Smartphones and Portables – Driving Higher Data Traffic Usage

By Craig Conkling

Smartphone and Portable (i.e. Laptops/Netbooks, cellular-enabled Tablets) devices continue to drive higher data usage and service providers (i.e. carriers) are starting to see a significant uptick in data traffic. Both MetroPCS and Leap Wireless’ Cricket Wireless have introduced new Smartphones over the past several quarters, and together with their data plan offerings, are seeing an increase in data traffic. In addition, Leap is in the process of launching its Muve Music product offering, which may further stretch its capacity. Strategies are in place to alleviate potential bottlenecks, but will that be enough over the next 18 to 24 months as ease of use, synchronizing PIM and content, apps, and file sharing (via upload/download to the Cloud) increase?

The COO of MetroPCS, Tom Keys, sees Smartphones as the handset of choice and no longer Feature phones (to quote: “Feature phones are dead”). MetroPCS’s “Wireless For All” plan which was launched beginning of 2010 has helped to increase their subscriber base from 6.63 million at the end of 2009 to 8.1 million subscribers at the end of 2010 – ~22% growth! This product offering includes all taxes and fees, which is a consumer-friendly plan – no hidden fees such as state telecom tax and franchise tax recovery – and is refreshing to see an all-in-one offering. This new plan has also significantly increased data traffic on their network

MetroPCS is also moving towards LTE (Long Term Evolution, 3GPP Release 8) data networks to provide increased bandwidth (and therefore capacity) to accommodate the data traffic demands created by Smartphone use. Present LTE downlink speeds are on the order of 5 – 12 Mbps (similar to WiMAX), which is great for Web-surfing (see my recent blog) – and larger file downloads.

Cricket Wireless will see more download data traffic as their Muve Music product is launched and new Smartphones become available that have their technology embedded. As for the success of Muve Music, it’s still to come. Cricket is seeing data usage growth (as all services providers have mentioned) and have a plan to address this issue over the short term – off-load to Sprint networks, provide session-based data, and eventually bring on LTE. But as noted in a recent article from Fierce Wireless, Cricket plans to throttle-back the available bandwidth for users that exceed their allotted data plan…this isn’t a strategy to “keep customers” since it can diminish the user experience. Charging extra – moving the user up to the next data plan for $10 extra that month – is a preferred strategy however.

Tablet’s are becoming all-the-craze and will drive data traffic, albeit not as great as Smartphones, Laptops and Netbooks (see Figure 1, below). Apple's iPad has generated much interest in Tablet computing with estimated shipments in Q4/2010 of ~7.3M units, ~75% market share. Android-based Tablets market share is gaining relative to the iPad, however, and has shipped nearly 2.1M units in Q4/2010, ~22% market share. Other operating system rivals will come on the scene - Blackberry and Windows 7, for example – but actual market share growth is undeterminable. What is expected, though, that features, functionality and apps will continue to drive data traffic.

As Smartphones and Portables become pervasive and consumers utilize them to a greater extent, LTE-Advanced (and possibly WiMAX 2 – WirelessMAN-Advanced) under IMT-Advanced will become a requirement to keep consumer’s performance expectations satisfied while mitigating data traffic bottlenecks. In a recent vote at the 3GPP conference in Taipei, the final specification for release 10 will be frozen soon, in March 2011. Given the newer Mobile and Portable devices with newer technologies coming to the market over the next few years, I would target late 2013 (early 2014) time frame to rollout the “IMT-Advanced” technology due to data traffic demands.

Cisco’s VNI (Visual Network Index) for global mobile data traffic shows a CAGR (Compound Annual Growth Rate) of ~92% from years 2010 thru 2015. The global mobile data traffic will grow from ~0.24 EBytes (exa-bytes) in 2010 to ~6.3 EBytes in 2015 – approximately 26X data traffic increase, with Smartphones exhibiting a significant growth rate and having almost half the data traffic demand of Laptops/Netbooks. According to Cisco’s white paper, there will be 788 million mobile-only Internet users by 2015 – the mobile-only Internet population will grow 56X from 14 million at the end of 2010 to 788 million by the end of 2015 – considerably increasing data traffic.

 

Figure 1 - Global Mobile Data Traffic 2010-2015

Source: Cisco VNI

To help alleviate the increasing data traffic demand, other major carriers – Verizon, T-Mobile USA, AT&T and Sprint – have either launched their LTE network or announced other strategies. Verizon launched LTE in 38 cities and covering 110 POPs in December 2010. T-Mobile USA has ruled out deploying LTE technology because they’re waiting for available mobile/portable devices to drive demand, yet T-Mobile USA is considering partnership deals to cover the basis.

This may be T-Mobiles USA’s opportunity to “wait-and-see” and then deploy LTE-Advanced before their competition, thus delaying the investment and additional costs of deploying LTE and then upgrading a few year later. This strategy may work out for the T-Mobile USA since they’re continuing with deploying HSPA(+), which will offer significant bandwidth improvements over the present UMTS/HSPA technology. AT&T doesn’t have near-term plans either to launch LTE, but has put a stake in the ground for VoLTE (voice over LTE) support in 2013. Sprint is offering WiMAX but hasn’t rules out LTE in the future given geographic availability and demand. Both T-Mobile USA and AT&T will continue to utilize HSPA technology evolution to satisfy the data traffic demands for the next few years.

Perspective

As Smartphone, Laptop/Netbook and Tablet technologies and their uses advance over the next several years, accommodating the resulting data traffic demand by the present networks will be complicated. Faster, .i.e. higher bandwidth, data network technologies will become available, yet the consumer will find ways to consume bandwidth as handset applications, real-time communications, Cloud-based storage, and PIM and content synchronization expand.

Cisco mentions in their latest Global Mobile Data Traffic 2010-2015 overview, that offloading data traffic to lessen congestion is a necessary consideration. “By 2015, over 800 million terabytes of mobile data traffic will be offloaded to the fixed network by means of dual-mode devices and femtocells. Without dual-mode and femtocell offload of Smartphone and Tablet traffic, total mobile data traffic would reach 7.1 exabytes per month in 2015, growing at a CAGR of 95 percent,” according to Cisco. Essentially, backhaul will be an issue and fixed/wired line networks to offload will reduce the mobile data traffic congestion by ~11% (e.g. 7.1 EBytes/month without offloading versus 6.3 EBytes/month with offloading).

The connectivity to access the fixed/wired line network for offloading may be through Wi-Fi (or other wireless broadband) technology. I’ve also suggested in a prior blog that handset providers combine LTE-Advanced/WiMAX 2 and utilize each technology as needed – one for data communication and the other for backhaul – as sort of a mobile femtocell. In addition, microcells, picocells and femtocells will become more widely deployed in the future for off-loading the network’s data traffic in either high-use areas or in-door, as well as for backhaul.

Service providers’ network strategy becomes all the time more important over the next several years to provide enough capacity to meet demand, while minimizing their investment (i.e. capital cost) as the data network technology landscape continues to change. Verizon has moved to LTE to provide additional capacity, but few phones offer LTE technology (…more phones to come in 2011). Since most cellphone owners have two (2) year contracts, a purchase of a LTE-based Smartphone now (or in the next 12 to 18 months) means that when their contract expires they can purchase new phone (with LTE-Advanced ?), which will be in 2013 to mid-2014 range, just in time for the launch of LTE-Advanced (and/or WirelessMAN-Advanced, i..e. WiMAX 2).

AT&T and T-Mobile are continuing to offer an incremental versions of the HSPA technology – HSPA(+) release 7/8/9 – which offers “increasing” speeds that are similar to LTE (the present technology, not the Advanced version which is release 10). This strategy will keep cap-ex cost lower while providing bandwidth improvements…at least for a while. Other 2^nd and 3^rd tier service providers will partner with the major carriers to offer higher data rate speeds to their customers.

The next three (3) to five (5) years will be exciting as newer Mobile and Portable devices with greater features and functionality drive increases in data traffic. Furthermore, each carriers’ strategy to upgrade quickly to higher bandwidth data networks or combine technologies to accommodate data traffic increases, will become increasingly important as “bottleneck relief” and capital expenditures will need to be balanced. The end game is to provide an affordable data network that intern offers an extraordinary user experience as new devices and uses become available to the consumer.