2009 Year in Review: The data traffic conundrum

The news: It was highlighted this year with AT&T Mobility. Data traffic, thanks mostly to the iPhone, experienced a surge on mobile networks. And AT&T Mobility admitted it was struggling to cope. In an interview with the New York Times in September, AT&T's chief technology officer conceded the difficulties in keeping pace with iPhone users' data demands. "It's been a challenging year for us," said CTO John Donovan. "Overnight we're seeing a radical shift in how people are using their phones. There's just no parallel for the demand."

One can argue whether AT&T never invested enough in the network in the first place or was completely caught off guard by the deluge, or both, but experts warn that data traffic will continue to grow at an exponential rate thanks to data-intensive services such as video. Many folks like to quote the Cisco Visual Networking Index forecast that estimates mobile data traffic volumes are expected to jump 66 fold between 2008 and 2013 thanks mostly to video service consumption. The company has said it expects 2 million terabytes to run over mobile networks each month by 2013.

Why it's significant: Vendors and analysts have been warning about a dangerous trend stemming from data access plans: Network traffic growing faster than revenues. It's already happening for some. That talk, of course, has led to a variety of ideas as to how operators can recoup these lost revenues--ranging from dramatically changing the cost metrics in their networks, to offloading to other networks like WiFi, to ratcheting back data usage to usage-based pricing. The trend will continue to plague mobile networks thanks to the popularity of smartphones and broadband access plans until LTE comes along. In the meantime, there are and will continue to be a number of companies working on solving this bottle-neck problem. The question is: Will operators have to ratchet back to usage-based pricing before LTE comes along?