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No Stopping the Mobile Internet Growth

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[qi:___3g] By now you all know that despite the spotty coverage and expensive rate plans, I am a big fan of Mobile Internet. Down economy or not, I want my 3G wireless connection. Apparently I’m not the only one. According to a survey of 50,000 wireless customers in the U.S. and five major Western European mobile markets, nearly 71 percent of wireless users are likely to use some kind of wireless data services. These countries collectively have about 200 million mobile data users and more than half expect to increase their mobile data usage. The survey was conducted by Nielsen on behalf of telecom equipment maker, Tellabs.

Average intended usage increase over the next 24 months U.S. Europe
Current users 58% 55%
Non-Users 27% 28%

Take a look at how the new users will likely use the networks: mobile Internet access, MMS and photo-sharing are the top reasons people are going to sign up for the data services.

What that means is that mobile operators should expect more network traffic and hence bigger stress on their respective backbones. I’m sure that like me, many of you are frustrated by slow networks and their choppy performance. If more and more people come onto the network, wireless backhaul networks are going to be put under further stress.

As I have explained in the past, the backhaul networks that feed into wireless broadband are a big opportunity. Infonetics Research predicts that demand for backhaul-related gear is going to exceed $10 billion by 2011, as today’s T-1 based infrastructure is going to be replaced by fiber and microwave links. Infonetics predicts that in the near term, microwave-related sales are going to grow 83 percent by 2011, from $3.9 billion in 2007. That’s good news for all sorts of companies, including Ericsson (s eric), NEC, and a gaggle of startups such as Exalt Communications, which recently introduced a 5 GHz radio with 440 Mbps throughput.

Intended use amongst non-users U.S. Europe
Mobile Internet 49% 34%
MMS 38% 39%
Uploading Photos 34% 27%
Software/App Downloads 30% 30%
Email 28% 32%

The carriers — despite the economic downturn — don’t have much choice other than to spend on their data networks. For AT&T (s T) and Verizon (s VZ), mobile data represented 10 percent and 12 percent, respectively, of their overall revenues for the fourth quarter of 2008. Unless they spend big to keep the data users happy, this gold mine is going to dry up real fast.

Judging by the reaction to my break-up with the iPhone, there are a lot of people who are ready to divorce AT&T’s service and switch to an alternate carrier. In a down economy, when carriers are struggling to find growth, that’s a risk they can’t afford.

10 Responses to “No Stopping the Mobile Internet Growth”

  1. Om,

    To add to your charts, another interesting stat I found from an industry survey was that about 50% of users intend to have an web capable mobile device by 2010. Once that happens, the followers will push the counts even higher. I wouldn’t be surprise to see a similar adoption curve as what we saw with the tethered web.

  2. Om,

    You’re right, I really like the chart information. I love the mobile web, even though it’s slow and choppy, just because it’s almost every where with me, I love it!

    I’ve recently switched from AT&T to T-mobile, it’s economical.

  3. i really do not think it will develop as most tech oriented bloggers are predicting. most see phones being used for more and more. what i expect is that as 3G/4G becomes more and more popular on laptops/netbooks people will start to move there mobile computing back to more traditional computing devices. the mobile computing on a smart phone will become redundant once the laptop works anyplace a cell network is available.

  4. MMS is no big deal from a network traffic point of view, and you don’t need 3G to do it here in the UK. You figures for MMS don’t really add up with realistic usage either.

    Data demand will stress more than the backhaul- nodeB uplifts such as second carrier deploymeny will be required too. This isn’t too hard, but it adds to the workload.

    You’re also missing out some of the biggest traffic sources- streaming and p2p. Streaming is going to be very big as some segments of customers move away from mp3s and more towards lastfm/shoutcast delivery of music.

  5. Om, you are coming to India shortly. You want even get proper 2G, forget about 3G. The Indian government has really screwed up big time for 3G. Hope they understand sooner.

  6. @Ian

    I think the implications are pretty clear – more connectivity is going to cause a serious rethinking of our lifestyles and how we consume information. I think the rise of the new kind of phones is only going to cause a major re-focus on a new class of apps and usage scenarios.

    on the non net-neutrality: well unfortunately there is little one can do about this, except hope that the competition remains fierce in the marketplace. That is why I think we need Sprint to succeed in whatever it is doing. The mobile interest isn’t going to play by the rules of wired net, but hopefully competitive pressures would keep bringing change to the market.

    More thoughts later.

  7. What are the implications, if there is no stopping the mobile internet? If folks no longer bother to log in to wifi hotspots when travelling since they are always connected via 3-4G? Or more extreme they go to work and instead of plugging in the the corporate network, work as if they are a remote user off their mobile broadband. Far fetched? I already know some non-techies who equate internet with their verizon pc card, and don’t understand the difference between that and connecting to their DSL link via wifi.

    Given the different physical deliver model of mobile internet, it would seem that this will also impact the types of applications adopted by end users, and how software is developed to deal with the constraints of mobile networks. To say nothing of the net neutrality concerns…if mobile internet adoption really takes off, wireless service providers are likely to use the inefficient medium as an excuse to enforce non-network-neutral policies, and will be able to do so more credibly than the traditional broadband service providers. We’re in for a fascinating transition to mobile computing. Hopefully what the public considers to be the internet won’t get too mangled in the process.

  8. Curtis

    I don’t think they under estimated the demand – they are trying to be fiscally stingy and well then the iPhone happened. That shows sometimes even Bell operators and PSTN companies can’t stop the future from happening. They try, but it just happens. I think it will be interesting to see how it all shakes out in coming months.


  9. @Om,

    I think that you’re spot on, which makes me wonder how did the carriers underestimate demand for mobile broadband devices and services? I think if there were a richer offering of devices (ie…laptops/netbooks, smartphones, MIDs, indoor wireless teleservices, etc.) the carriers would be seeing even better wireless data revenue growth.

    My $.02.