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 Thursday, December 04, 2008

Phone companies are praying their golden goose -- revenue growth from wireless data services -- doesn't turn into a dead duck during the recession.

U.S. phone companies garnered $8.8 billion in wireless data revenue in the quarter ended Sept. 30, up 7.3% from the previous quarter and 37.5% from the year-earlier period, says Chetan Sharma Consulting. Research firm SNL Kagan's most recent forecast, pre-economic crisis, called for wireless data revenue to rise at an average annual rate of 16% over the next decade. Wireless data revenue accounted for 20% of all wireless revenue in the first half of 2008, up from 10% two years ago, says industry trade group CTIA.

The rapid growth in data services has been fueled by a wave of smart phones. Wireless firms continue to expand the reach of their third generation, or 3G, networks, which provide for fast mobile data speeds.

Phone companies rely on wireless data growth to offset slowing subscriber growth and falling prices for calls. With the economy worsening and job losses mounting, consumers have cut back on spending.

For the big four wireless service providers -- AT&T T; Verizon Wireless, co-owned by Verizon Communications VZ and Vodafone VOD; Sprint Nextel S; and Deutsche Telekom's DT T-Mobile USA -- the big question is whether wireless data growth stays solid in the teeth of a recession.

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Source: Cellular News.