Bloomberg News

Cisco Says Mobile Data Traffic More Than Doubled as IPads Spread

February 14, 2012

Feb. 14 (Bloomberg) -- Cisco Systems Inc., the biggest maker of networking equipment, saw the strain on global wireless networks more than double last year, fueled by more people watching mobile video and using tablets.

In an annual report released today, Cisco said that wireless data traffic -- videos, audio and e-mails sent via laptops, smartphones and tablets -- rose 133 percent in 2011, a bit more than the 131 percent it anticipated.

Cisco’s Visual Networking Index is a key benchmark for the industry, used by wireless carriers, equipment suppliers and software developers to predict sales of their products. Faster data growth could force carriers to spend more money on new gear, following delays in upgrades that have crimped sales at Juniper Networks Inc. and other networking companies.

“Mobile data traffic will continue to explode,” Suraj Shetty, a vice president in charge of service-provider marketing at San Jose, California-based Cisco, said in an interview. “This is a trend we don’t see slowing down.”

Mobile data growth will climb 110 percent this year, Cisco predicted. And the traffic will increase 18-fold by 2016, reaching 10.8 exabytes per month, the company said. That’s equivalent to streaming 33 billion DVDs annually.

The surge resembles what happened with wired Internet networks between 1997 and 2001, when their average annual growth was 150 percent, Cisco said.

“A lot of service providers are increasing their spending on wireless,” Shetty said.

YouTube Clips

Video is a big source of the traffic. More people are watching YouTube clips or streamed movies on their laptops and phones -- activities that take up a lot of bandwidth. By 2016, video will account for more than 70 percent of all mobile traffic, up from about 52 percent in 2011, Cisco said.

The popularity of smartphones and tablets is another contributor. While laptops hooked up to wireless networks are the biggest single source of network congestion today, that’s changing. By 2016, smartphones will account for 48 percent of global mobile traffic, up from 18 percent now, Cisco said. Tablets will contribute 10 percent of the total, up from 1 percent in 2011.

Wireless consumption also is becoming more evenly distributed among customers. At the beginning of 2010, the heaviest 1 percent of users accounted for 52 percent of traffic. That percentage has come down since carriers such as AT&T Inc. curbed browsing speeds of the top users. In 2011, the top customers contributed 24 percent, Cisco said.

Gigabyte Club

Meanwhile, the average consumer’s data appetite is growing. By 2016, 60 percent of mobile users -- some 3 billion people worldwide -- will belong to the Gigabyte Club, according to Cisco. That means they consume more than a gigabyte of mobile data a month. In 2011, only half of 1 percent of users fit that description.

That’s put a further strain on wireless carriers, which already have struggled to meet demand in recent years, especially in cities like New York and San Francisco. One remedy is to rely more on Wi-Fi networks at homes, coffee shops and airports.

By 2015, Wi-Fi networks will overtake wired Internet connections, such as digital subscriber lines, as the technology handling more global traffic than any other -- reaching 46.7 percent, according to Cisco. Wi-Fi networks handled 38 percent of the total last year, while wired connections accounted for 60 percent. Cellular networks made up just 2 percent, Cisco found.

--Editors: Nick Turner, Stephen West

To contact the reporter on this story: Olga Kharif in Portland, Oregon, at okharif@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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