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Summary:

The rise of smartphones is bringing about massive changes in the mobile industry, according to data collected by researchers. Data revenues are moving on up and data usage is zooming at a time when voice and messaging sales have stalled for carriers.

iPhone 4S

The iPhones, the Androids, the iPads and hot-spots — whatever the device might be, one thing is for sure: the demand for mobile broadband is continuing to grow unabated. Two different reports, one from Akamai and another from Chetan Sharma show that we are using more mobile data in more places, and this is going to keep changing how we live, work, create and consume.

Chetan Sharma, an occasional analyst for GigaOM Pro in his State of Mobile Market 2012 report shares the following stats, that give you a sense of change.

  • Total Global Mobile (non-messaging) data revenues were about $159 billion in 2011.
  • The number of mobile operators with more than $1 Billion in yearly data revenues will touch 50 in 2012.
  • There will be 7 billion total global subscriptions by early 2013
  • US now accounts for 26 percent of the global data revenues.
  • 70 percent of the device sales in the US are now smartphones.
  • Mobile data will be 95 percent of the global mobile traffic by 2015.

The data from Akamai has even more interesting findings. For instance:

  • In the fourth quarter of 2011, the average measured connection speed for known mobile providers worldwide ranged from a high of slightly more than 5 Mbps to a low of 163 kbps.
  • In the fourth quarter of 2011, users at eight of the surveyed mobile providers consumed an average of 1 GB or more per month delivered from the Akamai Intelligent Platform.
  • The volume of mobile data traffic doubled from the fourth quarter of 2010 to the fourth quarter of 2011, and grew 28% between the third and the fourth quarters of 2011.

The shift to mobile data is causing quiet upheavals in the industry. For instance, the highly lucrative voice and messaging revenues are vanishing fast, and are being replaced instead by the over-the-top services such as Skype, Nimbuzz, Voxer and other apps such as WhatsApp.

Chetan Sharma succinctly sums it all up:

As a result of the data tsunami, there are two types of opportunities that are being created, one that takes advantage of the data being generated in a way that enhances the user experience and provides value and the other in technologies that help manage the traffic data that will continue to grow exponentially.

So far the carriers are responding to these shifts by experimenting with newer usage plans, and raising prices. But those are short term fixes, for the wireless carriers need to totally re-imagine their value proposition.

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  1. Hi Om: I agree with your emphasis that carriers must reevaluate their value proposition – boosts in revenue from increased data pricing can only buy so much time. Exponential increases in data usage, deriving from technology becoming exponentially faster [processing] and cheaper [cost], is proving to be a headache for carriers [and their customer service!] to keep up with. I believe that telecom is an industry poised for a magnitude of future disruptions deriving from mobile that will force fascinating paradigm shifts. Perhaps there will be a heterogeneous U.S. [mobile] network that all smart devices can connect to with ease in the next 10-15 years, or sooner? Blending the lines between being on a “3G”, “4G”, or WiFi” network to the point of just consistently being “connected” to a single network could be very beneficial. Although I wonder who would control such a network.

    1. Tsahi Levent-Levi kontrase Tuesday, May 1, 2012

      There’s actually a technology term coined for it: HetNet, which means that carriers will offer heterogeneous network access. This is starting by offloading and onloading from 3G/4G to WiFi, which is now being standardized.

      1. HetNet? Very interesting Tsahi I’m going to look into it to learn more – thanks for sharing.

  2. There is a reason why voice and sms have been slowing: VOIP
    The big problem for carrier is VOIP, last week we heard that Telia is blocking Skype, Telia is not the first to block Skype but definitely not the last, I am sure we are going to see many carriers that will follow Telia, if you look at the increase of mobile VoIP usage in the world you can understand the panic of the carriers, please look Allot MobileTrends Report: http://www.allot.com/index.aspx?id=3797&itemID=83869 ,you can learn that in the last few year VoIP users on mobile is more then doubling each year, don’t get confuse from the report that VoIP is only 5% of the data and 42% is YouTube/streaming videos, with streaming video you can play with packet priority and most of other data you can shrink it (and also play with packet priority) but VoIP is different story, you cannot shrink it or play with packet priority. So carriers need to invest money in Antenna tower, but it is too expensive and it takes a lot of time to built (so who is eating up data capacity –its VoIP, http://gigaom.com/broadband/whos-eating-up-atts-data-capacity-its-not-new-customers/).
    The carrier need to do what Verizon (if i am not wrong) did, they route the Skype calls as normal voice call and not as data, like UK carrier 3 did before few years ago, the other choices is to block the users or ask for extra money so most of the free users will not want to pay and the carrier reduce the network usage, one other solution that Skype just add in their web shop, product called Navoto GSM Gateway which route the calls through the voice channel and not on the data channel , carrier should locate the heavy VoIP users and offer them what verzion/UK 3 did… Please look company name onavo (onavo.com) in their FAQ you can lean a lot about shrinking data.

  3. Is there anybody here who will not pay for bleeding fast mobile data? Hell, I don’t have a DSL and would pay for nice little box to plug in at home. Two iPhones, an iPad, a laptop. My data costs are already more than my historical cell phone bills.

    Don’t weep for me Argentina!

  4. Pieter de Villiers Monday, April 30, 2012

    Hi Om, I have a lot of respect for you and GiGaOm’s reports, but as per my post yesturday that was not published. There is nothing in this report that validates your claim that SMS is slowing. SMS has always formed part of the Data graph and in your Ericcson data set still does, the net number of SMS is still growing and will continue to grow, the impact of OTT just means that while SMS on a net basis will continue to grow some of the P-2-P messaging will shift form the SMS channel to IP (OTT) channels, that said all reports indicate SMS will still grow for many years to come.

    1. The point is that growth of SMS is slowing. Growth can come at a slower pace while the number of messages and users continues to grow (more slowly) for a few more years.

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