Smartphone surge shortfall
One of our recent projects involved taking a very long term look at demand for wireless infrastructure in the United States – going out twenty years. A couple of really interesting things came out of it:
- just how long it takes for technologies to move from the lab to having a significant market impact – something I’ll cover in another post
- the balance between demand and supply for network capacity over the next few years
On the one hand, there’s a surge in smartphones, and smartphones that are powerful and easy to use drive significantly more data traffic. On the other hand, wireless network operators will soon be able to make use of the new spectrum that they have acquired in one form or another, and they will soon be able to start the transition to Long Term Evolution (LTE).
How do these play out?
- how much increased demand does a smartphone put on a cellular network?
- how much does new spectrum help?
- what is the payoff from deploying LTE?
- what does the relative timing look like?
For the first question, we are indebted to one of our specialist partners, who we worked with to cut their data so that we could figure out the differential load of diverse devices.
For the second and third questions, spectrum and LTE, we built a simple model that estimated the overall impact, taking into account the different circumstances of each of the major US network operators.
Although building out the network infrastructure is both challenging and capital intensive, it’s not enough, however. Getting the payoff also requires getting devices into the hands of customers; this is what constrains the benefits from more spectrum and new technology.
Smartphone surge and shortfall
This picture shows in schematic form the smartphone surge, and the resulting shortfall in network capacity. As smartphones become widespread, they’re going to drive a nearly tenfold increase in demand. The payoff from new spectrum and LTE will be significant, but not enough to absorb all of this demand; over the next several years growth in demand outstrips growth in supply, and they don’t come back into balance until sometime around 2015 or beyond.
Now this analysis focused on smartphones; it doesn’t take into account a couple of other things:
- laptops with data cards – not as numerous but can drive several times as much demand – or devices like Verizon’s incredibly cool MiFi which provide the same capability (and which I’m using to post this from here)
- other mobile devices or appliances, such as Amazon’s Kindle™, where we may see a lot of innovation through programs such as Verizon’s
These may also have a significant impact, depending on just how many people adopt them, and how their usage patterns evolve. But that’s a topic for another day…
