It isn’t news that mobile service providers face bandwidth demands that threaten to outrun revenue while boosting capital spending and operating expense as well.
In Germany, Solon expects a 15-fold increase in data demand over the next five years. The additional network capacity required would almost double network operating expense from 12 percent of revenues in 2011 to 23 percent of revenues in 2016.
Global mobile data traffic will grow from 3.89 trillion megabytes in 2011 to 39.75 trillion megabytes in 2016, amounting to a ten-fold increase, according to Informa Telecoms & Media (
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Alert) . In contrast, global mobile data revenues will grow from $325.8 billion in 2011 to $627.5 billion in 2016, amounting to a two-fold increase.
In 2016, mobile phone users will, on average, consume 6.5 times as much video, over eight times as much music and social media, and nearly 10 times as much games as in 2011 according to Informa Telecoms & Media.
And although the revenue pie will grow, the share earned by mobile operators will shrink. If you exclude simple access and text messaging, the percentage of revenue earned by mobile service providers from content or commerce operations will drop from 56 percent in 2011 to 41 percent in 2016, Informa Telecoms & Media argues.
By 2016, the average mobile user also will be browsing six times as many web pages and downloading 14 times as many megabytes of applications on their handset as in 2011. Text (SMS) and picture (MMS) messaging traffic will continue to grow, but at a much slower pace than most other mobile data services. On average, mobile users sent 118 text messages and two multimedia messages a month in 2011, compared to the 146 text messages and four multimedia messages in 2016.
In terms of remedies, a move to Long Term Evolution fourth generation networks will help, as LTE (
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Alert) is more spectrally efficient by seven to 12 times. Also, new spectrum allocations for LTE are incremental to existing 3G spectrum allocations, so LTE will add net spectrum.
But that will take some time. Analysts at
Solon assume that by 2016, not more than 25 to 35 percent of the total Western European data traffic will be handled by 4G networks.
Handling of video streams also might be important. More than half of all video sessions are abandoned before the viewer reaches midpoint, Solon says. That means “downloading” complete videos is wasteful, if half of all those videos are terminated about half way through.
In some cases, service providers might be able to changing video resolution and compression ratios, or lower the bit-rate of a video, at least when those actions can be taken without damaging user experience.
And though some object, traffic shaping can be used in ways that change user behavior or otherwise match revenue to data consumption while lessening network congestion. Usage caps, time-based tariffs, or rate-limiting after a certain download volume is reached are some basic tools for “steering user behavior” and managing traffic loads at peak usage periods.
Solon also estimates that only about 30 percent of today’s mobile usage actually takes place at locations without access to fixed-line services. So WiFi (
News 
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Alert) offload can help, as well. The point is that the mobile data revenue-cost relationship is becoming a serious problem, Solon and Informa Telecoms data suggest.
Edited by
Carrie Schmelkin 
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