Monday, February 10, 2014

Cisco’s Annual Data Report Highlights the Importance of Sound Spectrum Policy

On February 5, Cisco released its Global Data Traffic Forecast Update, 2013 - 2018. These reports, undertaken by Cisco annually, have proven to be valuable tools for understanding and forecasting shifts in data traffic.
This year’s report shows impressive growth in the adoption, usage, and number of mobile devices worldwide. But each of these metrics varied dramatically by region. North America led the world in nearly all categories of growth, including traffic, data usage, and “smart” device adoption.
While such leadership is evidence of a strong digital economy, it also highlights the growing demand for spectrum. And this continually growing spectrum demand emphasizes the importance of sound spectrum policy decisions by the FCC to ensure positive trends like those reported by Cisco continue.
According to Cisco, global mobile data traffic increased by 81 percent in 2013, rebounding from a slowed rate of growth in 2012. In 2013, global mobile data traffic reached 1.5 exabytes per month, increasing from 820 petabytes per month at the end of 2012. This traffic is nearly 18 times the traffic of the entire global Internet in 2000. Emerging market regions like the Middle east and Africa all doubled mobile data traffic in 2013. Mobile data traffic in more mature markets like North America and the Asia Pacific region grew by 77 and 86 percent respectively.
Cisco projects that global mobile data traffic will grow nearly 11-fold between 2013 and 2018, increasing to 15.9 exabytes per month by 2018, as the chart from Cisco’s report shows below.

In North America, consumers utilize more data than the rest of the world, averaging 1.38 GB per month in 2013, compared to just 185 MB in the Middle East and Africa. This trend is only expected to continue, as North America is a region that is projected to have the fastest growth in connections to mobile devices that access mobile networks. The North America and the Asia Pacific regions will account for nearly two-thirds of global mobile traffic by 2018. 
The report finds that the increasing number of wireless devices is one of the primary contributors to global data growth. Cisco projects that by the end of 2014 there will be more mobile-connected devices than people in the world. Consumers added over half a billion mobile devices and connections in 2013, making the global device and connection total 7 billion in 2013. As noted above, North America leads growth in this metric too, with the region projected to increase in mobile device connections at a 12 percent compounded annual growth rate.
Globally, mobile devices and connections are projected to grow to 10.2 billion by 2018. This will be comprised of approximately 8.2 billion personal mobile devices, and 2 billion machine-to-machine (M2M) connections. Over half of all devices connected to the mobile network will be “smart” by 2018, as the chart below shows. “Smart” devices have advanced computing and multimedia capabilities and a minimum of 3G connectivity. Again, North America is projected to lead growth in this area, with its regional share of smart devices and connections increasing from 65 to over 90 percent between 2013 and 2018.  Western and Central Europe fall second and third, with projected regional share of smart devices reaching 83 and 61 percent of total devices, respectively.

Cisco reports that the transition to smart devices is accompanied by an evolution to higher-generation connectivity. This fuels rapid production and adoption of advanced multimedia applications, and contributes to increased mobile and Wi-Fi traffic. By 2018, mobile video is projected to generate over 69 percent of mobile traffic by 2018, contributing to the 90 percent of total mobile data traffic accounted for by all cloud applications which include streaming audio, online gaming, social networking, web browsing and online storage.
In turn, the need for efficient bandwidth and network management drives 4G deployment and adoption worldwide. Japan and Korea are predicted to lead 4G deployment; Cisco estimates that 56 percent of Japan’s connections will be 4G by 2018, and 54 percent of Korea’s. North America is projected to have 51 percent of its mobile devices and connections with 4G capability by 2018, but it is expected to lead the world in its share of total global 4G connections.
Additionally, the marked growth of machine-to-machine (M2M) connections and wearable devices will also continue to drive mobile data traffic growth. Over the next five years, Cisco projects M2M and wearable connections will grow from 341 million to over 2 billion, and those will transition from predominantly 2G (71 percent) today toward 3G (51 percent) and 4G (14 percent) by 2018, as the chart below shows. For wearables, Cisco estimates that the number of devices will grow 8-fold by 2018, increasing from 22 to 177 million. Traffic from these devices is projected to grow an amazing 36-fold between 2013 and 2018, reaching 61 petabytes a month. Again, North America currently leads the world in this category, with 42 percent of the global share of wearables. North America is also slated to lead growth in this area, despite experiencing a decrease in relative share over the next five years as other regions adopt wearable device technology.  

The global growth in mobile connections, devices, and traffic, and the evolution and emergence of new technologies over the past year exemplify the strength and vitality of the digital economy worldwide. Cisco’s valuable work tracking these metrics provides a crucial resource that informs the decisions of carriers, vendors, innovators, investors, and policymakers alike. 
Clearly, Cisco’s latest report shows that North America leads the world in many growth categories. Although it is important to acknowledge this progress, it is imperative that policy-makers consider the implications of these findings. The report provides evidence of the exponential growth in data traffic, devices, applications, adoption of smart devices, and the accompanying demand for more spectrum. The North American region has by far the highest data use per month in the world, and the fastest growing number of devices with advanced computing and multimedia capabilities. Given Cisco’s projections, making more licensed and unlicensed spectrum available will be increasingly necessary.
The FCC has an important role to play in ensuring the continued growth and development of the mobile market. It is essential that the Commission not take for granted the way in which this progress has benefited consumers and fueled the development and deployment of new networks and technologies. Making more spectrum available for licensed and Wi-Fi offerings will help meet the constantly growing consumer demand for advanced services and devices demonstrated throughout Cisco’s report.
Successfully executing the upcoming incentive auction and framing forward-thinking broadband policy that reflects the robust and rapidly changing digital economy will be challenging. But approaching these proceedings with an understanding of the extent of mobile data growth and the resulting need for additional spectrum will be crucial to promoting future U.S. leadership in mobile broadband.
Cisco’s report is a valuable resource for all, and especially for communications policymakers.