Smartphones at Tipping Point as Carriers Turn to Data Revenue

More than half of Americans are now carrying a smartphone—and their hunger for mobile Internet access will only grow, leading to more tiered data plans as wireless carriers search for new streams of cash.

In a new market survey, relying on data from carriers, industry consultant Chetan Sharma reports that smartphones for the first time accounted for more than 50 percent of all mobile phones in the U.S. last quarter.

In another first, Sharma reports that new subscribers accounted for less than 5 percent of the service providers’ revenue for the first time last quarter. That’s a big change: Sharma reports that at the beginning of the 2000s, new subscribers were about 15 percent of carrier revenue.

Add those two forces together—a saturated market and the unstoppable march of powerful devices—and you can see why carriers will continue to rejigger their subscriptions to draw more money from wireless data access. An example is the shared plan, introduced so far by Verizon and AT&T, which charges increasing prices based on tiers of data use per month.

And that hunger for mobile data access will only continue to increase as smartphones take over more of the device market. Sharma says this represents the rise of the “gigabyte generation.”

“The smartphone data consumption at some operators is averaging close to 850 megabytes per month. As we move into the 1 gigabyte range along with the family data plans kicking in, you can expect the data tiers to get bigger both in GBs and dollar amount,” Sharma reports.

Carriers can’t just rely on data access as a source of new revenue forever. As we’ve reported before, there’s a move by some carriers to explore new services that customers might pay for—in some ways, this represents the carriers acting like the “over the top” app developers who have been reaping rewards in the smartphone era by selling digital services like streaming music subscriptions.

T-Mobile is tackling this opportunity with Bobsled, a cross-platform messaging service that works on mobile devices and traditional computers—even if you’re not a T-Mobile subscriber.

The Bellevue, WA-based carrier needs to do something: It’s in fourth place nationally, and has endured eight straight quarters of subscriber losses, not to mention a CEO change and a failed merger with AT&T.

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