Analysts pour scorn on 'over-hyped' mobile data growth

Analysts pour scorn on 'over-hyped' mobile data growth

Summary: The growth of mobile data usage is overstated and there is a danger of operators investing in 4G technology too soon, an analyst firm has claimed.On Monday, Analysys Mason issued research suggesting that "mobile network operators can easily meet the demands on their networks at the current growth rates without huge investment in LTE", the company said in a statement entitled "Weak growth in over-hyped mobile data traffic dampens need for LTE".

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TOPICS: Telcos
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The growth of mobile data usage is overstated and there is a danger of operators investing in 4G technology too soon, an analyst firm has claimed.

On Monday, Analysys Mason issued research suggesting that "mobile network operators can easily meet the demands on their networks at the current growth rates without huge investment in LTE", the company said in a statement entitled "Weak growth in over-hyped mobile data traffic dampens need for LTE".

"There is a lot of exaggerated talk about mobile operators facing massively increasing pressure on their networks, and having to use every resource possible to make costs, revenue and traffic growth align," analyst Rupert Wood said in the statement. "The problem with the view that there is a huge impending wave of mobile data is that it does not correlate to measured traffic on mobile networks."

Wood poured scorn on the "frequently reiterated claim" that European mobile data traffic is doubling every year, saying growth was in reality "nothing like as fast". According to Analysys Mason, European mobile data traffic will have grown by just 35 percent in 2010, significantly down from the 110 percent growth seen in 2009. "There is no real prospect of a pick-up in growth rates in 2011," the company said.

Wood noted that most mobile broadband usage comes from PCs, rather than smartphones, but PC use of mobile broadband has the slowest growth. "In fact in some markets mobile broadband traffic growth has already come to a standstill", Wood said. "Subscriber bases are still growing, but each subscriber uses on average less and less."

As for smartphones, Wood added, relatively little mobile data traffic actually flows over the operators' cellular networks — as little as 10-20 percent in countries where fixed broadband connections are the norm. "The bulk of advanced smartphone traffic is generated indoors and most of it goes over Wi-Fi and fixed broadband," he said. "Mobile operators have little influence over consumer behaviour in this respect, and indoor traffic has consequently been lost to them."

Over-investment in LTE before the demand is there would lead to "a further devaluation of data transport", the statement noted.

However, another firm, Coleago Consulting, issued a statement on Wednesday questioning Analysys Mason's research. "The reported traffic numbers relate to the whole network, but mobile broadband traffic growth is not evenly geographically distributed," chief executive Stefan Zehle said. "What really matters are the 15 to 20 percent of cells that are congested. Here operators are experiencing capacity constraints which impact on the user experience."

Operators such as O2 want to be able to charge content providers for the privilege of having their services prioritised over those of rival providers. The justification for this, the operators say, is the explosion of data usage and the associated costs in terms of infrastructure. However, as Huawei recently told ZDNet UK, even a move to LTE would not entail a significant increase in operational costs for the carriers.

This week the European Commission reported back on a net neutrality consultation it carried out in the second half of this year. Respondents to the consulation expressed fears over fiixed and mobile operators' plans to charge content providers, claiming that they could amount to a "tax on innovation" and be anti-competitive.

Topic: Telcos

David Meyer

About David Meyer

David Meyer is a freelance technology journalist. He fell into journalism when he realised his musical career wouldn't pay the bills. David's main focus is on communications, as well as internet technologies, regulation and mobile devices.

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