The usage of mobile phones has exploded over the last decade. But growth is now slowing with significant implications for the whole mobile industry. William Webb, CTO at Access Partnership, explains what is happening and what this might mean for a key industry.
A recent report released by Tefficient shows that data growth is actually slowing. Aptly titled “Further slowdown in data usage growth causes ARPU development to soften”, the piece documents how data growth rates have been slowing and are now in the region of 15-20% a year across most countries.
Places with higher growth rates, such as Canada, are generally catching up from historically low monthly usage, but some countries have growth rates of less than 5%. This is a far cry from the era of 50%+ annual growth and below the “rule of thumb” of 40% a year growth that Ofcom and others have been using. So what is going on?
Growth reductions align with predictions
This is part of a broader trend of slowing growth that has been happening for many years now. It is something I predicted and charted in my book “The 5G Myth” back in 2016 when I predicted the following for the UK (with similar curves for other countries):
This graph shows growth in usage decreasing and usage eventually plateauing around 2027. The numbers I predicted back in 2016 for the year 2022 for the UK were 27% growth and 14GBytes/month average usage. In fact, the UK had 22% growth and 6.5GBytes/month usage, suggesting a lower plateau than I expected and which might occur 1-2 years earlier. My 2016 prediction was that these growth rates will fall by about 5% a year, which still seems likely, so the UK might see around 17% growth next year and 12% the following.
Absence of new ways to use our phones
The reason is somewhat obvious – the absence of any new way of using our phones. The most data-intensive usage is video, and there are only so many hours a day when anyone wants to watch video on a mobile device. Of course, radical new applications are always possible, but none are likely for mass adoption in the next few years.ext few years.
Mobile networks have enough capacity for the foreseeable future
If this prediction remains correct, then mobile networks will only need to double capacity between now and the predicted plateau. That should not be a problem for those who already have substantial 3.5GHz spectrum licenses, which provide around a 3x potential for capacity growth depending on actual amounts of spectrum.
Such operators will generally not need more spectrum for cellular. They will broadly not need to deploy small cells (at least for reasons of capacity), and they will not need to embark on other off-load approaches such as using unlicensed spectrum. This may be a relief for such operators since they will not need to spend at spectrum auctions or on major network enhancements.
This is a dramatic conclusion when much of the industry is focused on finding new spectrum bands, designing a 6G system with large increases in capacity and working to an assumption of continued huge growth in demand. Could there be a future increase in growth rates to merit this activity?
Fixed wireless access growth
One potential growth area is fixed wireless access (FWA). Tefficient models this through the use of data-only SIMs and notes that where monthly usage is high (such as in Finland). It appears to be because of a high number of such FWA subscriptions which can use between three and eleven times more data than a mobile phone subscription.
Might growth in FWA in the mobile frequency bands spur the need for more investment in capacity? I suspect not. If an FWA user generates ten times more traffic than a cellular user, then it displaces ten users, all of whom might pay as much as the FWA user. Hence, as capacity starts to become constrained, it will likely make more economic sense to drop the FWA subscribers and replace them with cellular subscribers. Adding more capacity for a few FWA subscribers is unlikely to be cost-effective in most locations.
Of course, there is always an element of the unknown. Some postulate that the metaverse might drive a large increase in usage, while others that there will be yet unforeseen applications that will emerge. All of this is possible, but it does not make sense to enhance network capacity until it becomes clear that there will be demand for it.
The end of an era
Broadly speaking, all of this is signalling the need for a change of mindset. Mobile data growth is no longer 40% a year and is unlikely to continue indefinitely. We may soon be entering a period of plateauing usage unless some new application emerges to drive greater consumption.
We should optimise networks for other factors than capacity, such as lowest cost, maximum coverage and lowest power consumption. This has implications for 6G design, for the use of the 6GHz band, for Government support for various 5G and 6G initiatives and more fundamentally, for the business models of operators, suppliers and others in the value chain.
It is hard to overstate the implications of this apparently simple observation. Everything about designing future generations of cellular, spectrum, and even about investment is predicated on continued growth in usage. All of this needs a re-think as we are approaching the end of the era of dramatic mobile data growth.
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