Friday, February 24, 2017

Cisco Forecasts Continued Extraordinary Mobile Traffic Growth

On February 7, 2017, Cisco released its annual Visual Network Index (VNI) Forecast Report: Mobile Data Traffic Update, 2016-2021. This annual report is useful in helping policymakers, entrepreneurs, and consumers understand the forecasted growth of mobile devices and network technologies at national, continental, and global levels. It should be particularly useful in getting policymakers to focus on the need to remove impediments to the deployment of next-generation 5G network infrastructure.
The significant rise in mobile traffic experienced over the past several years is expected to continue for the next five years, as connections increase and networks expand. The proliferation of video applications is by far the biggest driving force behind exponentially increasing mobile traffic. On a global level, video traffic is projected to comprise 78% of mobile data in 2021, an increase of 30% from 2016. The United States has been a leader in the growth of mobile connections and traffic, with mobile traffic expected to rise fivefold by 2021. And as the graph below indicates, global mobile data traffic will increase sevenfold by 2021.
Cisco Forecasts 49 Exabytes per Month of Mobile Data Traffic by 2021
Here are some key findings regarding the growth of mobile connections and traffic throughout the world:
  • Almost half a billion (429 million) mobile devices and connections were added in 2016.
  • Mobile network (cellular) connection speeds grew more than threefold in 2016.
  • Average smartphone usage grew 38% in 2016 from 1,169 MB per month in 2015 to 1,614 MB per month in 2016.
  • Global mobile data traffic will increase sevenfold between 2016 and 2021.
  • By 2021, 4G will be 53% of connections, but 79% of total traffic.
  • The average smartphone will generate 6.8 GB of traffic per month by 2021, a fourfold increase over the 2016 average of 1.6 GB per month.

The graph below shows the extraordinary global growth projected across all Internet-enabled devices.
Global Mobile Devices and Connections Growth
Here are some of the key findings for the United States:
  • Mobile data traffic totaled 1.3 exabytes per month in 2016, the equivalent of 334 million DVDs each month or 3,687 million text messages each second.
  • Mobile data traffic will grow fivefold from 2016 to 2021, a compound annual growth rate of 35%.
  • Mobile data traffic will grow 2 times faster than fixed IP traffic from 2016 to 2021.
  • Mobile traffic per user will reach 18,617 megabytes per month by 2021, up from 4,604 megabytes per month in 2016, a compound annual growth rate of 31%.

North America, predominantly the United States, has been a global leader in mobile device innovation and the deployment of mobile broadband networks. Advanced 4G networks offer exponentially superior reliability, capacity, speeds, and security for mobile data traffic compared to previous mobile network technologies. By 2021, 53% of all global devices and connections will have 4G capability. But 63% of devices and connections in North America will have 4G capability.
The United States’ strong protections for intellectual property (IP) rights have encouraged a proliferation of mobile device brands and new video content. Indeed, mobile video currently comprises 60% of mobile data in the United States. It is important for device manufacturers, app designers, content creators to have secure copyrights and patent rights in order to incentivize returns on creation and investment. The prospect of profitable returns sustains new product and service innovation, encourages investment by competitors, and invites new entrants into the market—ultimately leading to more choices and lower prices for consumers. As further explained in a new February 15 blog, Free State Foundation Senior Fellow Seth Cooper and I discussed the findings of the GIPC’s 2017 International IP Index and why the United States should take steps to expand its global leadership in IP rights protection.
The United States’ leadership in developing mobile broadband networks, devices, and content apps has also been facilitated by a predominantly light-touch regulatory environment. The Omnibus Budget Reconciliation Act of 1993 – and key FCC deregulatory decisions in the two-plus decades that followed – removed regulatory barriers to entry and avoided onerous rate controls. This light touch regulatory regime spurred entrepreneurial investment in new mobile services and products, facilitating the creation and widespread availability of mobile services in finance, health, and transportation. Indeed, we are now on the cusp of 5G mobile network technology, which will deliver speeds 10 times faster than 4G and enable smart citiesto more efficiently use local services such as energy, utilities, transportation, and public safety. Future deployment of 5G technology is expected to create 3 million jobs and $500 billion in annual economic activity. 
Unfortunately, the previous light touch environment for mobile services became more intrusively regulated during FCC Chairman Tom Wheeler’s tenure. Ensuring that ongoing 4G deployments to all Americans take place in a timely manner and facilitating future 5G advancements requires that Congress or the FCC reverse the Open Internet Order’s imposition of public utility-style regulation on mobile broadband services. Congress or the FCC must also repeal the anti-innovation, unnecessarily prescriptive regulations adopted in the Broadband Privacy Order. The Federal Trade Commission should instead be empowered to protect privacy across all types of online services platforms according to a consumer welfare-oriented standard.
More licensed and unlicensed spectrum is needed to fully realize the tremendous economic potential of 5G technology. The proposed MOBILE NOW Act, if ultimately enacted in present or similar form, would make 500 MHz of spectrum available by 2021 and encourage the continued growth of innovative mobile services.
Cisco’s latest Mobile Data Traffic Update report should help U.S. policymakers appreciate that the extraordinary forecasted mobile data growth requires additional spectrum to match that growth and make its economic benefits a reality. To promote the next generation of mobile broadband, it is crucial that policymakers at the federal, state, and local levels avoid imposing new regulatory burdens and remove existing ones. Also, Congress and the FCC should remove or at least minimize impediments to wireless infrastructure investments in order to ensure continued innovation and growth in the indisputably competitive market for mobile services.