Major Mobile Milestones – The Last 15 Years, and the Next Five

Cowritten with Usha Andra, Senior Analyst, Visual Networking Index, Service Provider Marketing

2016 marks the 10^th anniversary of the VNI Mobile Forecast. For a decade, we have analyzed, reviewed, and made projections about mobile networking and how consumers and business users’ behaviors and expectations have changed based on device innovations, network enhancements, and a seemingly never-ending variety of mobile applications and content options. Our work and focus on forecasting the growth of global mobile network traffic and wireless service trends has given us an opportunity to cover one of the fastest growing (in terms of user adoption) and constantly interesting global industries ever developed. Over the past 10 years, mobile data traffic has increased 6,000-fold, and over the past 15 years, it has increased an incredible 600-million-fold. The average smartphone owner today is carrying a computing device more powerful than 10 PCs from 2000. And mobile devices have evolved from devices for calling and texting to devices for calling, texting, tweeting, posting, watching, gaming, banking, navigating, shopping, and reading.

Here’s a very brief summary of some of the major mobile milestones that many of us have experienced over the last 15 years, in five-year increments. What did we miss or would you add to these timelines? We’ve also provided a quick snapshot of our projections for the next five years. Let us know what you think…

Pre-2000: The wireless wilderness shows early signs of development

In 1973, the first mobile phone call was placed with the words “guess where I’m calling from?”, the motto of the early days of cellular voice. Mobile phones became commercially available in 1979, but the early phones were expensive and heavy, with large nickel cadmium batteries weighing them down. In the 1990s, lithium ion batteries were introduced, reducing the weight and size of the phones by more than half, and the phones began to be offered at more affordable prices. Also in the early 1990s, 2G phones deploying GSM technology were introduced, marking the shift from analog to digital communications. With GSM, limited data services such as text messaging and paging began to be available. The GPRS standard was introduced in the late 1990s, delivering packet-switched data capabilities to existing GSM networks and allowing users to send graphics-rich data as packets.

2000 – 2005: “Call me”

Mobile voice was still the dominant voice application in this era, but text messaging had already taken hold by 2000, with millions of messages sent each day. With the introduction of the Blackberry smartphone in 2003, email was added to the mix and text messaging adoption accelerated due to the keyboard device, which enabled rapid typing of longer messages. Though text messaging was the most common mobile application globally, it was not a majority of mobile traffic. In something of a surprise development, mobile data traffic was dominated by laptops. Laptops were connected to the mobile network though special-purpose laptop modems or by tethering to phone models such as the blackberry. Even though phones far outnumbered laptops on mobile networks, the volume and types of traffic originating from laptops were so traffic-heavy that laptops became the dominant traffic driver.

The speeds of mobile networks were still relatively slow in this era, with 2G data speeds generally remaining under 100 kbps. In 2003, 3G networks begin to be rolled out across the globe, providing data transmission speeds three to ten times faster than 2G.

2005 – 2010: “There’s an app for that”

The next five years saw an explosion of mobile applications. The first iPhone was introduced in 2007, which enabled a much richer mobile experience. Smartphones were not the only factor responsible for the multiplying number and diversity of mobile applications, however. The increasing reach and availability of 3G networks was a crucial component. Not only did 3G offer increased speeds but 3G operators often placed no data limits on users at this time. As unfamiliar as it may seem to us today, early 3G networks were under-utilized and operators wanted to increase rather than limit data consumption. With 3G speeds, unlimited data allowances, and smartphones on the scene, the mobile applications industry took flight. Twitter was launched in 2006, Facebook went mobile in 2007, and the Spotify mobile app was released in 2009, along with many others.

2010 – 2015: “Watch this”

The primary growth drivers in this era were video, multiple devices, and the continued increase in speeds and the launch of 4G networks. Video first appeared on mobile networks through cellular-connected laptops, so even before the appearance of smartphones, video was present as a traffic driver. But with 3G speeds and iPhone-style smartphone screens, mobile video reached a much larger audience. By the end of 2013, video was already nearing 50 percent of mobile data traffic. In 2010, tablets were introduced, some with mobile connections. Though the number of users in developed mobile markets had already begun to level out, the number of devices continued to increase, and the presence of large screen devices contributed to the use of high-bitrate applications such as video and gaming.

2010 also marked the introduction of data caps and tiered plans in a majority of mobile markets, worldwide. Though initially the effect of these data caps was merely to limit the consumption of mobile data “hogs”, these measures began to curb the usage of the average mobile data before 2015.

2015 – 2020: “Watch your data cap – where’s the WiFi?”
 

2015 was a milestone year for mobile data traffic in two ways. First, offload traffic exceeded cellular traffic for the first time in 2015. Emerging trends such as homespots are increasing the community prevalence of Wi-Fi. Globally, total public Wi-Fi hotspots (including homespots) will grow 7-fold from 2015 to 2020 from 64.2 million in 2015 to 432.5 million by 2020. With higher availability of Wi-Fi hotspots globally, and with continued pressure on users to remain with data caps, the average mobile user in 2015 opts for Wi-Fi wherever possible. With technology advances, dual mode devices are also smarter with switching between Wi-Fi and cellular networks.

Another milestone reached in 2015 was that 4G traffic surpassed 3G traffic for the first time. Although 4G connections represented only 14 percent of mobile connections in 2015, they already account for 47 percent of mobile data traffic, while 3G connections represented 34 percent of mobile connections and 43 percent of the traffic.

With the growing prevalence of 4G and the anticipated arrival of 5G, mobile users will enjoy higher quality mobile broadband and speeds over the coming years. But this growth in usage is currently mitigated by data caps along with the average mobile user’s growing awareness of these limits. The top 1 percent of mobile users used to generate 52 percent of mobile data traffic per month at the beginning of 2010. At the end of 2015, the top 1 percent of the mobile users generated 7 percent of mobile data traffic per month.

While the focus has been on smartphones and tablets traditionally, new and upcoming devices will enable new models for data caps. For example, at 335 MB per hour, only 1.5 hours of a GoPro type of action camera using mobile data can generate more than the average monthly traffic per typical user in 2015. Drones, home security, video and digital cameras and many such connected devices can create potential wild card consumption scenarios of mobile data traffic.

Operators around the world are offering creative sponsored data incentives such as free mobile data video streaming with select partners, data carry forward services and free trial toll free usage of social networking applications, among many other creative offers to decrease churn. Innovative data plans and network quality is a key differentiator in the mobile data business and it remains the chief determinant of user preference and carriers’ pricing power and ARPUs.

Beyond 2020: Digitization, Mobile Internet of Things, and 5G

Beyond 2020, the wave of digitization will spread beyond communications, media, and content, to encompass every aspect of our lives and work. While current traffic is dominated by end-user devices, machine-to-machine connections represent an increasing number of connections and traffic. Digitization will bring a large number of very diverse devices and applications onto the mobile network, each with its own unique network requirements and traffic patterns. The mobile network will soon connect more things than people, and with 5G these things will potentially be connected at speeds that enable high-bandwidth data transmission. The drivers of the future will continue to be devices, speeds, and applications, but the nature of these drivers will change dramatically over time.

The mobile industry has moved at an exhilarating pace in the last 15 years, and we can’t wait to see what the next 15 years might bring.