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The Mobile Traffic Deluge & the Implications for the Communications Industry 2011
New Paradigm Resources Group, Inc. (NPRG), July 2011, Pages: 54
This study analyzes and projects the growth of Mobile Data Demand.
While there has been considerable discussion and forecasting indicating that demand growth over the next five years will be very large, we were not satisfied that the methodologies of consensus type forecasts were sound or well-explained.
Correcting Errors in Consensus Mobile Data Forecasts In particular, we were troubled by the assumption by some forecasters, including prominently the widely-cited Cisco “Visual Networking Index” (VNI), that data demand growth for the Mobile Internet would parallel the pattern of growth experienced in the late 1990s by the original Internet. We developed an original methodology for analyzing Mobile Data Demand growth – from the bottom-up.
This bottom-up approach is based upon analyzing the future traffic flows through individual Cell Sites.
This methodology takes into account the unique combination of factors that are propelling demand growth at an unprogrammed rate.
These factors, discussed in the later sections of the Study, include:
- Proliferation of new mobile device types
- Proliferation of mobile data, imaging, and video-based apps
- Changing user behavior; expanding use of apps requiring greater bandwidth
- Sharply declining cost curves
- Evolution of networks to unprecedented mobile broadband capabilities
- Growth in the number of multi-device subscribers
- Increased number of users substituting wireless for fixed access
Key Conclusions
1. Consensus forecasting of the growth of mobile data demand, as illustrated, for example, in Cisco's VNI projection, severely understates the likely growth of demand to 2015 that is revealed by our bottom-up approach to studying demand.
2. We project, based on an analysis of device and apps growth and a bottom-up examination of the impact on cell site traffic and RAN (radio access network) and Backhaul requirements, about a ten-fold greater potential increase in mobile data traffic by 2015, compared with the Cisco VNI projections.
3. A cell site-based, bottom-up study of traffic growth is uniquely revealing for the future of mobile communications from a true strategic perspective. It is like taking an x-ray that reveals swollen organs and a dangerous metamorphosis taking place deep within the body of the mobile industry.
4. Tellabs has recently raised the specter of the mobile carrier industry entering an era of loss-making in the very near future. Our bottom-up study reveals an even more serious issue, which is the Sustainability of the Industry's Business Model.
5. The Carrier Model has been failing in the area of Value Creation for at least the past decade. Now it stands under challenge from a vast and growing number of companies – particularly in the Device and Applications worlds – that are mammoth creators of value, that are poised for extremely rapid growth and that cannot afford to let the Carriers stand in their way.
6. The consensus under-forecasting may be creating a false sense of stability regarding the future of the Carriers and masking how a severe conflict with the interests of the Device and Apps providers is likely to develop.
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