01.30.14

Still going down?

Posted in General, Spectrum at 6:03 pm by timfarrar

Today Cisco helpfully tweeted out one of the key statistics from their upcoming VNI report, which is scheduled for release on Feb 5, indicating that the “annual run rate” for mobile data traffic in 2013 was “less than 18 exabytes.” That’s even lower than last year’s report which forecast total traffic of 1.58EB/mo at the end of 2013. So I thought it would be interesting to examine how Cisco’s projection of global mobile data traffic for 2013 has evolved over the last six years of VNI reports.

The new figure also suggests that unless Cisco retrospectively reduced its estimate of global traffic in 2012 (which happened last year), then global traffic growth was only ~68% in 2013, rather than the 78% growth that Cisco forecasted in February 2013. Looking out to 2018, where an annual run rate of 190EB (i.e. monthly traffic of 15.8EB) is indicated, that would compare to a February 2013 projection for monthly traffic of 11.2EB at the end of 2017, or 42% growth in 2018 if the 2017 figure remained unchanged (in fact it may also come down slightly).

Sadly, we don’t have any CTIA benchmarks for traffic growth in the US in the first half of 2013, as that survey has been converted from a six monthly analysis to an annual effort, but its interesting to contrast these numbers with Chetan Sharma’s recent report suggesting that usage per consumer grew from 690MB to 1.2GB each month in the US in 2013 (74% growth) and from 140MB to 240MB per month globally (71% growth). Sharma’s numbers seem to be a little on the high side because obviously the number of smartphone users grew significantly during the year and there is tablet traffic to add in as well. One possibility is that Cisco is assuming there was little or no growth in laptop data traffic, which accounted for 46% of mobile data traffic in 2012 according to its February 2013 report.

We’ll obviously find out more next week, but it seems that despite evidence consumers are using more data on their smartphones when they upgrade to LTE, mobile data traffic growth worldwide is still slowing rather more rapidly than Cisco previously expected.

UPDATE (2/5): The released Cisco figures confirmed that traffic in 2012 is now estimated at 820PB/month, increasing by 81% to 1488PB/month in 2013. This represents a retrospective reduction of 7.3% in the 2012 estimate and 5.7% in the 2013 estimate. The trend for 2012, 2013 and growth between 2012 and 2013 is shown below.

3 Comments »

  1. Stephen said,

    January 31, 2014 at 3:29 pm

    Tim,
    Good and timely observations, as always! Thank you!

    However, absolute traffic volume can increase while the percentage declines. The denominator in the growth rate is accumulating a large base. Only with exponential growth does the rate stay constant, the Cisco data has approximated a parabola, which is increasing traffic but less than an exponential function.

    For example, In their 2012 report, they show global mobile data and internet traffic going from:
    2012 0.885 EB/mo
    2013 1.578 EB/mo an increase of 0.693 EB/mo or 78.3% over 2012 #
    2014 2.798 EB/mo an increase of 1.22 EB/mo or 77.3% over 2013 #.
    That’s a slight decrease in growth rate but nearly double the absolute growth (1.22/0.693 =1.8).
    Using their new 1.5 EB/mo (max) number for 2013 we see an increase in traffic of (1.5-0.885=0.615 EB/mo) which is still over twice the increase seen in going from 2011 to 2012 (0.885-0.597), using their May 2012 report for 2011 traffic.

    I agree that growth rates are decreasing but the absolute yearly increase in traffic is still growing impressively. The equipment that is tied proportionally to capacity should be growing in unit sales year over year. However, price errosion is constraining infrastructure spending.

    Steve

  2. timfarrar said,

    January 31, 2014 at 3:46 pm

    Yes, absolute growth is certainly increasing and it would be surprising if the increase in traffic wasn’t larger each year than the year before. My expectation is that you have an S-curve (growing smartphone penetration) overlaid on an ongoing moderate annual usage growth per person (30% would be inline with fixed network experience, but it might be lower because much of the extra usage is carried on WiFi).

    My post is really directly to the accuracy of Cisco’s predictions for a particular year (i.e. 2013). Their expectations for traffic levels in 2013 have fallen in each of the last two years, in contrast to the increases in earlier forecasts. Analyst forecasts often undershoot when growth is accelerating and then overshoot when growth is decelerating, and Cisco is no different.

    I’m told that Cisco’s 2012 numbers have been retrospectively downgraded as well, because the expectations for laptop data traffic were overstated. Once these figures are available it will be possible to plot how the expectations for growth in 2013 (in addition to the absolute growth shown above) have varied over 6 years of Cisco VNI reports.

  3. daveburstein said,

    February 4, 2014 at 2:55 am

    Tim

    Excellent work, again
    Dave Burstein

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