Many factors could derail the slowdown in data volume growth

editor's corner

ABI Research has joined Cisco in reporting that the rate of growth in the global volume of mobile data traffic is slowing, but that doesn't mean the mobile industry can kick back and relax.

ABI's new report predicts that 2015 will be the last year mobile data traffic volume will expand by more than 50 percent annually. This past February, Cisco also projected an impending slowdown, saying annual growth rates in mobile data volume will taper off to 90 percent in 2013 and 78 percent in 2014.

I just hope mobile operators don't get too comfortable with this idea of slowing data growth. For one thing, I recall during the industry's early days in the late 1980s and early 1990s how incredibly wrong the estimates of mobile industry growth were. For years, every single research firm grossly underestimated the number of annual subscriber additions. Though forecasters finally got a grip, I learned that the rate of mobile industry expansion should never be taken for granted.

I also have some other concerns regarding ABI's new report. The firm cited the trend of on-demand video content increasingly being viewed on non-cellular networks. I'm not sure that trend will reduce cellular data traffic; instead, it may just increase video content viewing on Wi-Fi while having a negligible impact on the amount of video viewed via cellular.

In addition, we really don't know what devices and services might be just around the corner, prepping to send mobile data traffic volumes skyrocketing once again.

Both of those factors were at play during a lunch date I had last week. I was sitting in a brewpub with an old college buddy and his best friend, who, it turns out, is my attorney (what a small world). My attorney was telling me about his efforts to emulate the playing style of blues guitarist Big Bill Broonzy. He tried to stream a YouTube video of Big Bill playing "Hey Hey" using his Apple (NASDAQ:AAPL) iPhone on a mobile network, but wasn't getting a connection for some reason. He tried to use the pub's Wi-Fi network, but that connection was super slow, likely due to data traffic congestion caused by other users.

So I tried accessing YouTube on my Google Android (NASDAQ:GOOG) phone using a different carrier's mobile network and managed to get a great connection. I watched and listened to "Hey Hey," and then checked out some other videos of Big Bill during our lunch.

The point isn't that my smartphone worked better than my attorney's iPhone (though that was certainly satisfying). The importance of this anecdote is that 1) Wi-Fi is far from a panacea, and 2) a mere five years ago, my attorney and I would not have been trying to grab a YouTube video on our smartphones because neither of us would have had one (unless my attorney had run out and bought one of the first iPhones).

I acquired my first Android device less than one year ago, and I don't know what connected devices I might buy in the next year or two, though an LTE-connected tablet is on my wish list. On that note, it's worth mentioning that the first iPad was released little more than two years ago, in April 2010.

This takes us to the problem with making predictions. It's nearly impossible to open a window to the future and see the devices and services that will, overnight, bring about a sea change in the industry. Of course, ABI and Cisco know this, as do all of the other firms in the forecasting business.

The growth in mobile data volumes may indeed be leveling out, and new technologies could speed up that trend. For example, widespread use of 802.11ac and WiGig could certainly encourage even more offloading of cellular data to Wi-Fi. But I still think mobile operators would be foolish to breathe a sigh of relief and significantly slow network investment based on the belief that growth in data volumes on their networks will dramatically decelerate in the next few years, because there might yet be a new device category or Cloud-based app that simply changes everything overnight once again.

On the other hand, there is one scenario in which I could see the growth rate of wireless data traffic absolutely plummet off a cliff, and that is if mobile operators set prices intentionally high to drive a dramatic slowdown. But they wouldn't do that, would they? --Tammy