Mobile Data Traffic to Grow at CAGR of 78% Through 2016 (CSCO, VZ, VOD, T, S)

Investing

Published: February 15, 2012 9:54 am

The latest report from Cisco Systems Inc. (NASDAQ: CSCO) on mobile data traffic offers any number of ‘gee whiz’ moments, but perhaps the most telling is the absolute explosion expected in data traffic generated by smartphones, tablets, and laptops.

Mobile data traffic accounted for about 0.6 exabytes of data a month in 2011 (1 exabyte is equalt to 1 billion gigabytes). In 2012, that number will double to 1.3 exabytes. By 2016, mobile networks will transfer 10.8 exabytes a month. The message for Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD), AT&T Inc. (NYSE: T), and Sprint Nextel Corp. (NYSE: S) is to keep building more and bigger and faster pipes to carry all that data.

Laptops and netbooks accounted for 2.1 Gbytes in monthly traffic last year, and Cisco expects that number to rise to 6.9 Gbytes/month by 2016. Tablets used about 500 megabytes of bandwidth/month in 2011, and that will rise to 4.2 Gbytes/month by 2016. Smartphones accounted for 150 Mbytes/month in 2011, rising to 2.6 Gbytes/month in 2016.

Cisco reckons that the expected compound annual growth rate (CAGR) of data traffic of 78% would reach 84% except for the offloading of data traffic to landlines and femtocells.

Mobile video is expected to account for 70% of all mobile network traffic by 2016. Network speeds will rise to accommodate that demand, from an average of 315 Kbits/second in 2011 to 2.9 Mbits/second in 2016. Smartphone speeds will rise to 5.2 Mbps by 2016.

In 2011, 4G handsets generated 28x the traffic of 3G or lower-compatible handsets. That ratio will fall to around 9x as the number of smartphones increases.

Machine-to-machine (M2M) traffic is expected to increase at a CAGR of 86% and will account for 5% of all mobile data traffic by 2016.

The rise of tiered pricing plans has not slowed the growth in data traffic. Cisco’s data shows tiered pricing plans rose from 4% of the total to 29% in 2 years, while unlimited data plan offerings fell from 81% to 63%. Usage figures show that tiered plan users consume about half as much data as unlimited plan users. This data is likely to be of particular interest to the carriers, and almost certainly point to further increases in tiered pricing plans.

Geographically, Asia will account for 40% of all mobile data traffic in 2016, while the Middle East and Africa will have the highest CAGR, at 104%.

An executive summary of Cisco’s report is available here.

Paul Ausick

Are You Still Paying With a Debit Card?

The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.

Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!

Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!

Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.