Torrid Growth in Mobile Data Traffic

AT&T reports that data traffic on its network increased 40% in 2011.  The change probably stems from the modest number of its customers using a smartphone and the dampening effect of high prices charged for data traffic.   In contrast, globally data traffic is growing at a much higher clip.  Cisco forecasts data traffic on smartphones grew at 150 Megabytes per month in 2011 and it will accelerate to 2.5 Gigabytes per month in 2016.  This torrid pace reflects customer’s thirst for good video on high end mobile devices; smartphones, tablets and laptops. 

 

In the 2012-2016 period Cisco says demand will accelerate for streaming video, high definition video, for more devices within the same account and for more devices substituting mobile broadband for fixed-line broadband.  Cisco also sees more time spent consuming data on these devices, and expanded uses of applications for medical, location-based, financial, and commerce purposes.

 

This avalanche of data traffic would be impossible to sustain were it not for new efficiencies that pack more information into the same bandwidth, as found in Long Term Evolution (LTE) or 4th Generation (4G) technologies.  Likewise it took courage for the Federal Communications Commission to removing bandwidth from microwave pathways and TV stations that were not using it to the consumer’s advantage.  That bandwidth now gets a strenuous workout every second.

 

Only LTE/4G can deliver the massive bandwidth consumers want over the next few years. Today, there is competition among several major carrier groups who started erecting 4G networks.  Verizon, AT&T, and Sprint/Softbank have tapped the deep pockets needed to offer 4G service, although Verizon is a quantum leap ahead and that gives it a value/price advantage enjoyed especially by customers who travel.  

 

Sprint has plenty of bandwidth but it was obsessed with how to handle its quirky Clearwire and Nextel investments.  Softbank plans to put cash on Sprint’s balance sheet, enabling a quick 4G rollout.  Metro PCS/T-Mobile could have the funds needed if Deutsche Telecom elects to double down on its US beachhead (T-Mobile).  When Sprint and T-Mobile deploy 4G in force, consumers will benefit from stiffer competition and lower prices than today for 4G data traffic.

 

Alan Daley is a retired businessman living in Florida and following public policy from a consumer’s perspective.

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