Will Data Demand Keep Growing at 60% a Year?

Forecasting the future is a tough business, at least in part because people respond to changes in incentives, which in turn reshapes their behavior in non-linear ways. Many of you who follow trends in bandwidth are familiar with a basic rule suggesting that bandwidth consumption grows about 60 percent a year, globally or in most market segments.

It therefore is logical to assume continued growth at about that magnitude. But that might not be a safe assumption. One might assume that later users are less heavy consumers of data than the early adopters.

Retail pricing is shifting in ways that provide clear incentives for users to make choices about which networks they use when connecting to the Internet.

And service providers also have new incentives to encourage offloading of data demand. Wi-Fi is more prevalent, all the time, and service providers have a vested interest in convincing their own customers to use Wi-Fi when possible, in part to relieve strain on mobile networks, and in part to provide a better end user experience.

To be sure, the percentage of data-using devices also is growing steadily, adding more users. So any attempt to predict future usage has multiple moving inputs.

So it is reasonable to ask whether smart phone consumers are making significant changes in behavior that could slow the rate of mobile broadband data consumption. Given trends that show substantial  use of Wi-Fi connections in place of mobile network access, that is a possibility.

A recent study by NPD Connected Intelligence, for example, tracking usage on 1,200 smart phones, shows a mixed pattern. Android users on the Verizon, AT&T and Sprint networks seem to have decreased their use of mobile data networks between April 2012 and October 2012, while T-Mobile USA Android users seem to have increased usage.

Apple iPhone users on all of the networks except AT&T seem to have increased usage.
Fierce Wireless notes that the iPhone sample is small, so the results might be an anomaly.

But at least a couple explanations could explain the data. It is conceivable that users are learning to economize by shifting to Wi-Fi access whenever possible. And even where mobile network usage is growing, it is possible the greater consumption is less than it would have been had users not begun shifting access to Wi-Fi.

It is conceivable that new Android users are more budget conscious. And it remains possible that the demographics of Android and iPhone users are different in some material way. A number of surveys have shown that Apple iPhone users are, in fact, wealthier than Android users.

Other studies suggesting iPhone spend more than Android users likewise might be related to differences in disposable income. That pattern was upheld, some studies suggest, on Black Friday of 2012 and also Cyber Monday of 2012.

The NPD data is a snapshot in time, and one ought to be circumspect about what it really means. Nor are consumer preferences, demographics, disposable income or device type the only key variables.

Some of the service providers might be deliberately creating greater incentives for users to switch to Wi-Fi, in some cases allowing users to default to Wi-Fi automatically, which would increase use of the Wi-Fi access method.

With mobile service providers having clear financial incentives to shift users to Wi-Fi, and with a greater move to use of small cell access (especially when those small cells also feature Wi-Fi access), it seems reasonable to assume at least a possibility that smart phone mobile network bandwidth consumption might not grow as fast as some have predicted.

That will have key implications for any number of other elements of business strategy, such as new spectrum policies, the value of new spectrum, the amount of undersea cables that must be built, and the lit capacity on those cables. 

How fast to deploy Long Term Evolution will be an issue in many markets, especially where 3G might meet demand in the near term. And service providers might have to rethink the pace of infrastructure upgrades, at least in terms of network elements that can handle higher speeds and more capacity.
It bears watching.



Solid Lines represent Android data. Dashed Lines with square markers represent iOS/iPhone data.

Smart Phone Penetration in Africa Growing Faster than You Might Think

Wikipedia founder Jimmy Wales has been spending the past couple of years working on Wikipedia Zero, a way to make Wikipedia available to users who don’t own a computer or can’t get access to 3G mobile data.

On the other hand, Wales says the pace of smart phone adoption in Africa is happening much faster than people typically think.

The pace of change in Africa was surprising enough that Wikipedia Zero, which formerly had been focusing on India, now is paying a lot more attention to Africa, thanks to the growth in ownership of cheap, Android-powered handsets. 

The African mobile market in the third quarter of 2012 served 1.08 billion people using 821 million subscriber information modules, representing subscription penetration of 76.4 percent. In the first quarter of 2013, mobile penetration will eclipse 80 percent, according to ABI Research.  

One might predict that, even though Internet usage remains low, and broadband as well, that likewise will change dramatically over the next decade. 

How Do Tablets Get Used at Work?

Tablet users spend 2.1 hours daily on their tablet for work purposes, a survey of 600 workers has found. Tablet users say they gain 1.1 hours in daily productivity by using their tablet, CDW says. 

Some 84 percent of tablet users say tablet use makes them better multi-taskers, while 71 percent of tablet users say tablet use makes work more enjoyable.

Digital Device Market Growth Will Shift to Emerging Markets by 2017

The global connected device market, including PCs, tablets, and smartphones, grew 27.1 percent year-over-year in the third quarter of 2012, reaching a record 303.6 million shipments valued at $140.4 billion dollars, and a rapidly-growing share of such sales will occur in "emerging" markets in the coming years. 

Expectations for the holiday season quarter are that shipments will continue to reach record levels rising 19.2 percent over the third quarter and 26.5 percent over the same quarter a year ago, IDC estimates. 

Smart Connected Device Market by Product Category, Shipments, Market Share, 2012-1016
(shipments in millions)
Product Category			2016 Unit Shipments			2016 Market Share			2012 Unit Shipments			2012 Market Share			2016/2012 Growth
Desktop PC			151.0			7.2%			149.2			12.5%			1.2%
Portable PC			268.8			12.8%			205.1			17.2%			31.1%
Smartphone			1405.3			66.7%			717.5			60.1%			95.9%
Tablet			282.7			13.4%			122.3			10.2%			131.2%
Total			2107.8			100.0%			1194.0			100.0%			76.5%
Source: IDC Worldwide Quarterly Smart Connected Device Tracker, December 10, 2012. By perhaps 2017, more tablets will be sold in "emerging" countries than in "developed" or "mature" countries, according to NPD.  Also, there is significant awareness and appetite on the part of "emerging market" firms to use the latest collaborative and digital technologies. In fact, appetite for cloud computing, business intelligence, mobile services and devices, collaboration tools, social media and telepresence is significantly higher in emerging countries than in developed nations.

U.S. Delegation Takes Tough Stand Against ITU "Takeover" of Internet

The U.S. delegation to the International Telecommunication Union talks about regulation of the Internet has threatened a veto if proposals seen as posing a danger of censorship. 

New Money, Old Problems

Would-be innovators in the virtual currency business face a problem other entrepreneurs in the Internet ecosystem also have faced, but with even-higher obstacles. 

The problem is that there now are many ways "money" or its equivalents can be exchanged between people, and lots of new ways people can use "banking" functions involving the receipt or sending of money. 

But what can be done, in terms of technology, is not always legal. Banking, everywhere, is among the most regulated of all industries, and always is viewed from a "national interest" perspective.


"A digital payment can move between two people as they pass each other on the street, or between two people on opposite sides of the Earth, with no difference between the character of the two payments,” says Erik Voorhees, a Bitcoin entrepreneur who works at Bitinstant. 

So technology alone will not dictate how "money" and "banking" will change. Regulators will be quite vigilant about protecting existing ways of doing things, not specifically to safeguard incumbent business interests, but everywhere to "protect the public."

One might note that mobile payments already have run into a "post-hype" period where muted expectations will be the rule. Virtual money or virtual currency has not yet even emerged into a full-blown hype phase. 

2013 Could be a Big Year for Internet Access in the United States

A U.S. Court of Appeals finally will hear a Verizon challenge to Federal Communications Commission network neutrality rules. How the court rules could lead to big changes for the broadband access business. 

Specifically, if the court sustains the network neutrality rules, it is possible the "best effort only" rules that now apply to fixed access providers likely will be extended to mobile service providers as well. 

It is conceivable that new rules could be considered that extend FCC rules over terms and conditions of service, including such items as prices or data caps. 

The case, which is before the Court of Appeals for the D.C. Circuit, is Verizon's challenge to the FCC's controversial net neutrality rules. The case has been winding its way through the courts since 2010.

The regulations, adopted by the commission in late 2010, mandate that the only class of service a consumer Internet service provider can offer is "best effort," with no quality of service policies or traffic shaping.

The intent is to bar ISPs from charging application providers for expedited delivery or class of service features. The logic there is that such business practices could lead to invidious business practices where an ISP either favors its own services, or a situation where larger app providers are able to afford a better end user experience than their smaller rivals.

But if the FCC loses, some FCC commissioners will be tempted to reclassify broadband Internet as a "telecommunications service" under the Communications Act, which would give the FCC more authority to regulate it.

On the other hand, some observers think the same court, which upheld  the Federal Communications Commission’s data-roaming rules, has sent a signal it will upheld in the net neutrality case as well.

In the earlier decision, the U.S. Court of Appeals for the District of Columbia ruled against a Verizon Wireless challenge to the FCC’s rules requiring wireless operators to provide roaming access. 

Up to this point, the legality of the network neutrality rules as applied to mobile service providers has been unclear, as the FCC has said it has the authority to apply net neutrality rules, but simply has avoided doing so. 

If the FCC wins the appeals court case, some members of the FCC might be emboldened to extend rules over broadband access that make it a common carrier service. Many observers think that would lessen innovation and reduce investment in the business, on the part of access providers. 

So 2013 could be a big year for the broadband access business.