Video Data Is the Leading Contributor to Rapid Traffic Growth

On November 26, 2018, Cisco released its Visual Network Index (VNI): Forecast and Trends, 2017-2022. This annual report is useful to policymakers, entrepreneurs, and consumers because it projects growth of broadband devices and network technologies at the national, continental, and global level. Given the projections, the report should be particularly useful in getting policymakers to focus on the need to remove regulatory and other impediments to deploying broadband infrastructure. Cisco deserves credit for producing this valuable resource.

According to Cisco, the significant rise in Internet traffic experienced over the past decade or so is expected to continue for the next five years as connections increase and networks expand. The proliferation of video applications is by far the most significant driving force behind exponentially increasing Internet traffic. On a global level, video traffic comprised 75% of Internet data in 2017 and it will increase to 82% by 2022. In the United States, video traffic comprised 81% of all Internet traffic in 2017 and it will increase to 82% by 2022.

As the graph below shows, global Internet traffic will grow threefold from 2017 to 2022, at the same rate as Internet traffic growth in the United States.

Global Internet Traffic: Cisco Forecasts 396 Exabytes per Month by 2022

Overall, the amount of Internet traffic and the number of users and devices throughout the world is astounding. By 2022, there will be 4.8 billion Internet users (60% of the global population), up from 3.4 billion in 2017. And those users will connect to 28.5 billion networked devices, up from 18 billion in 2017. In the United States by 2022, there will be 317 million Internet users (94% of the population) connecting to 4.6 billion networked devices. That means there will be 13.6 networked devices per capita by 2022, up from 8.1 per capita in 2017.

The graph below shows the extraordinary global growth projected across all Internet-enabled devices.

Global Devices and Connections Growth, 2017 - 2022

While overall Internet traffic and devices are growing at a phenomenal rate, mobile traffic is growing twice as fast as fixed traffic. The United States has been a leader in the growth of mobile traffic, which is expected to increase fivefold from 2017 to 2022. Over that same span, global mobile traffic is expected to grow even faster than the U.S. mobile traffic.

Here are some key findings regarding the growth of mobile broadband throughout the world:

• Average smartphone usage will grow from 5.1 GB per month in 2017 to 26.1 GB per month in 2022.

• Global mobile traffic will increase sevenfold between 2017 and 2022.

• Global mobile traffic will grow nearly twice as fast as fixed Internet traffic from 2017 to 2022.

• Video will comprise 79% of global mobile traffic by 2022, compared to just 59% in 2017.

• Global mobile traffic by 2022 will be equivalent to 38x the volume of the entire global Internet in 2005.

Here are some of the key findings regarding the growth of mobile broadband in the United States:

• The average mobile connection speed will grow threefold from 2017 to 2022, reaching 39 Mbps.

• U.S. mobile traffic will reach 5.7 exabytes per month by 2022, up from 1.2 exabytes per month in 2017.

• U.S. mobile traffic will grow fivefold from 2017 to 2022, a compound annual growth rate of 36%.

• U.S. mobile traffic will grow two times faster than fixed IP traffic from 2017 to 2022.

• U.S. mobile traffic by 2022 will be equivalent to 12x the volume of the entire U.S. Internet in 2005.

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 traffic compared to previous mobile network technologies. Now, we are on the cusp of deploying 5G mobile network technology, which will deliver speeds at least 10 times faster than 4G and enable “smart cities” to more efficiently use local services such as energy, utilities, transportation, and public safety. Deployment of 5G technology is expected to create 3 million jobs and $500 billion in annual economic activity.

Since my February 2017 blog regarding Cisco’s most recent mobile traffic update, the FCC has adopted a number of items that should spur innovation and investment in U.S. broadband networks, both mobile and fixed. Adoption of the Restoring Internet Freedom Order, proposed in May 2017, repealed the public utility-style regulations imposed in the Title II Order. Internet service providers increased broadband investment in 2017 after a two-year decline. Moreover, the FCC has adopted a number of wireless and wireline infrastructure items that remove state and local regulatory barriers. These should accelerate 5G wireless deployment. (See here and here.) Lastly, the Commission has identified a number of spectrum bands for commercial assignment and allocation, which will be tremendously valuable as consumers continue to demand more mobile data. (See here and here.)

Again, Cisco’s report is an important tool. It should help U.S. policymakers understand that mobile and fixed data services require additional spectrum to match the forecasted growth and to make the social and economic benefits of 5G a reality. To promote 5G and the emergence of other broadband technologies, policymakers at the federal, state, and local levels must avoid imposing unnecessary new regulatory burdens and continue to remove existing ones. Also, Congress and the FCC should continue to remove, or at least minimize, impediments to infrastructure investments in order to ensure continued innovation and growth in the dynamically competitive market for broadband services.

Strong Property Rights Lead to Economic Prosperity

In July 2017, the Property Rights Alliance at Americans for Tax Reform published the 2017 International Property Rights Index (IPRI), ranking 127 countries around the world based on the strength of both physical and intellectual property rights. The 2017 edition comprises over 98% of global gross domestic product (GDP) and over 93% of the world’s population. Importantly, the IPRI finds that property rights are a defining factor impacting a country’s investment, entrepreneurship, and economic prosperity.

The International Property Rights Index includes three core components (legal and political environment, physical property rights, and intellectual property rights) and ten corresponding categories. The legal and political environment component includes judicial independence, rule of law, political stability, and control of corruption. The physical property rights component includes the protection of such rights, the ability to register property, and the ease of access to loans. The intellectual property rights component includes the protection and enforcement of such rights, strength of patent protections, and the level of copyright piracy. Using data from other international indices, the IPRI compiles these scores into a 0-10 scale for each of the 127 countries.

New Zealand ranks highest with a score of 8.63, followed by Finland and Sweden with scores of 8.62 and 8.61, respectively. The United States ranks 14^th with a score of 8.07, moving up from 15^th in 2016 when it scored a 7.74. On the other hand, the bottom three countries are Bangladesh, Venezuela, and Yemen, with scores of 3.12, 3.06, and 2.73, respectively.

Significantly, the Index provides insight into correlations between IPRI scores and many economic outcomes. Free State Foundation scholars often have stated that strong protection of property rights, specifically strong protections of intellectual property rights, will foster creativity, innovation, and economic growth. The strong positive correlations found in the IPRI are consistent with those statements. For example, IPRI scores have a correlation coefficient of 0.814 with GDP per capita, 0.764 with gross capital formation per capita, and 0.878 with global entrepreneurship. Other strong positive correlations include a 0.857 coefficient with networked readiness/connectivity, 0.801 with civic activism, and 0.768 with overall economic freedom.

With these robust positive correlations, it should not be a surprise that the top 20% of countries in the IPRI have an average GDP per capita of over $57,000, while the bottom 20% of countries have an average GDP per capita of just over $4,500.

The IPRI, in addition to the U.S. Chamber of Commerce’s Global Intellectual Property (IP) Center’s 2017 edition of the International IP Index, provide U.S. policymakers a useful tool for assessing how to improve our country’s physical and intellectual property rights systems. (See this February 2017 blog.) Providing strong protections to property rights is a principle embodied in the U.S. Constitution and improving such protections will enhance creativity and innovation and foster economic growth. (For much more concerning foundational principles supporting IP rights protections in the United States, please read “The Constitutional Foundations of Intellectual Property: A Natural Rights Perspective” by FSF President Randolph May and Senior Fellow Seth Cooper.)

Additionally, policymakers in the countries which rank towards the bottom, such as Venezuela or Yemen, should use these indices to their advantage. From the correlations cited above, it is clear that strong physical and intellectual property rights foster innovation and economic prosperity. As undeveloped and developing countries continue to improve their property rights protections, U.S. companies will be more inclined to expand international trade into those countries, creating economic opportunities in impoverished parts of the world. Robust property rights reduce poverty by incentivizing economic activity because entrepreneurs understand that their innovations and earnings will be protected.

Finally, the U.S. must continue to be a leader throughout the world by participating in trade agreements that contain effective provisions that support protection of property rights. As more countries adopt strong property rights through trade agreements, the global economy will grow substantially because mutual gains from international trade are much higher when participating countries adopt and enforce laws that protect physical and intellectual property rights.

Online Video Is Driving Internet Traffic Growth

On June 6, 2016, Cisco released its annual Visual Network Index (VNI): Forecast and Methodology, 2015-2020. Consistent with Cisco’s latest Mobile Data Traffic Update, which I highlighted in a February 2016 blog, this new index projects the global growth of Internet traffic and devices on all broadband technologies as opposed to just mobile.

Here are some of the key findings:

• Global Internet traffic will increase nearly threefold over the next five years and will have increased nearly 100-fold from 2005 to 2020.

• Smartphone traffic will exceed PC traffic by 2020. In 2015, PCs accounted for 53 percent of total Internet traffic, but by 2020 PCs will account for only 29 percent of traffic. Smartphones will account for 30 percent of total Internet traffic in 2020, up from 8 percent in 2015.

• Traffic from wireless and mobile devices will comprise two-thirds of total Internet traffic by 2020.

• Global Internet traffic in 2020 will be equivalent to 95 times the volume of the entire global Internet in 2005.

• The number of devices connected to broadband networks will be three times as high as the global population in 2020. There will be 3.4 networked devices per capita by 2020, up from 2.2 networked devices per capita in 2015

The proliferation of video applications is by far the biggest driving force behind the increases in Internet traffic over the past several years and will continue to be for the next five years as connections increase and networks expand. On a global level, video traffic is projected to comprise 79 percent of Internet traffic in 2020. This is an increase of 16 percentage points from 2015 (63 percent).

While the United States certainly has been a leader in the amount of growth in connections and traffic, Cisco projects the rest of the world will have tremendous growth over the next five years. For the U.S. to continue to lead with respect to broadband deployment and innovation in broadband technologies, it is important that the FCC and state and local agencies remove unnecessary and burdensome regulatory barriers that stifle investment and innovation in broadband networks. Additionally, for continued growth in mobile broadband innovation, the FCC needs to allocate more licensed and unlicensed spectrum to meet the increasing consumer demand for advanced services and devices.

Cisco Projects Global Mobile Traffic to Increase 8-Fold by 2020

On February 3, 2016, Cisco released its annual Visual Network Index (VNI) Forecast Report: Mobile Data Traffic Update, 2015-2020. I certainly recommend exploring the global, regional, and national findings on Cisco’s helpful interactive website.

The proliferation of video applications are by far the biggest driving force behind the increases in mobile traffic over the past several years and will continue to be for the next five years as connections increase and networks expand. On a global level, video traffic is projected to comprise 75 percent of mobile data in 2020, an increase of 20 percentage points from 2015 (55 percent). While the United States certainly has been a leader in the growth of mobile connections and traffic, Cisco projects the rest of the world will have tremendous growth over the next five years.

Here are some key findings regarding the growth of mobile connections and traffic throughout the world:

• More than half a billion (563 million) mobile devices and connections were added in 2015.

• Mobile network (cellular) connection speeds grew 20 percent in 2015.

• Average smartphone usage grew 43 percent from 648 megabytes per month in 2014 to 929 megabytes per month in 2015.

• Global mobile data traffic will increase nearly 8-fold between 2015 and 2020.

• By 2020, 4G will be 40.5 percent of connections, but 72 percent of total traffic.

• The average smartphone will generate 4.4 gigabytes of traffic per month by 2020, a 5-fold increase over the 2015 average of 929 megabytes per month.

As you can see from the two graphs below, the global growth of both mobile traffic and the number of devices is projected to be enormous over the next five years.

Cisco Forecasts 30.6 Exabytes per Month of Mobile Data Traffic by 2020

Global Mobile Devices and Connections Growth

Here are some of the key findings for the United States:

• 43.3 million net new devices and connections were added to mobile networks in 2015.

• Mobile data traffic will grow 6-fold from 2015 to 2020, a compound annual growth rate of 42%.

• Mobile data traffic will grow 2 times faster than fixed IP traffic from 2015 to 2020.

• Mobile traffic per user will reach 8,835 megabytes per month by 2020, up from 1,775 megabytes per month in 2015, a compound annual growth rate of 37%.

• There will be 292.2 million (88% of the United States' population) mobile users by 2020, up from 275.7 million in 2015, a compound annual growth rate of 1.2%.

North America, and predominately the United States, has been a global leader in the innovation and development of mobile broadband networks. By 2020, 40.5 percent of all global devices and connections will have 4G capacity, but in North America, 59 percent of devices and connections will have 4G capability.

The United States’ leadership in the ongoing development of mobile broadband, devices, and content applications is the result of many economic and institutional factors. However, it should not go unnoticed that a light-touch regulatory environment has helped entrepreneurs spur investment in new products and services through the process of “permissionless innovation.” As laptops, tablets, phablets, and smartphones have morphed into each other and become substitutes, competition among them has increased, reducing the price and increasing the quantity demanded by consumers. This increase in consumer demand has created more innovation in mobile services, more broadband network expansion, and more application accessibility.

Additionally, because video currently comprises 55 percent of mobile data, strong intellectual property rights have also played a pivotal role, allowing for a growing number of brands in mobile devices and new video content. It is important for artists, innovators, and service providers to have secure copyrights and patent rights in order to incentivize returns on creation and investment. The prospect of profitable returns invites new entrants into the market, which ultimately leads to more investment and lower prices for consumers.

Cisco’s report provides very important information for policymakers. It is essential that the FCC not take for granted the way in which the development and deployment of mobile networks and technologies has benefited consumers. More licensed and unlicensed spectrum is needed to meet the growing consumer demand for advanced services and devices. Understanding the extent of mobile data growth and the resulting need for additional spectrum will be crucial for promoting future U.S. leadership in mobile broadband – as will be the need for the government to avoid imposing burdensome regulatory requirements in a market which is indisputably competitive.

  

Cisco’s report provides very important information for policymakers. It is essential that the FCC not take for granted the way in which the development and deployment of mobile networks and technologies has benefited consumers. More licensed and unlicensed spectrum is needed to meet the growing consumer demand for advanced services and devices. Understanding the extent of mobile data growth and the resulting need for additional spectrum will be crucial for promoting future U.S. leadership in mobile broadband – as will be the need for the government to avoid imposing burdensome regulatory requirements in a market which is indisputably competitive.

New Cisco Report Projects Huge Increases in Mobile Traffic and Connections

On February 3, Cisco released its annual Visual Network Index (VNI) Forecast Report: Mobile Data Traffic Update, 2014-2019. Although there are several key findings that were made clear by the Vice President of Global Technology Policy Dr. Robert Pepper and the Vice President of Service Provider Marketing Doug Webster, who presented the report, I certainly recommend exploring the global, regional, and national findings on Cisco’s helpful interactive website. (See FSF blog on last year’s report here.)

Video applications are by far the biggest driving force behind the increases in mobile traffic for the past several years and will continue to be for the next five years as connections increase and networks expand. On a global level, video is projected to comprise 72 percent of mobile data in 2019, an increase of 17 percentage points from 2014 (55 percent). While the United States has certainly been a leader in the growth of mobile connections and traffic, the report projects the rest of the world will have tremendous growth over the next five years. 

Some key finding regarding the growth of mobile connections and traffic throughout the world:

• Almost half a billion (497 million) mobile devices and connections were added in 2014.
• Mobile network (cellular) connection speeds grew 20 percent in 2014.
• Average smartphone usage grew 45 percent in 2014.
• Global mobile data traffic will increase nearly tenfold between 2014 and 2019.
• By 2019, 4G will be 26 percent of connections, but 68 percent of total traffic.
• The average smartphone will generate 4.0 GB of traffic per month by 2019, a fivefold increase over the 2014 average of 819 MB per month.

As you can see from the two graphs below, the global growth of mobile traffic and devices is projected to be enormous over the next five years.

Cisco Forecasts 24.3 Exabytes per Month of Mobile Data Traffic by 2019

One of the many innovations in broadband technologies and applications is the ability to compress data for high bandwidth applications. This innovative tool expands the consumer base of applications by allowing users to get the same great experience while using less data, ultimately making less advanced networks more useful. Embedded within the methodology of the Cisco report is a 7 percent compression rate over each year of the projection. This speaks volumes to the projected growth in mobile traffic if we also expect applications to get smaller overtime (all else equal).

Global Mobile Devices and Connections Growth

Here are some of the key findings for the United States:

• 40.7 million smartphones were added to the mobile network in 2014.
• Mobile data traffic will grow 7-fold from 2014 to 2019.
• Mobile traffic per user will reach 11,510 megabytes per month by 2019, up from 1,960 megabytes per month in 2014, a compound annual growth rate of 41%.
• There will be 290.1 million (86% of the United States' population) mobile users by 2019, up from 268.5 million in 2014, a compound annual growth rate of 1.6%.
• Mobile data traffic in 2014 was equivalent to 32x the volume of U.S. mobile traffic five years earlier (in 2009).

North America, and predominately the United States, has been a global leader in the development of mobile broadband. North America had 39.1 percent of all global 4G connections in 2014 and that percentage is projected to increase to 42.4 percent by 2019.

The United States’ leadership in the ongoing development of mobile broadband, devices, and content applications is the result of many economic and institutional factors. However, it should not go unnoticed that a light-touch regulatory environment has helped entrepreneurs spur investment in new products and services through the process of “permissionless innovation.” As laptops, tablets, phablets, and smartphones have morphed into each other and become substitutes, competition between them has increased, reducing the price and increasing the quantity demanded by consumers. This increase in consumer demand has created more network development, expansion, and application accessibility.

Additionally, because video currently comprises 55 percent of mobile data, strong intellectual property rights have also played a pivotal role, allowing for a growing number of brands in mobile devices and new video content. It is important for artists, innovators, and service providers to have secure copyrights and patent rights in order to incentivize returns on creation and investment. The prospect of profitable returns invites new entrants into the market, which ultimately leads to more investment and lower prices for consumers.

This report provides very important information for policymakers. It is essential that the FCC not take for granted the way in which the development and deployment of mobile networks and technologies has benefited consumers. As the report recommends, more licensed and unlicensed spectrum is needed to help meet the constantly growing consumer demand for advanced services and devices. Understanding of the extent of mobile data growth and the resulting need for additional spectrum will be crucial for promoting future U.S. leadership in mobile broadband – as will be the need for the government to avoid imposing burdensome regulatory requirements in a market which is indisputably competitive.

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.