Explosion in mobile data traffic: presenting the case for Wi-Fi offload

Nikhil Jain
12 Oct 2011

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Industry overview

For many years now rising data traffic has been setting unprecedented trends in the mobile industry. Although communication service providers /network operators have realized the ramifications underlying this deluge of mobile data, they have unfortunately been very sluggish to respond to it. The business reality as it prevails now is that traditional voice oriented business models have been replaced by data, and voice now remains relatively less strategic in defining operators' revenue strategy. On the other hand, for mobile subscribers too, it's the availability of choice and personalization in mobile data services that commands their loyalty and keeps them satisfied. As mobile data consumption continues growing stronger, it keeps ushering in massive transformation on myriad aspects concerning networks, business models, devices, mobile ecosystem and subscribers too.

The scenario has drastically changed over the past two years. Now, operators across the globe, in both developed and emerging mobile broadband markets are finding that their precious networks resources are getting exhausted critically like never before. Several wireless carriers have reported that mobile data traffic over their networks have skyrocketed like never before. The fast increase in mobile broadband services, rich digital content such as Video streaming, Online Gaming, Social Networking etc as the impact of web 2.0 and eventually the arrival of iconic smartphones and connected devices such as Apple iPhone, Google Android devices, the iPad etc have together generated an unprecedented level of stress on mobile networks, leaving network operators in anxiety and incapable to respond. In 2010, global mobile data traffic nearly tripled (2.6 times growth) for the third year in a row, despite a slow economic recovery, increased traffic offload, and tiered pricing emerged a new norm. Again, global mobile data traffic is expected to grow 26 times from 2010 to 2015, a 92 percent CAGR.

Mobile video traffic was 49.8 percent of total mobile data traffic at the end of 2010, and will account for 52.8 percent of traffic by the end of 2011. Also by 2015, two-thirds of the world's mobile data traffic will be video.

The flipside to this trend is that while data revenues are growing, the rate of expansion is nowhere near that of traffic growth in mobile data. The non-linear relationship between revenue and traffic growth characterizes the principal cost related challenge mobile operators are facing now. At this juncture, mobile operators need to be wary of these challenges snowballing into bigger bottlenecks, and thus need to make the right technology choices and choose strategic partners that enhance their reach and help grow their revenues.

As a counter measure to reduce the burden on their network, several tier 1 operators have cut unlimited data plans and launched tiered plans to ensure network performance, following a similar move by AT&T in the US. However, operators do not find this as the only solution and do not want to lose a significant growing market smartphone users, looking for value added services. As a better practice and pragmatic method, operators are turning to mobile data offloading so as to relieve the network congestion and to monetize their 3G and 4Gnetworks more effectively

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