No Stopping the Mobile Internet Growth

[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.