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Wireless industry sees number of long-term contracts fall for first time

NEW ORLEANS — U.S. consumers have had their fill of expensive, contract-based phone plans.

Figures from T-Mobile USA this week, added to earlier reports from other companies, indicate that the U.S. wireless industry lost subscribers from contract-based plans — the most lucrative ones for phone companies — for the first time in the first quarter. The industry default, they account for the vast majority of revenue at the big phone companies.

The seven largest U.S. phone companies, representing more than 95 percent of the market, lost a combined 52,000 subscribers from contract-based plans in the January-to-March period, according to a tally by the Associated Press. The companies have a combined 220 million devices on such plans, accounting for about two-thirds of the total number of devices.

Since nearly every adult and many teens and children already have phones, there's little room for growth anymore. But subscribers are also flowing to cheaper, no-contract plans, which showed an increase of at least 2 million in the first quarter.

The industry is also adding millions of nonphone devices, like smart energy meters. These so-called "machine-to-machine" connections usually carry very low monthly fees, on the order of a few dollars per month.

For example, AT&T subscribers on contract-based plans pay an average of $64.46 per month, while other AT&T customers pay an average of $11.52 per month.

T-Mobile's report comes on the last day of the U.S. cellphone industry's annual trade show in New Orleans. At the show, companies talked about various ways of boosting their business outside phones. For instance, AT&T launched a home security and automation business, and the head of its wireless business, Ralph de la Vega, said the company is getting closer to launching family data plans, which would allow the sharing of one "bucket" of data among various devices and family members. That could encourage people who already have a smartphone to get a tablet with data service as well. Verizon Wireless has already announced that it is introducing such plans this summer.

The Associated Press's tally of subscribers excludes some contract-based machine-to-machine connections reported by T-Mobile. The company also added 435,000 prepaying subscribers of all kinds in the quarter, which was its best result in more than two years for that category.

Wireless industry sees number of long-term contracts fall for first time 05/11/12 [Last modified: Friday, May 11, 2012 8:02pm]
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