Pareto Theorem Suggests Where and Why Millimeter Wave Spectrum Will be Useful

Pareto distributions--often colloquially referred to as the “80/20 rule.--are common in business, technology and nature.

Most of us are familiar with the 80/20 rule, which suggests that roughly 80 percent of value or outcomes are generated by about 20 percent of actions. Formally, it is the Pareto theorem. 

Virtually nobody would be surprised if told that the highest data demand in the U.K. mobile services market comes from areas such as London, Manchester or Glasgow, which are major population centers. 

What might be more surprising is that cell site data demand is about as disparate as the population data would suggest. According to Ofcom, the U.K. communications regulatory body, the largest 20 cities, containing 32 percent of the total U.K. population, cover about 2.4 percent of the surface area. 

source: Ofcom 

In fact, cell locations and data usage tend to show a Pareto distribution. Pareto would suggest that about 80 percent of mobile data usage is generated by 20 percent of the locations. 

source: Medium 

Pareto applies to most aspects of the connectivity, data center or computing businesses. It even applies to revenue generated by mobile cell sites. Half of mobile revenue is driven from traffic on about 10 percent of sites. Fully 80 percent of revenue is driven by activity on just 30 percent of cell sites. 

source: Ericsson 

Pareto also applies to mobile operator and telco revenue, profits, accounts and cost.  

source: Telco Strategies

That is clear in the distribution of customer accounts, ranked by revenue potential.

source: B2B International

source: Ofcom 

That Pareto distribution of data usage also shows where and why millimeter wave spectrum will prove useful. The skewing of data demand in a relatively small number of dense, urban areas suggests millimeter wave’s capacity advantages will prove most valuable there, as Verizon has argued. 

source: Verizon