Ericsson Mobility Report: LTE and smartphone uptake drives video traffic growth

• Video traffic growing by 60 percent annually, driven by better network speeds
• Total global smartphone subscriptions hit the 1.2 billion mark in 2012, and are due to reach 4.5 billion by the end of 2018 
• 60 percent of the world's population due to be covered by LTE in 2018
• Smartphone users spend most time on social networks: an average of 85 minutes a day in some networks 
• Data traffic volumes doubled between Q1 2012 and Q1 2013, and are expected to grow 12-fold by 2018

The new edition of the Ericsson (NASDAQ: ERIC) Mobility Report reveals that mobile-data traffic will continue to grow significantly in the coming years, a trend driven mainly by video. Overall data traffic is expected to grow 12-fold by the end of 2018. Increasing usage is driven by continual growth in the amount of content available as well as the improved network speeds that come with HSPA and LTE development.

Douglas Gilstrap, Senior Vice President and Head of Strategy at Ericsson, says: "LTE services will be available to about 60 percent of the world's population in 2018. We expect LTE subscriptions to exceed 1 billion in 2017, driven by more capable devices and demand for data-intensive services such as video. Owing to the build out of WCDMA/HSPA, network speeds have improved, and so has the user experience."

Video makes up the largest segment of data traffic in networks, and it is expected to grow around 60 percent annually up until the end of 2018. Video consumption is on average 2.6GB per subscription per month in some networks.

While video is popular, users don't necessarily tend to spend the most time on data-heavy applications. Consumers spend more time on social networking: an average of up to 85 minutes per day in some networks.

Smartphones accounted for around half of all mobile-phone sales in Q1 2013, compared with roughly 40 percent for the whole of 2012. The number of total mobile subscriptions grew by 8 percent globally year-on-year by Q1 2013. Of those, WCDMA/HSPA added around 60 million subscriptions, GSM/EDGE-only subscriptions grew by roughly 30 million, and LTE added around 20 million new subscriptions. Mobile-broadband subscriptions grew even faster over this period (at a rate of 45 percent year-on-year), reaching around 1.7 billion.

The Mobility Report also addresses the concept of "app coverage" - broadening the definition of coverage from voice to include how well users are able to access their mobile apps - and presents a new framework explaining the effects of varying network performance in a way that is relevant to the user.

In this edition of the report, the relationship between network performance and consumer loyalty is also studied. Network performance is the principal driver of subscriber loyalty to mobile operators, followed by value for money. Other sections of the report explain the effects of smartphone signaling on data traffic, and look at data roaming, identifying opportunities for operators to generate new revenue streams.

Mobile data revenues to exceed US$200 billion in 2008

Released: 23rd July 2008. Revenues from mobile data services are set to exceed US$200 billion this year for the first time, according to data sourced from Informa Telecoms & Media's latest World Cellular Data Metrics edition, which has just been published. Total mobile data revenues were approximately US$157 billion in 2007.

Research from the first quarter of 2008 reveals that mobile data service revenues exceeded US$49 billion, accounting for a 42.7% y-o-y increase. This figure means that mobile operators now generate approximately one fifth of their revenue from data services; this is significant given that a general slowdown in voice revenues is forcing the pace around the importance of data services for mobile operators. Informa Telecoms & Media estimates that non-SMS data contributed US$17.48 billion of revenue in Q108, accounting for 35.6% of total data revenues.

"Growth drivers for the increase in data revenues include the acceleration in deployment of advanced technologies, an increasingly competitive market, and of course, growing consumer demand for mobile data services driven by popular data-optimised devices such as Apple's iPhone", says Informa Principal Analyst, Nick Jotischky.

The Asia Pacific region comprises 40% of the world's data revenues (over US$20 billion in Q108), representing an above average y-o-y growth rate of 48%. The biggest regional riser, however, is the Middle East, which despite contributing just 2% of the world's data revenues in the first quarter of 2008, has seen a 91.7% y-o-y increase in this figure to US$927 million. Aiding this acceleration is the 321% y-o-y rise in the number of HSPA subscribers in the region, which reached 2.9 million by the end of March 2008.

Further next-generation deployment should also ensure rapid growth in Africa and the Americas, which accounted for just 2% and 5% of global data revenues at the end of Q1 2008. With the increased deployment of fixed wireless telephony, the popularity of EV-DO datacards continues to spread across Africa, now available in 18 markets. Similarly, in Latin America, operators are hopeful for increases in data revenues from WCDMA and HSDPA launches.

According to Informa Telecoms & Media's World Cellular Data Metrics, the operator to generate the highest non-voice revenues in the quarter is Japan's NTT DoCoMo (US$3.6 billion), having overtaken China Mobile (US$3.5 billion), which had been the largest generator of data revenues for the previous three quarters.

In terms of data as a percentage of overall revenue, Filipino mobile operator Smart Communications is the world's market leader and the only carrier to depend on non-voice revenues for more than 50% of its income, such is the high level of SMS usage in the country.

100 million WCDMA subscriptions in Europe

European WCDMA subscriptions passed the 100 million mark at end-May 2008, just over five years after the region’s first commercial WCDMA-network launch, according to Informa Telecoms & Media data.

At end-May 2008, Informa's World Cellular Information Service shows there were 101.5 million WCDMA subscriptions in Europe out of a total of 910.8 million mobile subscriptions, taking WCDMA penetration to 11.1% of subscriptions.

Penetration of WCDMA is generally highest in markets where the technology was launched earliest. Italy became the first market in Europe to offer WCDMA devices when 3 Italia launched services in March 2003. The country now accounts for a quarter of Europe’s WCDMA subscriptions and has one of the highest 3G penetration rates, with 28.7% of subscriptions via WCDMA devices at end-May. Other markets where greenfield operator 3 launched in 1H03 also have high 3G penetration rates, notably Austria, Sweden and the UK.

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Click here for a chart showing WCDMA subscriptions as a percentage of the total across the top 10 European markets, comparing Dec 07 vs May 08: http://telecoms.msgfocus.com/c/12o7WDu4M8i0aYZWHV
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WCDMA-device sales in Central and Eastern Europe (CEE) have to date been far lower than in Western Europe. WCDMA subscriptions totalled just 7.8 million, or 1.9% of the total, at end-May 2008, according to Informa’s data. As a result, Slovenia and Georgia are the only markets in CEE where penetration of WCDMA has exceeded 10% of total subscriptions. As the cost of WCDMA devices falls worldwide, Informa forecasts that the CEE region will reach 10% WCDMA penetration by early 2011.

Informa’s WCDMA-subscription figures refer to WCDMA devices, including HSPA devices, that are actively used for voice or data services, or both.

A slight slowdown in the growth in WCDMA handset sales in Western Europe in 1Q08 was counteracted by an acceleration in sales of WCDMA/HSPA datacards and modems, which boosted the size of the total 3G market, particularly in Sweden and Austria.

It has only been with growing uptake of HSPA devices that data traffic and revenues have begun to take off. According to a report published on June 12 by Swedish telecoms regulator PTS, “Revenues from mobile services [in Sweden] totalled SEK19.7 billion [EUR2.1 billion] in 2007… Mobile Internet services, by means of USB sticks or USB modems, account for more than SEK1 billion of such revenues.”