Can Gen Y keep mobile broadband from a fiscal cliff?

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The mobile industry continues innovating and expanding, but some suggest it may be heading for its own innovation and fiscal cliff in coming years. That would be a shame because the importance of mobile communications is evident in the desperation felt by people who cannot get their smartphone fix whenever they want it.

According to the 2012 Cisco Connected World Technology Report, "90 percent of Gen Y surveyed worldwide said they check their smartphones for updates in email, texts and social media sites, often before they get out of bed."

Note that the report did not say they get up, switch on their laptop or PC, wait for it to boot up and then check their emails, etc. No, Gen Y turns first to the smartphone for the information it needs. "The smartphone has become the device of choice, out of any other device or technology out there, for this generation, more than TVs, more than laptops or tablets, more than desktop computers," Neil Wu Becker, Cisco's director of global research, told me.

No wonder two out of five Gen Y respondents surveyed said they "would feel anxious, like part of me is missing," if they couldn't use their smartphones to stay connected.

Further, 29 percent of Gen Y respondents say they check their smartphones so constantly that they lose count. "Globally, one in five checks a smartphone for email, text and social media updates at least every 10 minutes, and among U.S. respondents, two out of five check at least once every 10 minutes," said Cisco. Further, one-third of global respondents check their smartphones at least once every 30 minutes, and in the United States that figure jumps to more than 50 percent.

Cisco's report was based on a survey conducted by InsightExpress of 1,800 college students and young professionals aged 18 to 30 across 18 countries.

The Pew Research Center's Global Attitudes Project released a related study this week regarding social networking around the globe. The study of people in 21 nations found that most smartphone users visit social networking sites via their handset, while others rely upon their smartphones for consumer and political information.

As usual, the young are considerably more engaged with their cell phones than their elders, with Pew finding double-digit age gaps in most countries for all cell phone activities except making calls. Further, education impacts how people interact with their smartphones. "In 14 countries, respondents with a college education are at least 10 percentage points more likely than those without a college degree to access the internet on their mobile phones," said Pew.

This all adds up to the fact that mobile broadband service is becoming a critical part of daily life, especially among the younger generation. And that is why operators continue investing in their mobile networks as they try to boost their positions in increasingly competitive markets. For example, Deutsche Telekom recently announced that its T-Mobile USA's operation will commit to network capex $4.7 billion in 2013 and $3 billion per year in 2014 and 2015.

But T-Mobile is something of an anomaly, largely because it has a lot of catching up to do in the U.S. mobile broadband market. Telecommunications service providers globally are slowing down capex spending, which will only nudge up at a compounded rate of 1.5 percent from $207 billion in 2012 to $223.3 billion in 2017, according to a report from The Insight Research Corporation.

North America, Europe and the Latin American-Caribbean regions will show little or no growth and only Asia-Pacific and Africa are continuing to make investments in telecommunications hardware and software, said the company.

Not surprisingly, capex spending among fixed-line operators continues to decline, "and the only growth in capex spending comes from the mobile operators in developing countries that continue increase their capital outlays to meet the pent-up demand for service," said Insight Research.

The company added that services in every region will experience "heavy pricing pressure as operators fight over the cost-conscious customers quite willing to delay new device purchases.

Especially alarming is the company's prediction that network investments are going to drop off, just when customers have become seriously addicted to their mobile devices and services.

"The difficulty in finding funding now faced by many operators will certainly slow down, if not derail, the rolling out of investments in NGNs, WiMAX, LTE or converged services," said Insight Research President Robert Rosenberg.

I know I'll be disappointed as a customer if network investments slow down because I am personally relying on my smartphone more and more for information retrieval, navigation, social networking, you name it. My hope is that the demands of Gen Y for always-on connectedness will lay the foundation for continued funding that will support innovation and investments in wireless networking.

The wireless industry has come too far, and become too ingrained in too many people's lives, to simply stagnate when there is still so much promise ahead.--Tammy

P.S. How essential is your smartphone to your morning routine? Vote in the poll on our homepage.