When Sprint bought Nextel in 2005, it saw its average data revenue per user plummet as it absorbed Nextel's voice-centric subscribers. At first glance, Verizon Wireless appears to have a similar problem if it acquires Alltel, an operator working mainly in small and rural markets.

Alltel, however, is in better shape than it initially appears. Alltel's monthly data ARPU comes in at $7.50, or 13% of service revenues, while Verizon's retail data ARPU is $11.94 per month, or 23% of revenues. That's a big gap, but a look by M:Metrics into what kinds of services are being used on the Alltel network shows a lot to be positive about.

M:Metrics found that in areas such Web browsing, content downloads and instant messaging, Alltel was only slightly behind and in some cases ahead of Verizon when adjusted for Verizon's subscriber base. What's more, Alltel appears to be growing much faster in those areas. The number of Alltel subscribers accessing information from mobile browsers jumped 18%, while the number of IM users shot up 20% between March and April, compared to 5% and 10%, respectively, for Verizon.

“Alltel has quite a bit of velocity,” said Mark Donovan, senior analyst for M:Metrics.

Much of the momentum is due to Alltel's Celltop platform, a portal installed on most of its BREW phones in the last year. That helped fuel a 60% increase in Q1 data ARPU year-over-year, a number that — while impressive — is still in line with growth most operators are seeing. The likely explanation is that most of it is in short message service (SMS), which accounts for most user data purchases. But SMS can take a carrier only so far. Bucket plans and service penetration eventually will stall SMS growth. Meanwhile, Alltel's data services growth may be in niche applications now, but they are the very apps the industry hopes will supplant SMS.

MOBILE CONTENT GROWTH

Three-month average ending April 30

ALLTEL WIRELESS

News via browser
1,156,692

Increase
18.2%

News via download
694,859

Increase
14.1%

IM
655,719

Increase
19.9%

Watched video
584,272

Increase
28.2%

Source: M:Metrics