How Fast Can Bandwidth Demand Really Grow?

There is a running debate in the communications ecosystem about just how fast bandwidth demand might grow, either in the wireless or untethered spheres. A decade and a half ago, most executives and analysts might have suggested growth of 100 percent, or more, each year.

For a couple of reasons, those forecasts proved too high. There is a "law of large numbers" effect, for starters. Any new development or trend that is very popular, but starting from a low installed base, will show "big growth" numbers on a percentage basis.

Just as certainly, growth slows over time as the installed base becomes very large. So it is that annual year over year bandwidth growth now is more on the order of 40 percent than 100 percent. That's still a big percentage, meaning that, in the aggregate, bandwidth consumption doubles about every two and a half years or so.

But user behavior is highly responsive to pricing signals. People already have learned how to offload much traffic from their mobile devices to fixed networks (untethered use), since the per-biut prices of mobile bandwidth are significantly higher than rates for fixed network bandwidth.

There are other ways to shape demand, though. A higher use of unicast video (people watching YouTube video, for example) creates more demand, compared to any multicast method. That is why point to multipoint delivery of audio and video traditionally has been in "broadcast" mode.

So, over time, suppliers or users can shape demand by consuming more video in multicast mode than in unicast mode. One might argue that consumption is shifting to on-demand modes, but store and forward is a very efficient way of meeting much of that demand.

In other words, suppliers can broadcast content, but users can use DVRs to capture and store that content for later on-demand, or "near on demand" viewing. Users can choose to time shift their consumption as well, delaying "watching video" sessions from full mobile scenarios to offloaded sessions on their home Wi-Fi (untethered) connections.

Over time, one should not discount the amount of behavior change possible when price signals are sent about consumption modes. In other words, people will behave rationally if they know it makes a price difference when consuming video on a mobile, using the mobile network, compared to consuming that same video when at home, with demand shifted to the fixed network.

The point is that there is nothing "inexorable" about bandwidth demand. It can be shaped by suppliers or users, using price mechanisms, and will be shaped in such ways. Analysys Mason projects that mobile data in Western Europe will grow at a compound annual growth rate of just 29 per cent from 2012 to 2017, for example.

At a global level, Analysys Mason predicts that mobile data will grow by a multiple of 5.5, equivalent to 41 per cent CAGR. Over time, it is reasonable to expect continued growth, but the rates further are susceptible to changes in user behavior in response to pricing signals. 

In other words, there is nothing inexorably fixed about bandwidth consumption or rates of growth. Like any other product, higher prices will lead to less consumption, lower prices will lead to higher consumption. 

73% of Mobile Owners Do Comparison Shopping on the Phone

Some 73.2 percent of survey respondents with smart phones said they “sometimes” or “always” use mobile devices inside stores to conduct price comparisons. 

On the other hand, 68 percent of smart phone owners recently surveyed by CreditDonkey.com said they did not want to replace their cash and credit cards with mobile payment apps (mobile wallets). 

None of that should be terribly surprising. People do things that provide clear value. Price comparisons of items a shopper wants to buy have immediate perceived value. Storing loyalty credentials appears to offer less obvious value. 

Mobile payments offers the least value, at least at the moment. 

HOW MUCH OF YOUR SHOPPING IS DONE WITH MOBILE DEVICES? © CREDITDONKEY

WOULD YOU LIKE TO REPLACE THE CASH YOU CARRY WITH A MOBILE WALLET? © CREDITDONKEY

DO YOU FEEL YOUR PHONE IS AS SECURE AS YOUR WALLET? © CREDITDONKEY

DO YOU USE A MOBILE DEVICE IN PHYSICAL STORES TO COMPARE THE PRICES WITH THOSE ONLINE? © CREDITDONKEY

I MAKE MORE IMPULSE PURCHASES WHEN SHOPPING © CREDITDONKEY

Some other results from the survey

79 percent of respondents usually pay their bills online, versus 9.7 percent by mail, 6.1 percent in person, 3.6 percent by phone and 1.6 percent from mobile devices.

I USUALLY PAY MY BILLS © CREDITDONKEY

67.9 percent said they would not like to replace cash with a mobile wallet.

WOULD YOU LIKE TO REPLACE THE CASH YOU CARRY WITH A MOBILE WALLET? © CREDITDONKEY

66.7 percent said they would not like to replace credit cards with a mobile wallet.

WOULD YOU LIKE TO REPLACE THE CREDIT CARDS YOU CARRY WITH A MOBILE WALLET? © CREDITDONKEY

65.2 percent said they never negotiate with physical retailers – even after finding better prices online. Another 28.7 percent said they occasionally negotiate, and 6.2 percent claim that they “regularly” or “always” negotiate prices.

HOW OFTEN DO YOU NEGOTIATE WITH THE STORE AFTER FINDING BETTER PRICES ON YOUR MOBILE DEVICE? © CREDITDONKEY

43.7 percent said they have never used a mobile coupon; 42.5 percent said they occasionally use mobile coupons; 12.4 percent use them regularly, and 1.4 percent said they always use mobile coupons.

HOW OFTEN DO YOU USE MOBILE COUPONS? © CREDITDONKEY

Could Apple 5 Aluminum Explain NFC Absence on the Device?

Some might suggest there is a purely physical reason why the iPhone 5 does not support near field communications. 

The iPhone 5’s all-aluminum-and-glass body would block information from being transmitted to a terminal, according to Will Strauss, an analyst of Forward Concepts, a research firm that follows digital signal processing and chips.

In other words, iPhone 5 is physically incapable of supporting near field communications for reasons related to the design of the case. “NFC employs lower-frequency operation than cellular, requiring a longer antenna,” says Strauss.

A  metal back shields any radio waves from reaching a nearby data terminal. Only plastic, Kevlar or something similar allows the radio connection for NFC. 

PC Platforms Clearly are Shifting

Asymco created a couple of charts showing how much the computing business is changing. Up to this point, smart phones have been the biggest new factor. But tablets are destined to be a bigger portion of the market in the future. 

Another way of looking at matters is the post-2007 market share for Android and Apple computing platforms, compared to "WinTel."

Telecom Italia Considers Spinning off its Network

Telecom Italia's chief executive said the idea of spinning off its fixed network  had become "interesting" and that talks with a state-backed financing body over joint broadband projects were under way. "There is a dialogue that continues," Marco Patuano said. 

"The possible separation of the access network into another company is an option that both Telecom and Cassa Depositi e Prestiti are looking at with interest," Patuano said. 

In April, Telecom Italia first suggested a separation of the network, an asset valued at an estimated 9-15 billion euros ($11.6-$19.4 billion).

Telecom Italia and Fastweb, controlled by Switzerland's Swisscom AG, also have signed a memorandum of understanding to develop a  fiber access network in Italy, the companies said.

The two companies will share costs and investments in infrastructure construction, but "will retain total freedom and autonomy in the development of their own network platforms, technology decisions and commerical offerings."

Fastweb has pledged to invest  EUR 400 million investment plan to bring fiber optic technology to 20 percent of Italian companies and homes by 2014.

FCC Will Push for Spectrum Sharing in 3.5 GHz Band to Support Mobile Small Cells

The Federal Communications Commission will, by the end of 2012, initiate formal steps to authorize spectrum sharing in the 3.5 GHz band, potentially adding about 100 megahertz worth of spectrum intended to be used to support mobile network small cells. 

The set of frequencies between 3550MHz and 3650MHz is currently used in radar systems but could be shared with other wireless services. It would possibly be a complex undertaking.

However, in order for the government to keep using the spectrum for radar systems, other uses would have had to be blocked for about 200 miles inland from all U.S. coastlines, leaving out a majority of the country's residents, PCAST said in its report. A spectrum-sharing system could dramatically shrink or eliminate those exclusion zones, the group said.

Because of its high frequency, the 3.5GHz band would be better suited to fixed wireless Internet service than to mobile, according to Farpoint Group analyst Craig Mathias. 

“Sharing is a long-term process, and we are at day one of a long journey,” analysts at  Rysavy argue. Currently, there are three sharing models:

• Geographic sharing, in which a wireless carrier may use a federal agency's frequencies only in certain geographic areas;

• “Temporal” sharing, in which a wireless carrier may use a federal agency's frequencies only during certain times of the day or year; and

• Technology-based sharing, in which wireless carriers and a federal agency would each use a cognitive, or “smart,” radio device that can search wide swaths of a spectrum band for “quiet,” or unused, frequencies over which to transmit and receive data.

Such operations can be complex, many would note. 

Canadian Competition Bureau sues Big Three Telcos

The Canadian Competition Bureau is taking legal action against Canada’s big three mobile service providers,  along with their main industry association, to force them to stop what it alleges is misleading advertising that promotes “costly premium texting services” that slam consumers with hidden fees.

Rogers Communications Inc., BCE Inc., Telus Corp., and the Canadian Wireless Telecommunications Association are being sued for consumer refunds and possibly $31 million in fines.