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The mobile data explosion: myths and reality
|12 ноября 2010|
Rather than facing a capacity crunch, mobile network operators are at risk of creating a capacity surplus if they push ahead quickly with LTE roll-out.
Back in the 1990s, the global IP carrier UUNET put forward and re-iterated the view that Internet traffic was doubling every 100 days. Its views were taken extremely seriously and disseminated widely. This – as it turned out wholly erroneous – prognosis probably did more than anything else to create the Internet backbone construction bubble that burst along with the dotcom bubble in the early part of last decade.1
We are now seeing some reasonably scary claims about an impending capacity crunch in wireless networks. These generally forecast annual growth rates in excess of 100%. For example, the Cisco Visual Networking Index – the basis of many a mobile data traffic model – indicates a 108% CAGR for worldwide mobile data traffic between 2009 and 2014, and 106% for Western Europe. This data is, in turn, used to justify substantial network investment and the introduction of tiered tariffing to control traffic.
On the evidence so far, rather than facing a capacity crunch, mobile network operators are at risk of creating a capacity surplus if they push ahead quickly with LTE roll-out. As in the period of fastest fibre backbone build-out, there is a further risk of asset overvaluation – especially concerning spectrum.
Good data about mobile traffic is hard to come by, but all the hard evidence we have seen so far from Europe indicates far slower growth than this – perhaps 35% growth in Europe – and points to a further slowing of the rate of growth over at least one more year.
Here we consider six common myths, and the reality behind them.
Myth: Mobile data traffic will grow at rates of above 100% per year for at least the next three years.
Reality: Mobile data is still dominated by a type of traffic that shows only moderate growth: mobile broadband for the large screen (mainly PCs, but also tablets and similar devices). The slowdown in growth is particularly marked in the sub-segment that generates a disproportionate share of that traffic: home PC users using mobile services as a fixed-line substitute. If fixed broadband prices continue to fall faster than those for mobile broadband, then it is far from inconceivable that the volume of this type of traffic will actually fall; it is already flat in some markets. The dominance of large-screen data means that overall traffic doubling in any of the next three years is virtually impossible.
Myth: Smartphones are spearheading the explosive growth in mobile data.
Reality: Smartphones can and do generate a lot of traffic (measured in gigabytes not megabytes), but the greatest and growing proportion (probably between 80% and 90%) of this traffic is routed over Wi-Fi and fixed broadband networks because most of it is generated indoors. The volume of smartphone data that is actually routed over the cellular network is growing very fast, and 100% growth per year is not an unreasonable guess. However, increases in device penetration account for more of this growth than any increase in average usage, and in absolute terms the traffic volume remains tiny compared with that of large-screen mobile broadband. Only in the most-advanced markets is it approaching 10% of total data. Generally, it is nearer 5%. This proportion will grow, but not nearly enough to make total mobile data traffic double.
Myth: Operators need to introduce indoor solutions to manage the explosion.
Reality: Most consumers have one already (the Wi-Fi enabled fixed broadband home hub) and the mobile network operator has almost no influence in the matter. Consumers use it because it is simple to use, is cheaper and outperforms the cellular network. Mobile has already lost this battle.
Myth: Operators need to introduce tiered tariff plans for smartphones in order to control explosive growth.
Reality: Tiered pricing for smartphone data is an over-reaction to a potential congestion problem that is insignificant in scale compared with that created by mobile large-screen data. In fact, that may be a kind way of looking at the surprisingly well-publicised decisions to introduce it. In all likelihood, any decision has as much to do with operators’ wish to preserve a premium for small-screen data over large-screen data as with any genuine concern over network congestion.
Myth: The value of transporting a byte is collapsing.
Reality: This was emphatically true up until the end of 2009, but the rate of decline has slowed recently. If operators manage to preserve the premium for small-screen data, the value of transporting a byte of data could actually rise as the mix of large-screen and small-screen becomes more beneficial to the operator. (There’s a parallel with the Internet bubble here: the misplaced, mistimed and downright misleading fretting over flat-rate dial-up Internet services when the bulk of traffic was already migrating to broadband.)
Myth: LTE will change the picture.
Reality: LTE could indeed change the picture if it is implemented too early. But it could do so for altogether the wrong sort of reason, a reason that is all too familiar in the history of telecoms: excess capacity. Mobile broadband demand is slowing and home smartphone data has been all but lost to the fixed operator. Excess capacity could drive another major devaluation of the value of transporting a byte. As a result, operators may be driven to offer huge, inexpensive data plans for mobile broadband not by any intrinsic demand for the service (average usage currently shows no growth at all), but simply by the need to get some kind of return on investment.
Rupert Wood, Principal Analyst