ATT is rolling in money from iPhone, they should use it to build out their network.
That is an understatement. Nielson claimed that in April there were 6 million iPhones in the US, and some estimates say 2.4 million iPhone 3Gs units were sold in the US. Let's pretend there are 7 million iPhones due to upgrades, breakage, and other such events.
If they all had 3G data plans, that would be $210 million per month, but there are still some 2G iPhones out there, so let's imagine $175 Million per month. That's a bit over $2 billion per year.
Now the question is, how many smartphone users are there overall, and how many have iPhones? I have no way of knowing, but I'm pretty sure AT&T still sells plenty of non-iPhone smartphones, all with unlimited 3G data plans. Is it unreasonable to assume that AT&T has 20 million or more smartphone subscribers? That would be 1/3 of their entire subscriber numbers in 2007, so based on iPhone, Blackberry, and even WinMobile gains in the overall industry, I think it sounds like a reasonable guess.
20 million smartphones, all with data plans. $600 million per month, or more than $7 billion per year. Just for smartphones, just on data plans. Those same customers also have minutes plans, SMS plans, and other profitable add ons.
AT&T is claiming they will spend just shy of $18 billion in 2009 on upgrades. With more than a third of that cost being covered just by data plans, and the cellular industry making crazy profits on services like SMS I'm pretty sure they aren't exactly hurting for money. With SMS profits they will likely cover more than half of the upgrade cost they quote just from smartphone users. And just on data services.
These numbers get to be pretty striking when you find that AT&T's smartphone users comprise quite a bit less than half of their subscriber base. And many of those other subscribers are also buying into high profit items like SMS plans. And even data services, GPS services, etc.
Plus next year they will add a lot of subscribers from Centennial Wireless, and all the profits from those customers, some of which may upgrade to new phones with data plans as they live in areas where AT&T or Verizon service was weak and they couldn't get an iPhone, or a newer Blackberry.
AT&T needs to step up, and build out the network they should have had originally. There is no way they didn't see this coming when planning on adding the iPhone, they simply chose to ride the short term profits and deal with the issue later. Well 'later' ended up sooner than they hoped, and now they are doing what they always planned on doing:
- Playing catch up
- Sending out feelers in the press and at conferences to see how well they can get away with metered or restricted service
- Waiting for the above point to get people used enough to the idea that it will seem more 'natural' to them when it actually happens
Of course a lot of my math above is based on guessed numbers, including the numbers that come from Nielson and AT&T themselves, after all they are likely guessing and passing it off as fact as well. However I'm pretty sure the dollar figures for what AT&T makes is more than my guesses not less.