Phone Giants Fight to Keep Subscribers

With millions of people snapping up the iPhone, AT&T, the exclusive carrier for the popular phone, should be quite pleased with the stream of revenue it can expect from customers. But AT&T, the biggest telecommunications company in the United States, has a problem: analysts say consumers are dropping traditional landlines faster than expected. The company, which still gets 32 percent of its revenue from its landline business, reports its second-quarter financial results today and is expected to talk about how its traditional phone service is contracting. AT&T is not the only company facing a changing environment in the communications business. All of the major telecommunications companies — AT&T, Verizon and Sprint Nextel — are figuring out how to make more money from customers as they spend more time sending text messages or browsing the Web on their wireless phones, rather than talking. At the same time, as the American cellphone market gets saturated — nearly 85 percent of American consumers already own a mobile phone — phone companies are finding that growth is slowing. With more options, mobile phone buyers are also becoming more selective about the calling plans and the type of phones they want, making the market even more competitive.