The Mobile Traffic Explosion

If Cisco's projections for mobile data consumption are anywhere near correct, some changes in end user retail pricing for access, or some other new revenue streams based on such traffic, will be needed. Smartphones represent only 13 percent of total global handsets, but 78 percent of total handset traffic.

And if the predictions for tablet growth are anywhere near correct, demand is going to grow even more than projected for smartphones. In 2010, three million tablets were connected to the mobile network, each generating five times more traffic than the average smartphone.

Mobile data traffic will increase 26-fold between 2010 and 2015, as a result. In fact, there might be 788 million mobile-only Internet users by 2015.

To be sure, bandwidth and cost-per-bit do not scale linearly. In the global backbone network, additional capacity can be purchased at lower prices "per-bit" of capacity. New fourth-generation networks are helpful in the access network, where most of the actual cost of end-to-end service lies. But it stands to reason that an order of magnitude increase in bandwidth consumption, with matching investment in facilities, must be accompanied by some increases in retail pricing, even if the increases are not linear.

The likely way such increases could be avoided or limited is if significant new revenue streams can be created that are not the result of end-user subscription fees.

The Mobile Traffic Explosion and its Impact