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iPhone 3G Sales Spur AT&T Wireless Growth in Q4 2008
While iPhone activations result in an up-front hit to AT&T's earnings due to the subsidy provided to Apple, AT&T values new iPhone customers for their extended contracts at a higher average monthly rate than typical wireless subscribers. AT&T also reported that 40% of iPhone activations were to customers who were new to AT&T, a figure consistent with previous results.
Fortune analyzes how the iPhone has helped drive AT&T's wireless growth:
1. AT&T has activated 4.3 million iPhone 3Gs since its launch, 1.9 million in Q4 alone -- more than double its iPhone activations one year earlier.
2. The average revenue from Phone users is 60% higher than the typical AT&T customer -- thanks to that $30 per month data fee. Their heavy use of Web services helped drive AT&T wireless data use up 51.2% year to year, which as reader Jon in Brentwood, Calif., points out is not necessarily a good thing.
3. About 40% of the iPhone activations this quarter were new AT&T customers, either buying their first cellphone or switching from another carrier.
4. The churn rate -- the percentage of customers who drop AT&T's service -- among iPhone owners is significantly lower than the rest of the network, sharply reducing marketing costs.