“If the failed merger of AT&T and T-Mobile taught us anything, it’s how our new smartphone-driven lifestyle is driving mobile carriers to resort to extreme measures in order to slow sinking profits caused by the high cost of pouring data into our pockets,” Adam Clark Estes reports for The Atlantic Wire.
“t’s hard to feel sorry for the companies that impose an estimated 4,090 percent markup on text messaging services — very little data, very high price — but the bottom line doesn’t lie,” Estes reports. “The Wall Street Journal‘s Anton Troianovski pulled some numbers on Wednesday that quantify the race for wireless carriers to acquire rights to the airwaves that will help them deal with the more data-intensive requirements of smartphone applications: the web surfing, the email reading, the Spotify streaming and, yes, the YouTube watching. Troianovski explains that the wireless industry as a whole spent $24.9 billion in 2010 alone to invest in infrastructure that supports more data traffic.”
Estes reports, “Though you might not agree with the principles behind the AT&T-T-Mobile deal, it’s a little bit easier to sympathize with the idea that Apple grabbed mobile carriers by the shorthairs when it decided to launch the iPhone under its own terms. AT&T was the first to carry the iPhone, winning over fanboy customers but also sending its data infrastructure costs through the roof. And it’s only getting worse. One analyst cited in WSJ’s coverage of the trend estimates that AT&T’s profit margins will dip from 44 percent to 30 percent in the fourth quarter of this year. (That same analyst called the ascent of the iPhone ‘a wealth transfer from AT&T shareholders to Apple shareholders.’)”
Read more in the full article here.