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Carriers struggle to share mobile data costs with users

Posted: 05 Apr 2011 ?? ?Print Version ?Bookmark and Share

Keywords:cellular data? mobile data? next-generation? cellular networks? machine-to-machine applications?

Increased use of cellular data over the next five years will pose a serious challenge to operators struggling to convince end users to pay for the growth of next-generation networks, says market watcher Parks Associates.

Users of 3G or higher cellular nets will rise from 1.2 billion in 2010 to 2.5 billion in 2015, according to Parks. Most of those users2.3 billionwill be on smartphones, a four-fold increase from the number of smartphone users today, the firm said.

In addition, use of 4G networks such as LTE and WiMax will rise from just four million subscribers today to 325 million in 2015, Parks estimated.

Global mobile subscribers

Parks: 3G and 4G use is exploding.

As a result, wireless carriers could see their revenues grow from about $204 billion in 2010 to $500 billion in 2015. But they will only hit that peak if they are able to eke out new revenues from two new sourcescharging at least some end users by the amount of data they access and new machine-to-machine applications, said Parks.

"Carriers realize they have to move to pay-per-use to cover the loading on their networks," said Harry Wang, director of mobile and health research at Parks. "We are at early stage of migration to variable pricing," he said.

End users will have to get dragged into pay-per-use models. According to a Parks survey, 62 percent of users want fixed price plans for unlimited data, and only four percent support a metered data plan.

Carriers are using a mix of femtocells and Wi-Fi to deal with the mobile data demand, but neither approach is ideal. Only about 1.7 million femtocells have been deployed to date, in part because they are relatively expensive. Wi-Fi is cheap but not as reliable or broad in coverage as cellular.

Carriers are also driving a variety of machine-to-machine apps to grow revenues. Those apps span a wide range of sectors from remote medical monitoring to online vending machines.

Some of the biggest increases in mobile data use are in video. Parks said video use on mobile networks surged more than 90 percent in the last six months of 2010.

"Video is definitely going to be the beast to tame on the mobile network," said Wang.

So far a small minority of users of new devices such as tablets, e-books and netbooks are using cellular links, but that could change. In a Parks survey, 48 percent of prospective tablet buyers said they would like the tablet to have 3G, up from 28 percent of tablets purchased with 3G in 2010.

Parks estimates about 69 million tablets will ship with 3G connectivity in 2015.

Data revenues growth

Parks: Carriers will only hit $500 billion in revenues if they get users to pay for data.

- Rick Merritt
??EE Times

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