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Cisco: Mobile data continues to surge, driven by smartphones and tablets


WiFi offload, the introduction of tiered data plans and the crappy economy all would seem to have to put the brakes on mobile network traffic growth, but according to Cisco Systems (NASDAQ:CSCO), mobile data traffic nearly tripled globally in 2010 driven by increased smartphone sales, the advent of connected tablets and increasing reliance on mobile broadband plans.

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In its latest update to its annual Visual Networking Index, Cisco found that its projections for 2010 were a bit too conservative. Actually data traffic globally grew 160%, 10% faster than Cisco expected, said Arielle Sumits, manager of service provider marketing at Cisco. The sheer volumes of smartphone adoption took Cisco and the analysts it surveyed by surprise, Sumits said. And while tablet sales are just beginning, devices like the iPad and the Samsung Galaxy iPad made an outsized impact on mobile data traffic considering how few devices are in the market, Sumits said. In fact, Cisco has heavily revised its projections on the future impact of tablets, predicting that by 2015 tablets alone will generate as much traffic as the entirety of mobile data networks today.

Tiered smartphone and mobile broadband plans didn’t have much of a mitigating effect on consumption, though such plans are still fairly new and haven’t been adopted by all operators, Sumits said. “It’s still a little bit early but we’re starting to see a change in the top 1%,” Sumits said. “The heaviest data users are starting to use less data.” But the average data consumption of the remaining 99% increased so much, it wiped out any mitigating effects of the reduced usage among high-volume users, she said.

Another key factor driving traffic growth was increased connection speeds, which leads to faster downloads, more powerful applications and thus more data consumption. Average network connection speeds globally more than doubled from 101 kb/s in 2009 to 215 kb/s, reflecting the advent of 2.5G and 3G networks in emerging markets and upgrades to faster 3G networks in the developed world. In the U.S., average connection speeds in 2010 were 709 kb/s, but Cisco expects that number to increase to 3.8 Mb/s as new long-term evolution (LTE) and WiMax networks come online and operators upgrade their 3G networks to faster iterations of high-speed packet access plus.

In the U.S., the mix of devices and their consumption levels were highly stilted. Connected laptops and computers accounted for only 6% of connections but half of all mobile data traffic. Meanwhile handsets, accounted for 93% of all data connections, but less than half of data traffic. The 35% of those devices that were smartphones, however, accounted for 92% of that handset data traffic. Tablets were only a blip among devices, accounting for half a percentile of connections, but they ate up 2% of all data traffic.

Globally that imbalance between handsets and computers was magnified. Laptops accounted for 3% of all device connections but 70% of all traffic, which could be explained by the fact that in many countries consumers are using their mobile broadband connections as replacements for wired broadband, Sumits said.

Cisco is now projecting that mobile data traffic will continue growing at 92% a year between 2010 and 2015, reaching an annual run rate of 75 exabytes—more than 75 times greater than all of the IP traffic generated in 2000. Making up the bulk of that growth will be video traffic. Streaming video accounts for 50% of all global mobile data traffic. In the U.S. the number is even higher, 56%.

Despite the huge surge in traffic over the next five years, Cisco’s projections actually show the growth rate slowing down. Between the 2009 and 2014, Cisco’s VNI projected annual compounded traffic growth of 108% each year. For 2010 to 2015, annual growth will fall to 98% per year. Traffic increases will still be enormous but current traffic levels have already become so high it becomes harder and harder for the industry to double those levels with each passing year, said Doug Webster, director of strategic communications for worldwide service provider marketing at Cisco.

“We’re starting to get into the law of large numbers,” Webster said. “Our numbers tend to be fairly conservative, though at first blush they seem very aggressive.”


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