Want to know why cellular carriers are throttling your data?
They don't have capacity to meet demand and likely can't build profitable infrastructure fast enough. New data from Gartner explains why.
The analyst firm predicts that the number of mobile connections will reach 5.6 billion this year, up from 5 billion in 2010. By 2015, Gartner expects the number will reach a stunning 7.4 billion. That's not as fast as global population growth -- reaching 7 billion people this year -- but it's plenty enough to generate big revenues and big headaches for carriers and their customers.
The number of mobile data connections will rise 11 percent this year if Gartner is right, while revenue will grow more than 22 percent to $314.7 billion, up from $257 billion in 2010. Gartner predicts $522 billion mobile data revenue in 2015.
"Mobile data traffic will increase significantly as more people will have access to mobile data networks, there is a migration toward smartphones and an increase in sales of media tablets", Jessica Ekholm, Gartner principal research analyst, says in a statement. "Mobile data volumes will continue to grow as mobile data networks become faster and more ubiquitous, while at the same time the number of data users and data usage per user is expected to grow".
The problem for carriers: The number of connections will grow at a faster pace than revenue from them. "Data revenue will continue to grow but at a much slower rate", Ekholm says. "This is causing a decoupling between revenue and data traffic, and it is also creating an increase in network costs for carriers as they try to sustain growing data traffic". The increase in costs isn't just about number of users but investments, too, as carriers build out higher-speed networks such as LTE.
In calculating its forecast, Gartner looked at four key indicators: data-consuming applications and content; high-speed network availability, number of mobile connections and smartphone adoption. Rival analyst firm IDC predicts that 1 billion smartphones will ship in 2015. However, given the sudden sales surge in bandwidth-hungry tablets and larger-screen smartphones, Gartner's forecast could easily underestimate demand and cost of revenue. Right now, the mobile device market is hugely volatile. Gartner and IDC are continually upgrading their forecasts, after repeatedly underestimating smartphone demand, for example. Another: No one predicted, even as recently as early 2010, that Android, which launched in late 2008 with one phone on one carrier, would reach 48 percent global smartphone OS market share in second quarter 2011.
Carriers are acutely aware of this evolving scenario, and they're taking action by offering more tiered data plans and capping big downloaders. Gartner recommends that carriers offer more choices to cellular consumers rather than burden them with confusing, overly-costly or even heavily-throttling data options. Among the recommendations:
- Offer ala-carte plans
- Offer more personalized plans
- Offer easy add-ons, such as extra data option when cap is reached or choice of faster data connection
Globally, mobile data is still viewed as a luxury service, but Gartner expects that to rapidly change to must-have -- necessity -- as devices like smartphones proliferate. As such, "carriers should focus on increasing the level of clarity and the transparency of their mobile data contracts in order to make the majority of customers feel more at ease in using data services. This is particularly important when it comes to data roaming", Ekholm says. "Offering clients various ways of being able to track and monitor their data usage would help carriers receive a larger amount of revenue from more profitable lower-usage, medium-pay users".
In an ideal world, if carriers generate more revenue and competition for data services increase, you'll pay less.