Americans are sending bigger checks to their cell-phone service providers lately. Major wireless companies reported collecting more cash from their subscribers over the second quarter — as they have been for years now.
Here’s a look at the trend in average monthly revenue per customer for three wireless giants:
| Company | 2010 | 2011 | 2012 | 2013 Q2 |
|---|---|---|---|---|
| Sprint Corporation (NYSE:S) | $55 | $57 | $61 | $64 |
| Verizon Communications Inc. (NYSE:VZ) | $126 | $135 | $144 | $153 |
| AT&T Inc. (NYSE:T) | $62 | $64 | $65 | $66 |
Source: Company financial filings. Verizon figures are on a per-account basis, with many accounts including more than one user.
We can blame our smartphone addictions for this bounce. Adoption of those devices has been spiking over the past few years to the point that almost all of the new customers that AT&T Inc. (NYSE:T) won last quarter were smartphone users, which now account for 73% of its subscriber base. For Sprint Corporation (NYSE:S), that figure has climbed to 79%.
Of course, all of this increasing penetration has been good news for the wireless business: Smartphone-wielding users tend to pay twice as much per month.
Fancier phones
But at least part of that extra payment is going to fund ever-fancier phones. The latest models usually come with higher sales prices, but also with higher costs to wireless companies.
Sprint Corporation (NYSE:S), for example, has blamed the popularity of Apple‘s iPhone for driving up its equipment costs and revenue lately. Ditto for AT&T Inc. (NYSE:T). The company’s phone costs are spiking, which drove down operating income last quarter.
Higher data charges
Rising data fees are also helping push cell-phone bills into record territory. Sprint Corporation (NYSE:S)’s $10 premium data charge was the key reason it was able to book such a big boost in wireless revenue last quarter. Verizon Communications Inc. (NYSE:VZ)’s data-sharing plan also carries a much higher average cost, and has grown to 36% of the subscriber base.
More expensive networks
Still, wireless companies have a pretty good reason for charging extra for data services: It’s expensive to maintain and expand a fast wireless network. Sprint Corporation (NYSE:S) spent $3.7 billion on its wireless network last year, $1 billion more than it spent in 2011. And Verizon Communications Inc. (NYSE:VZ) just boosted its capital spending outlook for the year, to about $16.5 billion as it tries to prep for higher demand for wireless data consumption.
Bottom line
Wireless companies can expect revenue to keep creeping higher as they convert the rest of their subscriber base to smartphones. They also stand ready to reap the benefits from spiking demand for more powerful devices and quicker download speeds, suggesting that cell phone bills still have a way to climb.
The article 3 Reasons Your Cell-Phone Bill Is Rising originally appeared on Fool.com and is written by Demitrios Kalogeropoulos.
Fool contributor Demitrios Kalogeropoulos owns shares of Apple. The Motley Fool recommends and owns shares of Apple.
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