04.07.11

How wrong is Cisco?

Posted in Regulatory, Spectrum at 12:08 pm by timfarrar

As I noted when AT&T announced its deal with T-Mobile a couple of weeks ago, one of the most interesting facts in AT&T’s presentation was that it included significant detail on the traffic growth experienced on AT&T’s wireless network. Back in January, T-Mobile also put forward its own expectations that traffic would grow at 60% p.a. between 2010 and 2015.

If we compare these figures (assuming T-Mobile’s figure holds for 2009 as well) and look at the ratio of 2014 data traffic to that in 2009 then the Cisco projections are a striking outlier, and the AT&T and T-Mobile expectations are dramatically lower than any of the analyst forecasts. It should also be noted that the AT&T network traffic estimates appear to include the acquisition of TMO, so the actual growth in traffic per subscriber is even lower – AT&T states that its expectation is for 8-10 times growth between 2010 and 2015, very much in line with TMO’s growth projection. Even if data traffic on other wireless networks grows faster than on AT&T’s network, it hardly accounts for a factor of two difference in overall growth, let alone a factor of 4-5 as Cisco estimates.

So why do we hear so much from the FCC Chairman about the Cisco forecast as justification for the FCC’s actions to save us from the supposed “spectrum crisis”? As commentators have pointed out, it is after all primarily a sales brochure for Cisco’s network equipment. As an aside, the latest Feb 2011 Cisco forecast even appears to overestimate current wireless traffic, estimating North American wireless data traffic was 49Pbytes per month in 2010, when an extrapolation from AT&T’s figure of 12Pbytes per month at the end of 2010 (assuming AT&T is 40% of US traffic, and the US is 90% of North America) would indicate that the actual traffic is closer to 33Pbytes per month. Why also is the FCC basing policy on its deeply flawed October 2010 paper, which assumes 35 times growth between 2009 and 2014?

In my conversations with knowledgeable observers since the AT&T/T-Mobile deal, there seems to be an increasing recognition that the “spectrum crisis” is exaggerated and that there is no near term shortage of spectrum. If the FCC wants to make the case that we need more spectrum by 2018 or 2020 then that’s fine, and maybe it is true that political action is needed on incentive auctions now so that broadcast TV spectrum can be brought into use by 2018. However, basing your arguments on projections that are hugely exaggerated risks the whole edifice tumbling down once these errors are exposed.

2 Comments »

  1. TMF Associates MSS blog » How wrong is Cisco? | MisterDTV said,

    February 5, 2013 at 7:40 pm

    [...] TMF Associates MSS blog » How wrong is Cisco?. Share this:TwitterFacebookLinkedInEmailPrintLike this:LikeBe the first to like this. This entry [...]

  2. TMF Associates MSS blog » Cisco: castle deflated said,

    February 6, 2013 at 10:12 am

    [...] who have made so much fuss about the “spectrum crisis”, and have repeatedly cited Cisco’s over-optimistic projections to justify their argument, will now do likewise. Perhaps they might even give less credence to [...]

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