U.S. Mobile Data Growth Steady Amid Recession

Femto Hub Blog (Feb 2 2009) Americas

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  1. By Josh Adelson

    Recent Q408 earnings announcements from Verizon and AT&T offer a useful snapshot of U.S. operator economics in a slowing economy.  For both companies, wireless data continued to be the bright spot. Verizon reported data revenue growth of 41%, and AT&T reported 51%, year-over-year revenue .  This in turn is driven by strong trends in consumer device preference.  For Verizon, smart phones, including the newly-launched BlackBerry Storm, represented 37% of all phone sales.  AT&T sold 1.9 million iPhones, and doubled their year-over-year 3G data card sales.  Financial analysts consider mobile data market penetration still to be low, implying that these trends are likely to continue.

    For these companies overall, the picture is less rosy as the growth in wireless is offset by declines in wireline.  Both companies are expected to have flat-to-declining capex spending through 2009.

    What does this all mean for femtocells?  First, it should be acknowledged that declining capex is obviously a challenge for any new project. On the other hand, with data usage growing so rapidly, femtocells must be seriously considered as a way to grow capacity.  The U.S. market has recently become a hotbed of femtocell activity, with Sprint and Verizon both launching commercial services, and AT&T likely to follow.  It is interesting that the services so far have been voice-centric.  This is natural considering that voice coverage is an important issue in the U.S. market.  However, the recent trends in data usage, combined with capex constraints, may have the effect of shifting the emphasis in femtocells away from voice coverage and shine a stronger spotlight on data coverage and capacity.  The shelter built for one storm could prove even more valuable for the next one on the radar.

    As an interesting sidebar, within their landline businesses, the only growth segment is in high-speed residential services: AT&T U-Verse and Verizon FiOS.  So even as wireless trends are creating potential need for femtocells, the wireline infrastructure will be improving to better support them.

    Josh Adelson is Director of Product Marketing at Airvana

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