AT&T's Net Dips, but iPhone Adds Customers

AT&T Inc.'s quarterly earnings dipped 1.2% as revenue from traditional land lines fell faster than the company could cut costs, but its wireless business added a record number of iPhones to its network.

Total wireless subscribers increased by two million during the third quarter to 81.6 million from the preceding quarter—a larger jump than in the first two quarters of the year. There were 3.2 million new activations of Apple Inc.'s iPhone, helped by the June release of the faster iPhone 3G S and a price cut on older versions.

The appetite for the iPhone and other data-hungry smart phones has boosted AT&T's wireless revenue. In the latest quarter, AT&T said the average monthly bill for its contract customers rose 3.8% to $61.23 at a time when other carriers have been slashing prices.

"What we see is people signing up for data plans in record numbers," Ralph de la Vega, the company's wireless chief, said on a conference call. AT&T's revenue from wireless data-services—what customers pay for Internet browsing on cellphones as well as sending wireless emails and text messages—jumped 34%.