The emperor has no clothes…

Posted in Regulatory, Spectrum at 7:11 am by timfarrar

As I pointed out last week, despite growing skepticism over “What happened to the spectrum crunch?“, the FCC Chairman has been busy making speeches about how “U.S. mobile data traffic grew almost 300% last year, and mobile traffic is projected to grow an additional 16-fold by 2016″ and asserting that

“There were many skeptics [in 2009] about whether we faced a spectrum crunch. Today virtually every expert confirms it.”

One would assume that the FCC Chairman regards the CTIA as experts, because after all they have been amongst the foremost cheerleaders for the spectrum crunch over the last three years. Indeed, upon releasing their latest wireless industry statistics, CTIA’s press release on Thursday proclaimed that “Wireless Network Data Traffic Increased 111 percent and Highlights Industry Need for More Spectrum”.

However, the press release buried the far more significant message in the CTIA’s actual data (which counts wireless network traffic from 97% of all US wireless subscribers – it is unclear if any WiFi traffic is included, but it appears not), namely that growth in data traffic per device came almost to a full stop in the first half of 2012 (compared to the previous six months), presumably due to a combination of:
1) changes in user behavior (offloading to WiFi),
2) dilution from less active users buying smartphones, and
3) data caps beginning to impact some high end users.

According to the CTIA survey, total wireless data traffic in the US in the first six months of 2012 was 635B Mbytes, up only 21% on the 526B Mbytes recorded in the previous six month period. This compares to the 54% growth seen in wireless data traffic between H1 and H2 of 2011, and the 51% growth in traffic between 2010H2 and 2011H1.

Even more remarkably, with the number of smartphones and wireless connected tablets growing by 16% between 2011H2 and 2012H1, data traffic per device was only up about 3% (based on the average number of devices in each 6 month period), compared to 29% between H1 and H2 of 2011 and 23% between 2010H2 and 2011H1.

As shown in the chart below, if we extrapolate this same growth in traffic per device to the second half of 2012, then total data traffic during the period will be about 750B Mbytes, and total traffic for 2012 will have increased only 60% compared to 2011. That is only half of Cisco’s Feb 2012 estimate of 118% growth in North American mobile data traffic between 2011 and 2012, and would clearly force a complete re-evaluation of future traffic projections. However, just from the data in the first half of 2012, we can already see that traffic growth is clearly not “exponential” and has now passed its peak. More importantly, if growth in traffic per device has been brought under control, then a spectrum crunch is no longer possible in the foreseeable future, because smartphone penetration is already approaching saturation.

As others have pointed out, “there is no more scarcity of wireless spectrum than there is a shortage of, say, the color purple”. Its therefore perhaps ironic to note that back when the last Emperor Julius (Caesar) was in charge, “virtually every expert confirmed” that the color purple was expensive, difficult to find and limited by regulatory fiat to a tiny elite group.


  1. WiFiConnections said,

    October 13, 2012 at 7:55 am

    So if the sky really isn’t “falling”, why did the major wireless operators impose data caps?

    It would be interesting if Wi-Fi use could be properly calculated and included in total data traffic. It wouldn’t account for the missing 50% from Cisco’s estimate, would it?

    Dale Buckey

  2. timfarrar said,

    October 13, 2012 at 8:33 am

    The flip answer is “because they could”. But in reality what I think we’re seeing in 2012H1 is probably in large part the consequence of the data caps – even when people don’t hit the cap, they adjust their behavior, through more offloading to WiFi and limiting their on-network usage.

    Cisco’s numbers supposedly exclude WiFi, although there is always the question of what to do with operator-owned WiFi like AT&T’s hotspots. There is a modest discrepancy between Cisco and CTIA’s 2011 numbers, but not that large. Cisco’s forecasts are based on strong per device usage growth, and that appears to be what is missing in the 2012H1 actuals.

  3. Spectrum Crunch? | Spectrum Omega said,

    October 13, 2012 at 12:40 pm

    [...] Tim Farrar pointed out that bandwidth demands aren’t increasing on a per-device basis (though as more people get smartphones, overall traffic continues to increase). To me it seems obvious this is a result of data caps, and given the performance I’ve had with my iPhone 5 so far it seems like the spectrum crunch is easing (I’ll reserve final judgment until after Christmas and the holidays to see how the LTE networks hold up). The telecoms are pushing hard on things like LTE-Adv, hetnets, microcells, and 40MHz LTE, but what good is all that coverage and 25Mb/s data speed all if you still have a 2GB or 3GB monthly cap for $30/mo? Or 10GB of data to share between 4 people for $120/mo? [...]

  4. Deloitte’s mobile-broadband spectrum policy primer « Steven J. Crowley, P.E. said,

    October 15, 2012 at 1:57 am

    [...] Deloitte stumbles in the section on U.S. mobile broadband demand. It argues there is “exponential growth” in traffic, but the data cited do not exhibit exponential properties. Earlier this year, 4G Americas prepared a forecast, based on a global data forecast, suggesting that mobile data growth follows a logistic function more so than an exponential one. (In the same report, 4G Americas has also suggested mobile data growth could “saturate” in the year 2020.) Since the Deloitte report came out, CTIA has released data indicating a dramatic drop in U.S. traffic. [...]

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

    February 6, 2013 at 10:11 am

    [...] traffic in the US was estimated to have grown by only 62% (almost exactly as I predicted from the CTIA data last October) to 206,854 TB/mo in Dec 2012. However, in absolute terms Cisco’s number for the US appears [...]

  6. TMF Associates MSS blog » This year, next year, sometime, never… said,

    February 22, 2013 at 9:51 am

    [...] As a result, the timeline for that sale (at least if Ergen is to get an attractive price) may be pretty long, probably beyond the resolution of the broadcast incentive auction (scheduled for 2014) and perhaps even extending until after the 2016 Presidential election, if AT&T and Verizon are to be regarded as serious bidders, given the desire of the FCC to let Sprint and T-Mobile catch-up with their bigger rivals. That is even more likely to be the case if the recent slowdown in the growth of wireless data traffic prompts a reassessment of operators’ future spectrum needs and finally buries the supposed “spectrum crunch”. [...]

  7. TMF Associates MSS blog » Let’s not talk about traffic growth… said,

    May 2, 2013 at 11:11 am

    [...] shown in the chart above. That resulted in 2012 traffic growth coming at almost 70% compared to the 60% growth that would have resulted from a continuation of the trend seen in the first half of the year. The [...]

  8. Ultra HD | McAdams On said,

    August 30, 2013 at 4:38 pm

    [...] There is increasing evidence that the explosion in data consumption by smartphones is a function of imaginary calculus. And new iDevices are seeming more and more like the old iDevices with the word “new” in front [...]

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