Mobile data traffic takes off, outpacing revenue opportunities
By Chantal Tode
May 16, 2012
Mobile users consume more media via mobile than TV
As smartphone penetration continues to grow, average mobile users will consume more than eight times as much social media and 14 times more megabytes of applications by 2016, according to a new report from Informa Telecoms & Media.
The report’s findings have significant implications for both wireless carriers and marketers and underscore the difficulties both face in monetizing mobile. Over the next five years, Informa forecasts that mobile data traffic will grow from 3.89 trillion megabytes in 2011 to 39.75 trillion megabytes in 2016 - a tenfold increase - while mobile data revenues will nearly double from $325.8 billion to $627.5 billion during the same period.
“The main implications for wireless carriers is that mobile traffic will grow tenfold globally over the next five years, but that the revenue generated directly from mobile users will only grow twofold,” said Guillermo Escofet, London-based senior analyst at Informa Telecoms & Media’s Mobile Content & Applications Intelligence Centre
“Carriers should focus on their core asset, their networks, to ensure they can cope with the oncoming data tsunami,” he said. “And also ensure that they secure themselves a role as enablers in the rapidly growing mobile apps ecosystem through network assets such as carrier billing.
“Marketers need to take mobile more seriously as a medium in its own right, and not just as an extension, or pale imitation, of digital advertising and marketing.”
Many of the services driving the traffic growth, such as video streaming, applications and social networking, are largely in the hands of over-the-top players that rely on advertising to generate revenue.
As a result, wireless carriers are in the position of helping to drive demand for data plans but deriving little in the way of revenue from them. Informa Telecoms & Media forecast that the portion of mobile value-added-service revenues going to operators will shrink from 56 percent in 2011 to 41 percent in 2016 as over-the-top services spread.
However, carriers may be able to compensate for some of this loss with an increased emphasis on carrier billing as the app market continues to grow.
“The main thing that will help operators retain a place in the mobile content and applications value chain will be the increasing reliance on carrier billing by app store owners - with the notable exception of Apple - especially as app stores expand into emerging markets,” Mr. Escofet said.
Mobile data consumption will grow as mobile users watch more video, play more games, listen to more music, browse more Web pages and send more messages using their mobile devices. The top three data guzzlers in order will be applications, video streaming and Web browsing, per Informa.
However, the most data intensive services will not necessarily be the biggest revenue generators for wireless carriers.
For example, Informa forecasts that video streaming will represent less than 1 percent of mobile data revenue in 2016 despite accounting for a third of handset traffic.
The top revenue earners for wireless carriers in 2016 are likely to be Web browsing, P2P SMS and applications.
Other key findings in the report include that mobile users will consume 6.5 times as much video by 2016, over times as much music, nearly 10 times as much games.
Additionally, in five years mobile users will be browsing six times as many Web pages.
While text and picture messaging traffic will also continue to grow during this period, the rate of growth will be at a much slower pace than other mobile data services. However, Internet-based messaging services such as instant messaging and e-mail will grow at a faster pace.
The findings also point to the difficulties that marketers are having monetizing mobile as media consumption increasingly migrates to smartphones and other devices but the advertising solutions are still not there.
“Mobile is adding to the digital pie, but is also increasingly cannibalizing other digital channels,” Mr. Escofet said.
“And whilst advertising is a well established medium on PCs, it has still a long way to go to find its full potential on mobile,” he said.
“This is proving increasingly challenging for big ad-based online brands, such as Facebook and Google, as they see more and more of their traffic migrates to mobile.”
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