Analysys Mason: Mobile data growth will be strongest outside Europe and North America

Rupert Wood

The volume of mobile data traffic reached 8.1 exabytes worldwide in 2012, according to Analysys Mason's "Wireless network traffic worldwide: forecasts and analysis 2013–2018." The rate of growth in worldwide traffic declined from 99 per cent in 2011 to 78 per cent in 2012, but there were, unsurprisingly, major differences at a regional and country level. Traffic growth was just 47 per cent in Western Europe and below 20 per cent in recession-hit southern European countries. In Japan and South Korea, the LTE boom maintained growth rates at or near 100 per cent, and in middle-income markets with gaps in broadband infrastructure (such as Russia), the volume of traffic on data-only services continues to grow dramatically. We expect the rate of growth worldwide to fall again to 56 per cent in 2013.

Figure 1: Mobile data traffic growth 2011–2012 and CAGR 2012–2018, by region [Source: Analysys Mason, 2013]

We have revised up our forecasts for mobile data growth rates in developed and emerging markets during 2012–2017

This year's forecast for the next five years is a little more optimistic than last year's forecast, but we nevertheless expect cellular (mobile) data traffic to increase at a CAGR of no more than 44.5 per cent, although it will be higher (55 per cent) in emerging markets, and particularly high in newly emerging markets in Asia–Pacific, where we forecast 64 per cent CAGR.

The main reason for our more upbeat outlook is bound up with the declining cost (and therefore potential additional affordable capacity) of transport. We take account of these changes in our methodology because we consider them to be a more reliable indicator of traffic growth (or at least of an upper limit to growth) than second-guessing the appeal of various devices and services on wireless devices. LTE will continue the long-term historical downward trend in unit costs, but we predict that small-cell technologies will accelerate the decline in unit costs, and bring down prices to a level where larger handset data plans are affordable and may obviate many end-users' need for public Wi-Fi. Therefore, we believe that the annual rate of growth in mobile data will stabilise, particularly in affluent countries, and even accelerate again towards the end of the decade. Even so, the effects of small cells on capacity and operator costs can be overstated when seen in the context of whole national territories, where geographically averaged tariff structures continue to apply.

Mobile networks will contain public Wi-Fi's share of traffic, but Wi-Fi will increasingly dominate home-generated traffic

The forecasts also cover traffic volumes on all types of devices on public and private Wi-Fi. The latter (delivered over home Wi-Fi and broadband) is the most important in terms of volume of traffic, but it is against public Wi-Fi that mobile operators will have to compete. In developed markets in particular, private Wi-Fi will continue to account for the overwhelming bulk of handset and tablet traffic--operators will have limited opportunities to use LTE to compete effectively against next-generation fixed broadband, such is the recent surge in fixed broadband traffic, and therefore consumers will have few compelling reasons not to use Wi-Fi at home. Overall, we expect that mobile data traffic will increase only slightly faster than Internet data as a whole, rising from 4.3 per cent of the total in 2012 to 5.5 per cent in 2018.

In most developed economies, the volume of public Wi-Fi traffic has grown much faster than mobile data during the past two years. This has been driven mainly by fixed and cable operators rather than operator offload strategies, but small cells will have enabled operators to stabilise and begin to reverse the trend of handset offloading to Wi-Fi by the end of the forecast period (2018). We expect that public Wi-Fi will primarily carry mid- and large-screen traffic (and handsets' share of public Wi-Fi traffic will decline), and many fixed- or cable-provided public Wi-Fi services will evolve into hybrid MVNO, small-cell and Wi-Fi networks.

The report also emphasises the effects of social factors that limit the volume of mobile data traffic. For example, time spent at home appears to be a major limiting factor. The differences in workday location patterns between different cultural regions appear to correlate strongly to differences in mobile data usage.

"Wireless network traffic worldwide: forecasts and analysis 2013–2018" presents five-year forecasts of wireless data traffic in all eight regions of the world and in 22 selected countries. It analyses the key trends in, and drivers and inhibitors of, data traffic.

The forecast dataset underpinning this report covers:

  • Mobile data: Data delivered over cellular networks to handsets (typically smartphones), mid-screen devices (typically tablets), to USB modems, routers and other stand-alone data devices, and to M2M devices.
  • Wi-Fi data: Data delivered over private Wi-Fi connections (at home or place of work) to handsets and mid-screen devices, and data delivered to all devices using public Wi-Fi connectivity.

The report assesses the enablers of future capacity on wireless networks and the cost of supplying that capacity. It also analyses the trends in private and public usage, and the effect on use of mobile and Wi-Fi connectivity.

Rupert Wood is a principal analyst at Analysys Mason. Rupert's primary areas of specialisation include next-generation networks, long-term industry strategy and forecasting the dynamics of convergence and substitution across fixed and mobile platforms. Rupert has a PhD from the University of Cambridge, where he was a Lecturer before joining Analysys Mason.