An increase in high-volume/low-value prepaid customers and low-volume/high-value smartphone users affected U.S. carriers' Q2 numbers.

Verizon Wireless and AT&T had strong quarters given the economy and remained the top two carriers in the U.S., based on number of subscribers, while Sprint and T-Mobile USA remained in the third and fourth spots despite stumbles. Each carrier has rolled out a major smartphone recently to attract high-value consumers, while more consumers turning to prepaid offerings increased both revenue and churn, especially for Sprint with its Boost Mobile.

"Sprint has a large number of Boost customers, and it was still losing a lot of customers in the second quarter -- 1 million postpaid subscribers -- and when you add Boost, you're getting a higher churn in general," said Tole Hart, Philadelphia-based research director at Gartner.

"With the Virgin Mobile USA acquisition, Sprint is looking to consolidate or crystallize where the two brands stand and work with each to fit different segments," he said. "T-Mobile had a low number of net ads, because it has been under attack from value plays from Boost, MetroPCS and Leap/Cricket.

"Verizon and AT&T had decent quarters considering the economy -- they're holding their own."

Verizon Wireless reports that the launch of the BlackBerry Tour has been successful so far, while AT&T continued to ride the iPhone's momentum for a successful quarter.

"Verizon is a big BlackBerry promoter, because it's their main smartphone, and they will keep pushing BlackBerry until they bring other smartphones to market such as the Palm Pre next year," Mr. Hart said.

While Sprint benefitted from its prepaid business, its "Simply Everything" all-you-can-eat plan and the Palm Pre, it continued to get stung by the Nextel factor.

"Sprint is losing people from Nextel, but they're trying to hold onto customers by bringing smartphones to the market," Mr. Hart said. "The Palm Pre didn't seem to have a great overall impact on Sprint, as they still lost a million net ads, but if they didn't have it, it probably would've been worse.

"It is a rallying point for them, giving people a reason to come into Sprint stores," he said.

T-Mobile also didn't add many net postpaid customers.

In the first quarter of this year, T-Mobile had 415,000 net adds and 325,000 net adds in the second quarter, down from 600,000 or 700,000 net adds per quarter last year, according to Gartner.

"They've also been impacted by value plays from Boost, MetroPCS and Leap/Cricket," Mr. Hart said. "The myTouch 3G [on Google's Android operating system] could help T-Mobile -- all of these carriers have their big smartphone they're promoting.

"It certainly can't hurt, but it's a wait-and-see -- it's supposed to be a nice phone, but we haven't seen much advertising for it in general," he said. "The G1 was not a wild success, but it was certainly not a failure -- it was a little bit better than in-between.

"It helped them -- it was a good smartphone for the average consumer."

Verizon Wireless
Verizon Wireless claims that for the 19 consecutive quarter it led the wireless industry in customer loyalty.

Verizon Wireless operates a wireless voice and data network serving 87.7 million customers, making it the No. 1 carrier in the U.S.

Churn is a measure of customer loyalty and represents the percentage of customers who leave their provider in a given period.

Verizon Wireless reported the lowest customer churn, or turnover, in the second quarter of 2009: 1.37 percent for prepaid and postpaid and 1.01 percent taking just postpaid customers into account. AT&T reported the second-best results, with 1.49 and 1.09 percent respectively.

"Verizon Wireless continues to achieve both solid customer growth and strong profitability," said Nancy Stark, spokeswoman for Verizon Wireless, Basking Ridge, NJ.

"In the second quarter, Verizon Wireless continued to lead the wireless industry in all key metrics, including retail net adds, lowest churn, both total churn and retail postpaid churn, profitability, revenue, data revenue, ARPU and cost efficiency based on cash expense per customer," she said.

"Churn improved sequentially over the first-quarter, but was up slightly year-over-year primarily due to cyclical factors of some disconnects in the business segment."

AT&T
AT&T reported a substantial step up in retail postpaid subscriber additions and continued growth in wireless data revenues.

The iPhone 3GS launch drove financial results that were generally in line with the first quarter of 2009.

AT&T's second-quarter revenues totaled $30.7 billion, net income attributable to AT&T was $3.2 billion and cash from operating activities totaled $7.9 billion.

AT&T reported a 1.4 million net gain in total wireless subscribers to reach 79.6 million, up 6.7 million over the past year, making it the No. 2 carrier in the U.S.

The carrier notched 1.2 million retail postpaid wireless net adds, the company's best-ever second-quarter total -- up 29 percent from results in the year-earlier quarter and up 32 percent versus the first quarter of 2009. It claimed a record-low postpaid subscriber churn of 1.09 percent.

There were more than 2.4 million iPhone activations in the second quarter, reflecting a record-setting iPhone 3GS launch, according to AT&T.

Including the iPhone, the carrier reported a 3.5 million-plus increase in 3G integrated devices in service -- handsets with QWERTY or virtual keyboards in addition to voice functionality.

AT&T attributed its 37.2 percent increase in wireless data revenues to $3.4 billion to growth driven by messaging, Internet access, access to applications and related services.

It was the sixth consecutive quarter with a year-over-year increase in wireless postpaid subscriber ARPU (average monthly revenues per subscriber), up 2.3 percent to $60.21.

"AT&T was helped out a great deal by the iPhone, which helped with net ads," Mr. Hart said. "IPhone users helped AT&T increase data usage, and their data ARPUs are growing as voice ARPUs decline."