Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Sprint Corporation (S), Verizon Communications Inc. (VZ), AT&T Inc. (T): Three Reasons Your Cell-Phone Bill Is Rising

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.

Sprint Nextel Corporation

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 and is written by Demitrios Kalogeropoulos.

Fool contributor Demitrios Kalogeropoulos owns shares of Apple. The Motley Fool recommends and owns shares of Apple.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!