With 2012 being a breakthrough year for LTE and deployments gaining momentum, subscribers will begin to sign up for 4G LTE services in volume this year (2013). The emerging factor that is driving and will continue to drive the consumer take-up in the short term and beyond is the embedding of LTE technology in consumer devices. Although MNOs have sought to monetize this activity through the introduction of an array of data-centric services allied to data and content bundles, traffic growth continues to outpace revenue growth. Indeed, the proliferation of mobile broadband devices, along with the unlimited data bundles from operators, has led to network congestion and deteriorating network quality.
The increase in connectivity is seen to be driving applications, user preferences and broadband demand, which in turn drives the demand for access. The demand for increased access is actually leading to bigger investments in the area of mobile and broadband networks, in turn making it cheaper and supporting higher bandwidths and ubiquitous connectivity. As available bandwidth grows, so does the variety and sophistication of devices. As the volume of devices increases, prices become more attractive, thereby driving user demand. This completes a cycle of demand.
However, despite 2012 being a breakthrough year for 4G LTE, operators will still need offloading technologies such as Wi-Fi & small cells to augment 4G networks. For mobile operators, offloading to Wi-Fi or small cells will provide them with a greater opportunity to seize market share and revenues from fixed line operators, extend their reach beyond the mobile market and make their 4G business case profitable.
The demand for high bandwidth services from end users and the availability of Wi-Fi on most mobile devices have enforced the operators to address consumer expectations around quality and experience, while creating opportunities for the operators.
These factors, along with the affordability of wireless network broadband into the home, have enabled users to connect a number of devices to the Internet via Wi-Fi. On the other hand, operators have been using Wi-Fi hotspots increasingly over the past few years to offload intensive data. Operators now view Wi-Fi as an opportunity to capture mobile data revenue from fixed service providers by spinning off their own business.
Furthermore, a series of trends have developed together to greatly accelerate carrier-Wi-Fi adoption, mainly NGH (Next Generation Hotspot) and Hotspot 2.0 specifications along with 5 GHz enabled devices. Carrier-grade small cells along with Wi-Fi will enable high levels of capacity and, along with the macro network, offer the potential for commercial success for operators. Meanwhile, operators are also announcing the development of the first elements to a full Passpoint network. Service providers such as Boingo have plans to deploy Passpoint in their networks and a joint agreement among DoCoMo, KT and China Mobile regarding shared roaming agreements, are all indications of these new technologies making its way into the deployed networks.
As we observe in our latest research on Mobile Data Offload & Onload, operators will face significant additional pressure over the next five years from mobile data traffic generated by smartphones, feature phones and tablets. Juniper Research estimates that the amount of mobile data traffic generated by these devices will exceed 90,000 petabytes by 2017. Put another way: this is equivalent to almost 42 quadrillion tweets or approximately 7 billion Blu-ray movies. The average browser based usage on a smartphone is expected to almost triple over the forecast period, with the highest data usage between 2015 and 2017. This will be primarily due to the increasing smartphone penetration rate, faster 4G live networks and the ever increasing number of available apps from different app stores.
However, the actual volume of data traffic offloaded from mobile networks will continue to grow strongly throughout the next five years as the total volume of data traffic delivered to mobile devices accelerates. In fact our study indicates that only 40 percent of the data generated by these devices will reach the cellular network by 2017, as most of the data traffic will be transmitted via Wi-Fi.
In summary, the offload trend will continue and operators will make use of more integrated units of Wi-Fi and small cells. In the case of indoor cells, where most usage happens, Wi-Fi is indeed the pioneer, and mobile network operators are beginning to build out networks based on public access small cells. Together they will have a big effect on the offload ecosystem.
Nitin Bhas is a Senior Analyst with Juniper Research and the author of the recently published report: Mobile Data Offload & Onload: Wi-Fi, Small Cell & Carrier-Grade Strategies 2013-2017. His areas of focus include mobile networks, technologies and handsets.