If you currently have an iPhone or Android with 3G connectivity you most likely have considered an upgrade to a 4G device at some point recently. As broadband data consumers we are always seeking and sucking up additional bandwidth with new apps and video downloads. Unfortunately as we consume more data resource we will pay more. How much more? Well many 4G users today are already bumping up against those 1 or 2-gigabyte data caps your carrier (Verizon) has imposed on your data plan.
According to the latest annual Visual Networking Index recently released by Cisco, the average American will use 6.2 GB of data on their mobile devices each month in 2017. Compare that number to the average of 752 MB used by Americans last year. That represents a 724% increase in monthly bandwidth in roughly a four year span of time. How does this increase in bandwidth usage effect monthly data plan pricing? In five years the average user's smartphone bill could grow by $40 a month.
We recently reported on how the global growth of mobile device usage may cripple the wireless airwaves as available bandwidth from the wireless network carriers will eventually reach saturation unless the FCC takes drastic steps to increase supply.
Another report in 2012 by Cisco expands upon these findings. They project mobile cloud traffic to account for 71%, or 7.6 Exabytes per Month, of total mobile data traffic by 2016. Compare this to the current number of 45%, or 269 Petabytes per month in 2011 and you can easily visualize the eventual wireless saturation scenario.
According to the 2012 Cisco Visual Networking Index report, the global worldwide mobile data traffic will increase 18-fold over the next five years, reaching 10.8 exabytes per month or an annual rate of 130 exabytes by 2016.
The expected sharp increase in mobile traffic is due largely to a projected increase in the number of mobile Internet - connected devices, which will exceed the number of people on earth (2016 world population estimate of 7.3 billion according to the UN). During 2011−2016 Cisco anticipates that global mobile data traffic will outgrow global fixed data traffic by three times.
The deployment of 4G technology allows for very fast wireless networks from all four of the major carriers. These new networks are projected to provide for the bulk of the primary data bandwidth usage by consumers.
4G networks are capable of speeds comparable to your home broadband service, and it's roughly 10 times faster than 3G. By 2017, Cisco predicts that the average smartphone connection speed will grow more than three-fold.
The concept of latent demand teaches us that the faster the wireless connection, the more bandwidth users will consume on their mobile devices. Assets such as large video files will be the primary driver behind the download explosion, according to Cisco. Additionally, streaming video services such as Netflix, Hulu and YouTube are expected make up approximately 66% of downloads in five years.
The number of 4G devices in use today is relatively small. Only about 1% of devices were connected to 4G networks in 2012 last year. Interestingly those smartphones and tablets accounted for 14% of global mobile traffic.
By 2017, Cisco estimates that 10% of the world's devices will have 4G connections, and they will make up almost half of all traffic.
Who will pay?
You can bet it will not be the network providers. They will pass the costs along to their subscribers. After all the more consumers use the more they pay and this leads to more revenue for companies like Verizon.
Today's mobile-data-per-user average is beneath the entry-level 1 GB data tier that Verizon has put in place and well under the 3 GB tier that AT&T offers. If the Cisco projections are accurate then we all will be consuming 6.2 GB-per-month on average in five years. At current rates Verizon and AT&T customers would have to pay $40 a month more for their data plans. Currently, Sprint and T-Mobile continue to offer unlimited data service for mobile customers.
American mobile customers offloaded half of their traffic to Wi-Fi networks last year. The prospect of paying more has forced customers to think twice about when they need to use a 3G or 4G network.
By 2017, Cisco forecasts that 66% of smartphone and tablet traffic will be over Wi-Fi. So that may be a way for consumers to keep watching Netflix on their phone or tablet without paying steep fees to their carrier.
This significant level of traffic growth and service penetration is driven by a number of factors according to Cisco's 2012 report, including:
An increasing number of devices: The proliferation of tablets, mobile phones, and other smart devices as well as machine-to-machine (M2M) connections are driving up the demand for connectivity. By 2016, the forecast projects there will be nearly 18.9 billion network connections―almost 2.5 connections for each person on earth, ― compared with 10.3 billion in 2011
More Internet users: By 2016, there are expected to be 3.4 billion Internet users ― about 45 percent of the world's projected population according to United Nations estimates.
Faster broadband speeds: The average fixed broadband speed is expected to increase nearly fourfold, from 9 megabits per second (Mbps) in 2011 to 34 Mbps in 2016.
More video: By 2016, 1.2 million video minutes―the equivalent of 833 days (or over two years) ―would travel the Internet every second.
Wi-Fi growth: By 2016, over half of the world's Internet traffic is expected to come from Wi-Fi connections.
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