Ring tones not making ka-ching tones

U.S. cell phone giants will earn billions from IM and downloads. But revenue still has hang-ups.

Two U.S. cell phone giants say subscribers are using handsets to connect to the Internet more than ever, but Net-related revenue remains relatively low.

Verizon Wireless and Sprint are each on pace to earn about $1 billion this year from customers who download games and ring tones, use wireless broadband connections, and send and receive instant messages, the companies said. Although that's a significant improvement over 2003, this year's pace is below what people expected when such products and services debuted years ago.

Nonetheless, carriers say it's encouraging that Verizon Wireless is seeing an average of 20 billion instant messages a month so far this year and Sprint has seen data revenue rise 33 percent. Industry executives assert that the inexpensive Net services now gaining popularity are "gateways" to wireless broadband and other more lucrative offerings.

"Wireless data represents a bigger and bigger percentage of our revenue," said Verizon President Lawrence Babbio Jr. "We see growth in that area."

Most popular among the new services are games, says Sprint, which claims to lead all other U.S. carriers in that area. Between January and April, Sprint customers bought 3.5 million games, priced between $3 and $15 each, compared with the 5 million sold all of last year.

"We have widened our industry lead," a Sprint representative said.

Verizon Wireless' 2-year-old Get It Now service has never seen higher traffic, the company reported earlier this week. Get It Now uses Qualcomm's BREW technology to sell ring tones, games and business applications. Verizon is the only carrier in the United States selling BREW-based games. Between January and May, 34 million purchases were made through Get It Now, nearly matching last year's overall tally.

Another of the more popular services is instant messaging, specifically the current versions of cell-phone-oriented IM programs from MSN, Yahoo and America Online. Some 125 billion IMs have been sent over the Verizon network since December, the carrier said.

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