2014 Cisco VNI Forecast: It’s not just about big numbers

Today, Cisco released the updated VNI Global IP Traffic and Service Adoption Forecasts, 2013 – 2018 (see media release). The key drivers of global IP traffic growth (network users, devices/connections, broadband speeds, and video consumption) continue to show increases that will create a greater global demand for IP network resources:

• By 2018, there will be nearly four billion global Internet users (about 52% of the world’s population), up from 2.5 billion in 2013
• By 2018, there will be 21 billion networked devices and connections globally, up from 12 billion in 2013
• Globally, the average fixed broadband connection speed will increase 2.6-fold, from 16 Mbps in 2013 to 42 Mbps by 2018
• Globally, IP video will represent 79% of all traffic by 2018, up from 66% in 2013

As a result of these fundamentals, we are projecting that global IP traffic will grow three-fold from 2013 to 2018 –reaching 1.6 Zettabytes annually by 2018 (a 21% CAGR over the forecast period).

https://www.youtube.com/watch?v=T0onAUxbhyg

While quantifying the projected growth is important (and helpful to those who are planning for the future), what’s even more interesting are the shifts, transitions and emerging technologies that could significantly impact IP networks in the future. After developing and updating the VNI Forecast for nearly a decade, here are three surprising findings that stand out for us.

Device/Connection Shift: Moving from Basic-Feature Phones and PCs/Laptops to Smartphones, Tablets and M2M

Each year, various new devices in different form factors with increased capabilities and intelligence are introduced and adopted in the market. There’s a clear change taking place in terms of the mix of devices (and multi-device ownership). Globally, many are replacing their basic-feature mobile phones with smartphones and business users and consumers are either replacing their PCs/laptops with tablets (or just adding them to their digital portfolios). And machine-to-machine (M2M) connections are really taking off. The Internet of Everything is becoming a reality. By 2018, there will be 7.3 billion M2M connections — a growing number of M2M applications, such as smart meters, video surveillance, healthcare monitoring, smart cars and asset tracking (et al.) are responsible for this growth. The figure below captures these shifts.

The effects of these device/connection shifts can also be seen from a traffic perspective. At the end of 2013, 33% of IP traffic and 15% of consumer Internet traffic originated from non-PC devices. By 2018, 57% of IP traffic and 52% of consumer Internet traffic will originate from non-PC devices. Despite the volume of connections (and market buzz), M2M applications won’t have a significant impact on traffic in the near-term. Due to the low-bandwidth nature of many M2M apps, they accounted for less than 1% of global IP traffic 2013 and will represent less than 2.8% of global IP traffic by 2018.

4K TV/Ultra-High Definition (UHD) Video: A Potential “Wildcard” for Video Consumption

The introduction and adoption of UHD or 4K video streaming could have a significant impact on IP video traffic (primarily in advanced video markets with established HD subscriber bases). This is because the bit rate for 4K video is about 18 Mbps, which is more than 2X the HD video bit rate and 9X more than the standard-definition (SD) video bit rate. We estimate that by 2018, 21% of the installed flat-panel TV sets will be UHD, up from 0.4 % in 2013. While consumer cost may prohibit 4K TV adoption for some, many of the barriers that were associated with 3D TV have been removed from this new technology (i.e., special glasses, additional access equipment, limited content, etc.). By 2018, we project that nearly a quarter (22%) of global IP video on demand (VoD) traffic will come from UHD content (see figure below).

Wireless Supplants Fixed as Top Access Type: Wi-Fi Leads the Way to Wireless Connectivity

Over the past few years, we’ve seen and reported a significant rise in mobile data traffic. The figure below shows the growth of Wi-Fi and mobile (cellular) traffic in relation to traffic from wired devices. By 2018, wired networks will account for 39% of IP traffic, while Wi-Fi and mobile networks will account for 61% of IP traffic. In 2013, wired networks accounted for the majority of IP traffic at 56%, Wi-Fi accounted for 41%, and mobile or cellular networks accounted for 3% of total global IP traffic.  Carriers of all sorts (i.e., mobile, cable, telco) are developing Wi-Fi strategies to reduce the burden on 3G/4G networks (enabling Wi-Fi offloading) and also to extend the reach of their content to subscribers beyond their residential environments (via public hotspots).

For more information and insights from the latest VNI study, I invite you to explore the following links:

• Watch Cisco’s VNI Forecast 2013-2018 webcast featuring key findings presented by Doug Webster, VP Service Provider Marketing at Cisco and a panel discussion moderated by Dr. Robert Pepper, Senior VP, Global Technology Policy.
• The Cisco VNI Forecast Highlights Tool provides key forecast predictions that can be chosen on a global, regional or country level (these include device, traffic and network speed projections).
• The Cisco VNI Service Adoption Forecast Highlights Tool provides primary global and regional takeaways on user and subscriber, device and connection, and service adoption penetration rates.
• View the Cisco VNI Forecast interactive infographic.

We hope our work and analysis can play a role in helping you shape your vision and plan for the future.