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AT&T today reported first-quarter earnings of $2.5 billion and sales that were largely unchanged from the year before, at $30.6 billion — but the flat sales mask the gains made in its wireless business, which grew to account for 45 percent of revenues. In short, AT&T is betting big on wireless through the sale of phones with data plans (it added 1.9 million wireless subscribers), prepaid plans and an emphasis on providing wireless connectivity for the Internet of things.
For example, the carrier has a deal to provide connectivity for the Kindle (s amzn) and one with Jasper Wireless to help it provide wireless connectivity for myriad partners. I’ve spoken with Glenn Lurie, the executive in charge of At&T’s machine-to-machine efforts, who was optimistic that margins would be higher in emerging devices such as the pictured photo frame. Earlier this year AT&T said it was providing connectivity to everything from dog collars that broadcast a pet’s location to pill bottles that will remind you to take your meds (and even tell on you if you don’t).
The irony here is that M2M connectivity in many ways represents the dumb pipe future that AT&T is so worried about — it’s not providing anything to its partners but the bits. On the call, AT&T executives explained that the number of bits sent via the network are high-margin bits and the machine-to-machine clients have very low churn. Total wireless operating margin rose for the carrier to 44.5 percent.
AT&T also said it had improved its wireless network (GigaOM Pro sub req’d) in New York and that dropped calls in the region declined by 6 percent. For everyone on the wireless network, AT&T said its HSPA network upgrades are boosting download speeds by 32-47 percent in places where AT&T has deployed fiber backhaul. Readers, has your AT&T experience improved? Let us know in the comments.