For example, in the March quarter, AT&T added only about 187,000 postpaid subscribers, down by more than 40% over the same period last year. The story at Verizon was also similar with postpaid net adds declining from 1.3 million in the year ago quarter to only about 880,000 last quarter. Connected Devices Show Promise What is promising is that tablets accounted for almost all of the postpaid net adds for AT&T last quarter. As the wireless industry gets more saturated, AT&T is slowly shifting its focus from adding new subscribers through smartphone subsidies to increasing the demand for more data devices within its existing subscriber base. The nascent market of connected devices is growing at a tremendous rate as demand for non-smartphone data devices such as tablets, e-readers, M2M devices, and telematics is on the rise. In fact, one of the major reasons why wireless penetration has exceeded 100% is because of the growing demand for these connected devices. This bodes well for AT&T, which is currently the market leader in the connected device category, with more than 40% market share. However, these are early days and the equation could change in coming years, with Verizon also getting serious about this segment as evidenced by its acquisition of Hughes Telematics last quarter. Data Share Plans Therefore, AT&T will look to maintain its lead by fueling demand for these connected devices. The launch of AT&T's data share plans will make it more convenient for users to add more data devices to the carrier's wireless network. Being able to use multiple devices in the same data bucket can potentially decrease the per device costs for a family as well. At the same time, AT&T will be able to make more out of each user who now has more than one data device. Moreover, since the data consumption of most of these connected devices is low, it will help shore up AT&T's service margins. In fact, if data share plans see good uptake rates, it will give AT&T an opportunity to decrease the subsidies it offers on smartphones. This will give a positive boost to its margins which have taken a hit due to expensive subsidies offered on smartphones. But AT&T needs to get the balance right. While the shared plans would reduce customer churn as well as allow more number of mobile devices to connect to the network, thereby earning the carrier more revenue than earlier, it may be passing up on the opportunity of charging more per device and increasing its ARPUs even further.
However, the idea here is that as 4G LTE becomes the new standard, subscribers will eventually need to jump to higher tiers as they increasingly use data intensive applications and connect more wireless devices to the Internet. Further, since the shared data plans offer unlimited voice calling and texting, we expect AT&T's move to act as a hedge against the falling voice and SMS usage and to support the declining voice ARPUs in the long run. Click here to find out how a company's products has an impact on its stock price at Trefis. Like our charts? Embed them in your own posts using the TrefisWordpress Plugin. This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.