Cisco Projects 13-Fold Increase in Mobile Data Traffic by 2017

Wi-Fi and fixed network offloading is increasing faster than expected. Thirty-three percent of all traffic was offloaded in 2012, and will increase to 46 percent in 2017, Cisco said. Forecast traffic growth through 2017 would have been higher -- up to a 74 percent CAGR -- without offloading, Cisco said. Offload has been one of the ways service providers have used to throttle high-bandwidth users on mobile networks -- and demand will only continue to increase, said Thomas Barnett, Cisco director-service provider marketing. “More and more hotspots are out there,” he said. “How people charge for them is certainly up to the service provider.” AT&T, for instance, reminds its data plan subscribers that “mobile data is unlimited over [Wi-Fi].” Wi-Fi hotspots will be particularly important to tablet users, since 70 percent of tablets are purchased without an accompanying data plan, Barnett said. “That’s a revenue stream that providers are certainly not capitalizing on at this time, so any way that they can capture some of that revenue would be to their advantage. We may see more and more of that, but it definitely has to be affordable to the end-user."

Sandvine found in its own research that about 9 percent of traffic on Wi-Fi and other fixed-access networks currently comes from smartphones and tablets being used “in the home,” said Dan Deeth, a marketing analyst for the company that helps ISPs manage Internet traffic. By 2015, about 20 percent of all fixed-access traffic will come from mobile devices, Deeth said. That increase will come as a result of tiered mobile data plans, he said. “Consumers are very aware of caps on their usage -- they're constantly looking for ways to offload their data,” Deeth said. “You could make the argument that it’s consumers, more so than operators making that switch.” Increased smartphone and tablet data offloading is unlikely to cause overloads, Deeth said.

The U.S. government will need to pay attention to offload growth to determine whether there is enough spectrum to manage the resulting demand, said Mary Brown, Cisco director-government affairs. Cisco is interested in whether the FCC’s upcoming 5 GHz band rulemaking, set to launch in a few weeks, could yield additional spectrum for Wi-Fi, she said. The FCC also be taking comments on using the 3.5 GHz band, which could provide good spectrum for small cell uses, Brown said. Spectrum in the 600 MHz band and the TV white spaces will not work for Wi-Fi, since next-generation Wi-Fi technology will use channels that are 80 MHz wide, she said. “There simply isn’t enough spectrum in the 600 MHz band to accommodate Wi-Fi,” Brown said. “Whatever radio ecosystem grows up in the white spaces or the 600 MHz guard bands is probably going to be something other than Wi-Fi."

The traffic growth Cisco is forecasting will be driven by an increasing number of mobile users and mobile connections. By 2017, there will be 5.2 billion mobile users -- up from 4.3 billion at the end of 2012, and there will be more than 10 billion mobile-ready devices and connections by that time, up from 7 billion total devices and connections in 2012, Cisco said. Smartphones alone will account for nearly 68 percent of the data traffic in 2017, despite only representing 27.4 percent of total mobile devices by that time, Cisco said. Non-smartphones will represent slightly more than half the mobile connections in 2017 -- down from 75 percent of connections in 2012; laptops will represent 2.6 percent, while tablets will represent 2.3 percent. An additional 16.5 percent of connections will be machine-to-machine connections, Cisco said.

The forecast increase in network offloads and decreasing presence of laptops on mobile networks resulted in Cisco releasing a slightly more conservative forecast than last year, said Arielle Sumits, the forecast’s principal analyst. Last year, Cisco projected an 18-fold increase in mobile data traffic between 2011 and 2016, with 22 percent of all mobile data traffic projected to be offloaded in 2016 (http://xrl.us/boe9hn).

Smartphone penetration growth has led to a faster-than-expected increase in 4G connections, which themselves generate a “disproportionate amount of mobile data traffic,” Cisco said. While 4G-capable devices will comprise just 10 percent of all devices by 2017, those devices will generate 45 percent of the traffic -- up from 14 percent in 2012. In North America, 4G devices will comprise 31 percent of all mobile connections by 2017, Cisco said. Although the increase in 4G connections has occurred faster than expected, Cisco’s forecast shows it will take seven years from 4G’s introduction for it to gain a 10 percent connection share -- the same amount of time it took 3G to do the same, Barnett said.

The growth in 4G connections underscores the need for the U.S. government to continue fostering an environment that fosters 4G networks, since “our future data needs are in large measure still going to be served by 4G networks,” said Brown. The FCC can best do this by continuing on with its planned 600 MHz spectrum incentive auction, since “that appears to be the most immediate and important opportunity to deliver spectrum to 4G networks,” she said. The government needs to also continue to examine whether spectrum in the 1755 MHz band can be made available to 4G networks, “either on an exclusive or shared-use basis,” and “carefully consider” the best use of spectrum on the 3.5 GHz band to support small cells, Brown said.

Smartphones are expected to generate a larger portion of the monthly traffic in North America by 2017 -- 52 percent, up from 49 percent in 2012, Cisco said. That’s despite carriers’ increasing use of tiered data plans and a trend away from unlimited data plans, Cisco said. The company’s research team surveyed two major service providers over a three-year period, and found the percentage of tiered data plans increased from 4 to 55, and unlimited data plans dropped from 81 percent to 45 percent over the same period. The shift “has not, however, constrained usage patterns,” with the average monthly data usage per device on a tiered plan increasing from 425 MB to 922 MB over the surveyed period -- a growth of 117 percent, Cisco said. Still, tiered plans have managed to constrain usage by the top 1 percent of mobile data users. The top 1 percent generated 16 percent of all the traffic at the end of the surveyed period, down from generating 52 percent of the traffic at the beginning of the survey.