The digital media industry’s venture into mobile digital media looks certain to turn up some surprising facts, such as those in a report from Informa Telecoms & Media, “Mobile Broadband Access at Home: The Business Case for Femtocells, UMA and IMS/VCC Dual Mode Solutions.”
Some key findings:
– 49% of phone calls on mobile devices will be in the home.
– 58% of all mobile traffic will be from in and around the home.
– Mobile data traffic (Internet access, e-mail) is already surging with cellcos reporting growth ranging from 120% to 250%.
– Mobile data traffic in the home will account for more than 43% of total mobile data traffic in 2008 and reach 60% by 2013.
All that’s bad news for residential phone services like the incumbent telcos and good news for purveyors of video and music. And it’s good news for operators of 3G and 4G wireless networks. The report estimates that mobile traffic generated in the home was 40% in 2007. By 2013 it’s expected to reach 58%.
It predicts mobile voice minutes in the home will approach 42% of total mobile voice traffic by the end of 2008. As the price gap between fixed and mobile calls narrows, mobile voice usage at home will gradually increase to reach 49% by 2013.
The office environment will come in second position with a 30% market share, while only 9% of calls will be initiated on the move when walking, driving or on the train or bus, and the remaining 21% of calls will be generated from other public environments.
To handle the increase in home-generated traffic and to reduce the load on their cellular networks, cellcos will install femtocells in the home. When a user in the home makes or receives a call, the femtocell takes the signal and transmits it over the user’s broadband connection rather than over the cellco’s wireless network.
Cellcos will use femtocells to offload up to 8% of their traffic to fixed networks via their users’ broadband connection, according to Informa.
Mobile data usage is expected to increase over the coming years because of “aggressive flat-rate data plans” pushed by mobile operators, the rollout of mobile broadband networks (3G and 4G) and most importantly the advances in mobile device software.
In particular, advanced user interfaces are leading to the proliferation of new types of smart phones and mobile Internet devices, including Apple’s iPhone and Google’s G1. The report says 2007 was a watershed year for cellcos and their strategy regarding the development of new non-voice services.
“While mobile operators continue to develop their own services and strategies around applications such as music, games, TV and video, there was a realization during 2007 that a far greater opportunity exists in providing unrestricted broadband access to the Internet,” said Malik Saadi, principal analyst at Informa and lead author of the report.
“In the same way that voice traffic has moved from old fixed-line telephony service PSTN [Public Switched Telephone Network] to mobile, there is reason to believe that a significant percentage of Internet traffic generation will move away from fixed personal computers to mobile devices including mobile handsets, mobile Internet devices (MIDs) and connected notebooks,” he said.
These strategies are starting to pay off with the leading mobile operators seeing data revenues surpassing 40% growth in the first half of 2008 compared to the same period in 2007.
Australia’s Telstra, for example, announced its non-SMS (short message service) data revenues have jumped 84% to AUS $360 million in 2008’s first half from AUS $196 for the same period last year. Verizon Wireless reported a 49% year-on-year data revenue growth in 1Q08 and AT&T 57%.
At the same time, mobile data traffic is surging with operators now recording growth ranging from 120% to 250% over their networks.
However, Informa Telecoms & Media estimates that the annual revenue generated by 1 Petabyte of data traffic will decrease by a factor of 4.9 by 2012 to reach $125 million down from $612 million in 2008. In 2008, mobile data traffic in the home will account for more than 43% of total mobile data traffic and reach 60% by 2013.
The growth will be driven by users increasingly initiating longer and richer data sessions in the relaxed environment of their home, browsing the Internet, watching longer and richer video clips, downloading music and video content, exchanging pictures or using VoIP and on-line chatting.
This does not mean that mobile broadband services will fully substitute fixed broadband, but users will prefer to keep some applications on their mobile or portable devices since these offer greater privacy, according to Saadi.
In order to cope with the explosive mobile data traffic growth, operators have invested heavily in offering better 3.5G+ coverage in busy urban areas.
However, these areas are data-heavy hot zones, where the majority of smartphone and notebook users reside, so this will eventually result in overloaded networks and low bandwidth per user.
In addition, as the 3G/3.5G+ signal travels away from the base station or penetrates thick concrete walls in residential or business environments, the received signal strength deteriorates considerably, resulting in a significant drop of bandwidth in in-building environments, which could in turn affect the overall user experience.
Mobile operators have a vested interest in ensuring that call connection, call quality and mobile broadband capabilities are as high as possible in the home environment.
The Mobile Broadband Access at Home report says that, if implemented properly, mobile access at home (MAH) solutions, including femtocells, UMA/dual-mode, VCC/dual-mode and alternative technologies, have the potential to help mobile operators offload a substantial part of mobile traffic to the subscriber’s wireline broadband.
This could potentially lead to significant savings by reducing network capacity upgrade requirements while enabling considerable improvement in both coverage and capacity of mobile broadband access in the home.
It’s going to be a mobile broadband world, isn’t it?