are vastly more signficant than equally-high growth rates for U-verse broadband services.

Some U-verse growth cannibalizes digital subscriber line revenue. And though video services have room to continue growing, that revenue source is fundamentally bounded by the total size of the U.S. multi-channel video business, where AT&T essentially takes existing revenue and market share away from cable competitors.

The wireline data business essentially can aim to grow to nearly 100 percent of the existing base of AT&T's existing huge installed base of wireless voice customers. AT&T has more than 85 million mobile voice customers.

The entire U.S. cable customer base is about 62.6 million accounts, and AT&T does not have a universal U.S. footprint. AT&T ultimately might cover 30 million U.S. homes out of 115 million total with its U-verse network.

If AT&T often appears to be a wireless company first and foremost, there is a good reason.

Is Verizon a "Wireless" Company as AT&T Is?

Is Verizon now a "wireless company with a wireline business"? Some might argue that is the case. Others might argue Verizon is a company with significant wireless and broadband businesses. At AT&T, it is easier to make argument that the company really now is a wireless company with wireline businesses.

Part of the reason for the difference is Verizon's decision to go to a "fiber to the home" access network, while AT&T has chosen a less-costly "fiber-to-neighborhood" approach. But those decisions are conditioned by the different potential customer bases in each telco's territory. AT&T is less dense, so FTTH is aq more expensive choice. Verizon also has more business customers, and fewer consumer customers, relatively speaking.

Analysts at Trefis, for example, estimate that mobility counts for 34 percent of Verizon's equity value, with broadband access contributing 36 percent. Services to larger businesses and organizations account for 17 percent of Verizon's equity value.

The consumer and smaller business revenue stream accounts for just 10 percent of Verizon's equity value.

At AT&T, wireless accounts for a whopping 51 percent of equity value, while Internet and television services account for 16 percent. Services to business customers, plus wholesale, accounts for 12 percent of equity value. The landline voice business accounts for 12 percent of equity value.

AT&T really is a wireless company with a wireline business.

VZW added 2.2 million net wireless subscribers in the last three months of 2009. Verizon remains the marker leader in size, quickly approaching the 100 million-sub mark with 91.2 million total mobile customers.

Total wireless service revenues remained flat quarter-over-quarter at $13.5 billion and were up only five percent year-over-year.

But wireless data revenues continued to balloon, increasing $200 million over the third quarter to $4.3 billion and 26.6 percent  year-over-year. Data now accounts for 31.9 percent of all service revenues.

Wireline service revenues fell $100 million quarter over-quarter to $11.5 billion, representing a 3.9 percent drop year-over-year. On the residential side, access line loss showed no signs of improving with Verizon posting a further 12.3 percent decline.

Verizon also is losing digital subscriber line accounts as it switches customers over to the FiOS service. Verizon lost 107,000 broadband lines, primarily DSL accounts, as its FiOS service grew by153,000 net new customers, including both broadband access and video customers.

FiOS now has 2.9 million TV subscribers (25 percent penetration) and 3.4 million Internet customers (28 percent penetration).

But wireline figures also were distorted by the addition of Alltel assets.

Wireless profit margins also are higher than wireline. Wireless had 45 percent margins in the fourth quarter of 2009, while wireline margins fell to 23 percent.

Apple iPad Will Use AT&T 3G Network

Apple's new iPad will use Wi-Fi and also AT&T's 3G wireless network. Users can opt for using Wi-Fi only, as iTouch users do, or can buy 3G service. AT&T offers a 250-megabyte plan for $15 a month, and an unlimited plan for $30, neither requiring a contract.

Those pricing levels more closely resemble an iPhone data plan than a data card subscription, which costs $60 a month, and typically requires a contract.

Some observers might say the iPad subscriptions represent a "higher-quality" or higher-margin revenue source than is typical for iPhone subscriptions, which also represent $30 a month in fees, because AT&T gets the traffic without having to factor in a subsidy for the devices.

One issue is how much data iPad users will consume. Users of the iPhone typically consume about 400 megabytes a month, where mobile PC card users tend to consumer about 2 gigabytes a month. A reasonable estimate is that iPad usage will fall somewhere between those levels.

AT&T Announces New Pricing for Unlimited Mobile Plans

AT&T has announced new unlimited plans across all of its devices. The new plans, available beginning Jan. 18, 2010, feature an unlimited voice plan for $70 a month. "Family Talk" customers (two lines) will be available for $120  a month.

Texting plans remain unchanged at $20 for unlimited plans for individuals and $30 for Family Talk plans.

"Quick Messaging Device" (feature phone) customers can buy unlimited talk plans for $70 a month and Family Talk customers can buy unlimited talk plans for $120 per month (two lines).

These plans also require a minimum of $20 per month for individual plans and $30 per month for Family Talk plans for texting or Web browsing packages for new and upgrading customers.

All smartphone customers, including iPhone customers, may now buy unlimited voice and data for $100 a month.

For smartphone customers on Family Talk plans (first two smartphones), unlimited voice and data is now available for $180 a month. Texting plans remain unchanged at $20 for unlimited plans for individuals, $30 for Family Talk Plans.

Beginning Jan. 18, 2010, existing AT&T customers can change to any of the new plans without penalty or contract extension