AT&T now has 40 million smartphone subscribers, who helped generate an additional $1 billion in data Relevant Products/Services-plan revenues, a "remarkable statistic," the company's chief financial officer, John Stephens, said Tuesday. The company sold 5.5 million smartphones in the first quarter of this year, with 30 percent of those customers using 4G-capable devices.

The boast was part of a bright outlook for the nation's largest phone company and second largest wireless service carrier as it released first quarter numbers. Overall, the company's revenues increased 1.8 percent, or $575 million, to $31.8 billion compared with the same quarter last year. Wireless data revenues grew by 19.9 percent.

Phone Contracts Lag

The bulk of new monthly postpaid wireless contract plans added during the period, however, about 180,000 of 189,000, were tablet users, while new phone contracts lagged. The Associated Press noted that Verizon Wireless added 501,000 new contract subscribers during the quarter, spelling trouble for AT&T's efforts to catch up to its biggest rival.

However, AT&T did outpace Verizon on sales of Apple's iPhone for the quarter a year after losing its exclusive deal to carry the device. Sales were down for both carriers, but AT&T sold 4.3 million iPhones, the bulk of its 5.5 million smartphones, though down sharply from 7.6 million iPhones in the previous quarter. Verizon sold 3.2 million iPhones in the first quarter, down from 4.2 million in the last quarter of 2011.

Technology analyst Jeff Kagan told us it's too soon to attribute those falling numbers to anticipation of the next iPhone model, due this summer.

"Next version weakening happens the quarter before," he said. "We are still a couple quarters away. This is not a natural weakening. It means something different. It means the market for iPhone customers is slowing," Kagan said.

(Apple on Tuesday night reported iPhone sales of 37.04 million, only slightly above last quarter's 35.1 million, but double the 18.6 million of the second quarter of 2011.)

AT&T said its residential and business Relevant Products/Services wireline accounts revenues were $14.9 billion, down 0.8 percent compared with the same quarter of 2011, but losses were offset by "improved consumer and business strategic services revenue trends and execution of cost initiatives."

Triple Play Beats DSL

AT&T's U-Verse Internet access and TV service grew to 6.2 million customers in the quarter, including 4 million TV subscribers, up by 200,000. Those buying triple-play or quad-play packages made up three-quarters of U-Verse subscribers, which more than compensated for the loss of DSL subscribers who buy only broadband Internet access, the company said. The average monthly bill for U-Verse triple-play customers rose slightly to $169 year over year.

"AT&T earnings have risen, but its wireless subscriber growth is slowing," Kagan said. "Their U-Verse is still a strong part of the mix, but the regular local phone business is shrinking. There are changes in the wireless industry we will start to see in coming years. This was expected. No trend can run forever. Not even wireless."