Wireless Now Driving Broadband Business

It sometimes is hard to keep up with all the changes occurring in the communications business.

"In 2004, Wi-Fi was embryonic, the Motorola Razr was the hot phone, the BlackBerry was
a CEO’s email device, and Apple's most recognizable product was an orange-sicle laptop," says Bret Swanson, president of  Entropy Economics LLC.

The point is that Internet innovation hardly has been a problem, and Swanson is not convinced creating new rules about "packet neutrality" actually would have a neutral impact on potential for further innovation on the facilities side of the Internet business.

But one of the sometimes unnoticed changes is the huge role wireless now plays in the broadband access business. In fact, by some measures wireless now accounts for the majority of bandwidth consumed by U.S. consumers, for example. Not surprisingly, that suggests wireless bandwidth is where key growth will occur over the coming decade as well.

"Wireless carriers invested $100 billion in just the past three years, and the United States vaulted past Europe in fast 3G mobile networks," he says. "Americans enjoy mobile voice prices 60 percent cheaper than foreign peers."

"And the once closed mobile ecosystem is more open, modular and dynamic than ever," he adds. "We estimate that between 2000 and 2008, total U.S. consumer bandwidth grew from just 7.9 terabits per second to 717 terabits per second."

"On a per capita basis, consumer bandwidth grew to almost 3 megabits per second in 2009 from just 28 kilobits per second in 2000," says Swanson.

Between 2000 and 2008, total residential bandwidth grew 54 times; total wireless bandwidth grew 542 times; total consumer bandwidth grew 91 times; residential bandwidth per capita grew 50 times; wireless bandwidth per capita grew 499 times and total consumer bandwidth per capita grew 84 times, for a compound annual growth rate of 74 percent.

Swanson estimates U.S. Internet traffic will continue to rise 50 percent annually through 2015. Cisco estimates wireless data traffic will rise 131 percent per year through 2013. That means hundreds of billions of dollars of new investment will be required.

So the question must be asked: "if network service providers can't design their own networks, offer creative services, or make fair business transactions with vendors, will they invest these massive sums to meet (and drive) demand?" Swanson rhetorically asks.

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