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Summary:

We will soon be consuming nearly one gigabyte of data every month on our smartphones, thanks in large part to rapid improvements in technology and networks. This is a similar growth pattern we saw on wired broadband; the faster the speeds, the more data we consumed.

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It might not seem obvious today, but we will soon be consuming nearly one gigabyte of data every month on our smartphones, thanks in large part to rapid improvements in technology and networks. This is a similar growth pattern we saw on wired broadband networks; the faster the speeds, the more data we consumed.

According to London-based market research firm, Informa Research, an average smartphone (globally) consumes a mere 85 megabytes of data every month. Nearly 13 percent of world’s phones qualify as smartphones, and these phones are generating two-thirds of all traffic on mobile cell networks, Informa notes. For instance, so far in 2010, an average iPhone user consumes 196 megabytes of data each month, while an average Android phone consumes about 148 MB per month.

Informa predicts that over next five years, there is going to be a staggering 700 percent increase in data consumption every month. Actually, I think they’re being conservative, and it might not take that long. T-Mobile USA CTO Neville Ray turned me on to the concept of a Gigabyte phone earlier this month when we were chatting about industry developments.

A Gigabyte phone is one that pushes monthly data consumption to a gigabyte or higher, mostly because people use the wireless web more frequently. Sharing photos, watching videos, sending tweets or checking Facebook messages: These phones are powerful Internet terminals and easy enough to encourage usage.

We’re likely to cross the Gigabyte-per-month data consumption relatively soon, especially in the U.S. Why? Because of several factors influencing the U.S. mobile market:

  • The introduction of next generation wireless broadband technologies at scale by end of 2010. Sprint, T-Mobile, MetroPCS and Verizon will have started introducing their WiMAX, HSPA+ and LTE based networks.
  • The availability of new smartphones powered by dual core processors, which have longer battery life, better screens and bigger memory footprints.
  • The rise of more and more web services and apps written specifically for mobiles.

There are some known events that are going to further  impact of data consumption in the U.S. For instance, the introduction of the iPhone on Verizon, a superior network, will likely encourage more usage of wireless web.

Another factor going in favor of the U.S.: higher smartphone penetration. Last week, Dan Hesse, CEO of Sprint, told me that by the end of this year, nearly half  Sprint’s customers will have smartphones, many of them powered by Android. Even BlackBerry, the wireless web laggard has introduced new devices (BlackBerry Style and Touch) that are going to encourage more web usage because of a better web browser.

Juniper Research, a Hampshire, UK-based research firm, notes that carriers in North America will see their revenues from non-voice services almost double — to $96.7 billion by 2015, up from $56.0 billion in 2010 — driven by consumer adoption of data-hungry devices, such as smartphones and tablets.

This increased data consumption obviously has its own impact – both good and bad.

  • Cisco is predicting there will be 3.6 exabytes of data a month on mobile networks by 2014.
  • Carriers are expected to spend about $117 billion by 2014, up 41 percent from 2009 expenditures of $83 billion on last mile backhaul, according to In-Stat, a market research firm.
  • By 2014, more than half of the capacity in the North American last mile backhaul will be dedicated to LTE.

The move to wireless is a big shift, something I’ve been predicting and writing about since 2005. It’s comparable to the introduction of the early incarnation of DSL technologies back in the late 1990s. Then came cable broadband and higher speeds, and just like that, data consumption jumped drastically on wired connections.

It spurred sales of faster desktops; remember we needed processors and memory to keep up with the data tsunami that was coming down the broadband pipe. Better processors, beefier machines and faster networks: They often add up to increased usage.

For carriers, this is a heaven-sent opportunity. While they were unable to introduce per-bit metered pricing on broadband networks, they can now use the somewhat valid excuse of “limited” spectrum and the huge cost of build-out as a way to introduce metered pricing. Guess what? One by one, they’ve all started to shank the much-loved flat rate monthly plan in the back. (Check out our handy mobile broadband buying guide.)

Nevertheless, we must all get used to it, especially as we start to move toward a future where we consume a gigabyte per month on our phones.

Related GigaOM Pro Content (sub req’d):

  1. How many wired US households today are gigabyte data per month homes?

    Clearly services like Netflix Streaming have probably pushed a number of homes over the edge and pushed up the average bandwidth per home, but just curious on how many homes and what percentage of homes consume more than a gigabyte of bandwidth per month today.

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    1. Andrew MacDonald Tuesday, November 2, 2010

      Im currently using around 35 gigabytes per month on my home broadband connection, but we’re a very data-intensive house, with 3 laptops, 3 desktops, 3 new Apple TVs, an iPad, 2 iPhones and we do a lot of video calling too.

      Thankfully they haven’t imposed metered broadband here in the UK yet – atleast not with my broadband company – so we’re not paying the price for all that data use….. YET!

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    2. I think Cisco had said in a recent researchthe average broadband connection is now generating 14.9 GB of Internet traffic per month, up 31 percent from last year when it was 11.4 GB per month.

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      1. Good link to the report.

        I see the average, but looking further down in the report to the section on Top User Analysis, you see numbers such as the top 1% of connections consumed 20% of the bandwidth and the top 10% consumed 60 percent. These top end users skew those averages.

        Which still leaves me with the question of how many and what percentages of wired homes consume over 1GB per month?

        @Andrew – looks like your home is probably in that 10% (if not 1%) range.

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  2. Om – if you assume that (relatively) cheap mobile broadband continues, then it’s easy to see Gigabyte-level demand emerging. But as you point out, the carriers (with Verizon in the lead) would like nothing more than to convert to metered-pricing. So what’s the supply/demand curve, above which the average mobile broadband consumer will not pay? (I’d guess well below Gigabyte levels with metered pricing).

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    1. TimB

      Great question and still not clear as to what is the threshold for what is the top end of pricing for consumers.

      I speak from my own individual point of view: in my view is that most of us are comfortable paying $40 or so for what carriers used to call “unlimited” data aka 5 Gb/month. If you factor in today’s applications and assume growing popularity of mobile video, that might be just enough but anything more means overages.

      I am not seriously worried about my bills just yet (since I have been grandfathered in to unlimited plans), but my biggest worry is that one day I will get hit by a big bill. I think a lot of consumers are going to get a sticker shock as well.

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  3. A “700 percent increase in data consumption every month” means 7^12 or 13.8 BILLION times as much data just one year from today. In two years there would be more data flowing monthly to each handset than exists in the world today. Fix your innumeracy, please!

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    1. Yeah, that obviously makes no sense. When I see such an annoying lack of attention to detail from a writer I usually, whether consciously or not, think much less of the article at hand.
      More to the point, if the intention was 700% over the entire 5-year period, that doesn’t impress me in the least. If it was meant to be a yearly increase, I think it’s a ridiculous prediction. I just can’t find a way to slice it that makes this prediction useful whatsoever. I hate it when people toss numbers in the air to make it seem like they got something to say, when it’s all pretty meaningless.

      One final note: using a so-called “concept” like a “Gigabyte phone” feels very childish to me. Seriously, it’s just a user (not even the phone, really) that uses over a gigabyte a month. You really can’t leave it at that and gotta call it “the concept of a Gigabyte phone”?

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      1. Nadav

        Before you start flinging anger like mud, it would be good to pause and read the sentence twice. I think the same thing can be said two different ways.

        That said, I am not sure your comment is adding anything to the argument.

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    2. Marco

      ” that over next five years, there is going to be a staggering 700 percent increase in data consumption every month”

      It means, over five years there is going to be a 700 percent increase in per-month data consumption.

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      1. Andrew MacDonald Tuesday, November 2, 2010

        LOL. You put him right in his place Om, and rightfully so, too. His comment was totally unjustified, in my opinion.

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      2. Understood now, but it would be more helpful to rephrase a sentence like this to avoid confusion. Something along the lines of:
        “…in five years’ time, there is going to be a staggering 700 percent increase in monthly data consumption”
        Or even drop the ‘monthly’ altogether, as it is a more or less constant rate that we are talking about, and not a monthly quantity.

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      3. So the actual numbers are projected to be:
        47.6% annual growth rate (= 3.3% monthly growth rate).

        Roughly in line with other estimates:
        http://blogs.broughturner.com/2010/02/overestimating-mobile-data-growth.html

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  4. Perhaps he mean a 7% monthly increase, which would stack up to 1.07^12 = 2.25. Meaning data traffic to the handset would be a bit more than double a year from now.

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    1. Andy

      Look at my response to Marco’s comment. I hope it clears up the confusion.

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  5. The average data number for Android seem really low. T-Mobile tells me I use 200 MB/month on average while working mostly from home and using landlines almost exclusively (weird, eh? F$@*& T-Mobile coverage…).

    3 days of hot-spot sharing in a Chicago hotel room (less kinky than it sounds) brought last month’s data total to 2.3 GB. Worst part was T-Mo reps couldn’t give me a running total, so I had no idea how close I was to the 5 GB soft cap.

    How can the average Android user, who seems to spend most of every day uploading photos with the mobile Facebook app, use just 147 MB/month?

    Yeah, I know that it’s weak to argue from personal experience, but the gap is huge.

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  6. I take issue with your characterization that Verizon has a “superior” network. Superior to whom? AT&T has the fastest mobile broadband network, hands down. Additionally, AT&T offers consumers something they can’t get at Verizon, the ability to talk and text/browse at the same time. Verizon’s network can’t offer that – you have to pick one or the other.

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    1. Are you a AT&T marketing person? You can split hairs about HSPDA+ and EVDO Rev x – but tell the fine folks of New York and San Francisco (like Om) about AT&T’s superior network and see how long it takes them to stop laughing.

      Simultaneous talk and text isn’t the “must have” feature that Luke Wilson and AT&T want to tell us it is either, but….Sprints’s Wimax/CDMA and Verizon’s (soon) CDMA/LTE will remove that advantage.

      Disclaimer: I’m a Sprint guy – Verizon’s network is good – Sprint’s is comparable, and AT&T is in no position to throw stones at anyone.

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      1. I agree with Debra. The article states that …”by end of 2010, Sprint, T-Mobile, MetroPCS and Verizon will have started introducing their WiMAX, HSPA+ and LTE based networks”…. does this imply that AT&T will not? Or is it a convenient omission by the author? Then later to state that Verizon has a superior network…..suspicious reporting there! I believe the question at hand will be once the major carriers upgrade to LTE, and we begin seeing these “gigabyte phones”, will such claims about Verizon even exist? … especially if a Verizon customer gets out of 4G coverage range and down revs to EVDO? What will their expectations be and what will that experience look like?

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      2. @CRUSS – “does that imply that AT&T will not?” Mostly, yes. On 9/16 – AT&T’s CEO of Operations, John Starkey, said that AT&T will launch commercial LTE service in mid-2011. He also said they are readying a nationwide HSPA+ upgrade for “later this year”. T-Mobile has already deployed HSPA+, Sprint has already deployed WiMax, and Verizon is not backing off from their “year-end” LTE launch.

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  7. [...] out of consumers’ wallets. In short, the demand for data, or what Om yesterday called the Gigabyte phone, won’t come cheap. That’s good for carriers and is even good for consumers who are [...]

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  8. T-Mobile in the Netherlands announced last year March that their iPhone customers were consuming on average 640MByte per month. Given the current traffic growth rates for smartphones, I wouldn’t be too surprised if that number is now close to 1 Gigabyte.

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  9. [...] I wrote about the concept of a Gigabyte phone, something Ray talked about extensively in a conversation with me. “We’re seeing now the [...]

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  10. [...] tiered data plans. Om recently spoke with Neville Ray, T-Mobile’s CTO, about the plans and Om’s vision of the Gigabyte phone. Ray agreed that it’s just a matter of time, saying, “You’re seeing some of these [...]

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