Fixed Mobile Convergence

The United Nations estimates that the world will have 7.3 billion people in 2016. Cisco (News - Alert) estimates that, at the same time, there will be 8 billion handheld or personal mobile-ready devices. The volume of mobile data traffic will increase to three times that of fixed data traffic. If all of these predictions come true, experts are asking, then how are mobile carriers going to handle all of that traffic?

Worldwide data traffic, if Cisco estimates are correct, will increase 18-fold by 2016 to 130 exabytes annually. For comparison, Cisco states that 130 exabytes is the equivalent of 33 million DVDs, 4.3 quadrillion mp3 files or 813 quadrillion SMS messages. And an exabyte is equal to 1 quintillion bytes.

Sixty percent of users, according to the report, will enter what Cisco calls the “Gigabyte Club.” In 2011, only one-half of one percent of users generated over a gigabyte of mobile data traffic each month. By 2016, over 3 billion people will generate at least that much mobile data.

“The carriers need more bandwidth, or bigger roads, if you think of it that way,” said Kevin Cassidy, a member of the research team at Stifel, Nicolaus, & Co. “They need higher-speed connections, and that's what 4G or LTE (News - Alert) networks offer. These are new base stations, new antennas that are being built around cities to offload all the data traffic so that the 3G networks can run voice again and not get bogged down. There is good growth in the communications. All the ways that we communicate electronically are being upgraded.”

Some wireless carriers are commonly using a practice called data throttling, which is the deliberate slowing of the account of a customer who uses too much data. AT&T admits to the practice, as do competitors Verizon and T-Mobile (News - Alert). While AT&T won’t give a data throttling threshold, Verizon (News - Alert) slows customer accounts after 2 GB, but only when customers who use large amounts of data hit a congested tower.

T-Mobile slows accounts after customers exceed the threshold they paid for. Of all of the major carriers, only Sprint (News - Alert) doesn’t throttle; instead, they charge a $10 surcharge on top of the $30 monthly that customers already pay for their data plans.

Wireless carriers are expanding their infrastructure to deal with a significant spike in mobile traffic. If Cisco is right, then carriers will need to be prepared sooner rather than later.