Analysts question Cisco's mobile data traffic revisions

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Cisco Systems' mobile data traffic numbers from its Visual Networking Index are widely reported and touted by the industry, but a growing number of analysts and research firms are questioning the numbers and Cisco's methodology after the company made multiple backward revisions to its data in its latest report. TMF Associates analyst Tim Farrar raised questions about the data earlier this month, and noted, for instance, that Cisco had made "dramatic changes in assumptions about offloading, without much explanation or any retrospective view of whether the prior estimates were remotely accurate."

Now, research firm Analysys Mason is taking issue with Cisco's report too, arguing that the data shows "a substantial downward revision of traffic volumes for 2012 for Western Europe, and lesser, but significant downward revisions for most other regions. Moreover, projected growth rates to 2017 have been revised downwards. Despite these downward revisions, the volumes for 2012 in Western Europe and North America still look much too high to us, and imply growth rates of around 100 percent for 2012 over what we already know about 2011. This contradicts all the evidence we have seen for actual rates of growth last year in these regions."

Analysys Mason acknowledged that "forecasting data traffic is riddled with uncertainties, and, when the explicit or implicit warnings in forecasts are taken seriously, involves feedback loops that will contradict the trend forecasted." Still, Analysys Mason said that while there is nothing wrong with backward revisions, "trying to get it right by assessing the available evidence is important." 

In response, Cisco spokesman Jim Brady said that Cisco's methodology "includes a combination of direct data collection from more than 1.3 million users and nearly two dozen service providers around the globe, in-house estimates and forecasts, and third-party analyst projections from organizations such as Informa Telecoms and Media, Strategy Analytics, Infonetics, Ovum, Gartner, IDC, Dell'Oro, Synergy, ACG Research, Nielsen, comScore, Arbitron Mobile, Maravedis and the International Telecommunications Union (ITU)."

Brady said that "Cisco has consistently revised VNI predictions publicly to reflect new data and trends. For example, in February 2010 we did not have a tablet breakout. By 2011, after the iPad was introduced the previous spring, we updated the forecast to include this new device which would dramatically change the mobile landscape. As reported in the published in the Mobile VNI Whitepaper, the recent mobile traffic growth forecast was adjusted for several reasons, including the fact that mobile laptop traffic growth is slowing, particularly in Western Europe. As people replace mobile laptops, which consume more bandwidth than most other devices, we will see variances in growth."  

"In addition, Service Provider Wi-Fi has increased far faster over the past year than our forecast in 2011. It is a 'top of mind' issue for mobile service providers worldwide, many of which are actively deploying Wi-Fi solutions or looking to do so soon," Brady said. "While complementary to the macro-radio based Mobile Internet, we account for Wi-Fi in our fixed traffic forecast, which will be released in June. If we were to include offloaded traffic with mobile traffic, the difference between last year's forecast and this year's is much narrower. Also, people are using Wi-Fi small cells more often, shifting more data from mobile networks."

"We have consistently used what we believe to be the most accurate currently available data to support our methodology in updating the forecast each year, rather than artificially imposing consistency with previous estimates," Brady concluded.

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