Mobile data service fees help Bolster profit

Verizon Wireless, the nation’s largest cellphone service, on Thursday reported that in the first three months of the year fewer customers joined its service compared with the same period last year. Adding subscribers is essential to carriers, as they can rake in hefty amounts from charges to phone bills. But the predicament for carriers is that because most people who want a cellphone already have one, their subscriber growth has been anemic. That was the case for Verizon, which said it added 734,000 subscribers in the first quarter, 16 percent fewer than a year ago. Verizon still managed to post a profit of $1.7 billion for the quarter, largely because of the fees that customers pay to watch videos, browse the Web or play music over Verizon’s network on their smartphones and tablets. Revenues generated from mobile data services were $6.6 billion, up 21.1 percent. “We built momentum coming out of 2011, and our results show that we continue to execute in the key growth areas of our business,” Lowell McAdam, Verizon chief executive, said in a statement issued with its financial report. Mobile data use is growing fast. Cisco, the networking company, recently published a study showing that mobile data more than doubled in 2011, and it predicts that by 2016 it will have grown by a factor of 18. In light of the slowdown in subscription growth, Verizon will most likely be introducing new methods to continue to expand its revenue from mobile data, said Chetan Sharma, an independent telecom analyst. He said it was inevitable that Verizon would soon introduce shared family plans for mobile data, which would be similar to sharing voice minutes and text messages among multiple cellphones. Mr. McAdam has previously said the company would introduce shared data plans this year. Mr. Sharma added that Verizon still can potentially make plenty of money from data from existing customers who have yet to get smartphones. Currently 47 percent of Verizon’s wireless customers use smartphones, according to the company. Verizon is leading the industry’s race to build out fourth-generation LTE networks, which are designed to efficiently carry more traffic and, by delivering data faster, tempt customers to use their data allotments faster. Verizon says its LTE network now covers 230 markets, or two-thirds of the United States population. It plans further expansion this year. AT&T, its biggest rival, has L.T.E. deployed in 35 markets. To meet the rising demand for data, all the carriers say that they need more spectrum, the government-rationed radio waves that carry phone calls and wireless data. To get more radio waves, Verizon in December made a deal to buy spectrum licenses from a consortium of cable companies including Time Warner, Comcast and Cox Communications, for $3.6 billion. T-Mobile USA and Metro PCS, smaller wireless carriers, have urged the Federal Communications Commission to block the deal, claiming it would put too much spectrum in the hands of the nation’s largest carrier. Verizon on Wednesday said it would sell some of its current spectrum if the F.C.C. does not block the deal. Craig Moffett, an analyst at Sanford C. Bernstein & Company, said he believes this is a sign that Verizon is close to reaching an agreement with the F.C.C. He said it was likely that the agency was requiring Verizon to unload some of its spectrum before it could obtain the licenses from the cable companies just to ensure it did not have too much. Robin Nicol, a Verizon spokeswoman, said that if the company fails to get the spectrum from the cable companies, it will have to repurpose some of its existing spectrum to work with 4G L.T.E. and buy additional spectrum in order to have enough capacity.