WSJ: Apple iPhone puts strain on AT&T’s network

“The iPhone has made AT&T the cool kid on the cellphone block, bringing in lots of new customers all eager to play with the shiny new device,” Martin Peers reports for The Wall Street Journal. “Trouble is, the iPhone is expensive for AT&T, and not just because of the heavy subsidies on the initial purchase price.”

“Users of iPhone download games, video and other Web data at two to four times the rate of other smartphone users, according to comScore,” Peers reports. “Yet AT&T charges iPhone subscribers the same fee of $30 a month for data that it levies on other smartphone customers. And aside from restricting certain activities, like file sharing, AT&T doesn’t limit how much data can be downloaded.”

Peers reports, “But Web applications popular with iPhone customers are bandwidth hogs… As the proportion of customers with iPhones grows — 5.9 million 3G iPhones were activated in the last three quarters, 7.5% of AT&T’s total subscribers — the resulting growth in downloading and Web browsing will strain AT&T’s network. AT&T will need to add cell towers and spend more on the back-haul lines that connect the towers to the rest of the network.”

Peers reports, “The iPhone is the leading edge of a challenge for the wireless industry… Now, new customers are harder to come by. The question is whether new data revenues the industry is banking on — from Web-browsing and entertainment services — will be as profitable, at least as measured by return on invested capital. That looks doubtful.”

Full article here.

[Thanks to MacDailyNews Reader “JES42” for the heads up.]

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