Why Mobile Data Is Such a Cash Cow for Carriers

Verizon and AT&T reported their quarterly earnings in the last week, and they told nearly identical stories: Both are making a lot of money just from mobile data — the fees customers pay to reach the Internet over their networks. Some numbers shared by AT&T make it clear why.

Ralph de la Vega, chief executive of AT&T Mobility, said during Tuesday’s earnings call that about 60 percent of smartphone customers were paying for tiered data plans, and of those, 70 percent were choosing the higher-priced plans. For its tiered data plans, AT&T charges $20 for 300 megabytes of data, $30 for three gigabytes or $50 for five. (A gigabyte is 1,000 megabytes). Verizon’s data plans are similar: $30 for two GB, $50 for five GB or $80 for 10 GB. de la Vega’s statement suggests that the majority of people on AT&T’s tiered plans are paying at least $30 for three GB, or more. And it turns out that three GB is far more than most people use. A recent Cisco study showed that the average amount of data used per smartphone last year was 150 MB. And this year, Cisco predicts that 100 million smartphones will surpass just 1 GB of usage. An estimated 500 million smartphones shipped in 2011.