The Need (And Cost) For Speed

by Net Future Institute on April 24, 2012

It’s still early in the higher-speed mobile revolution.

While the answer to the need for mobile speed is just around the corner, it could be interesting to monitor how the market adapts to the cost.

It’s no secret that 4G mobile network speeds being rolled out by carriers like Verizon Wireless and AT&T provide dramatically faster mobile downloads. The actuality is that more data can be sent in a shorter amount of time, though consumers are not charged by time but rather by the amount of data.

Remember the unlimited data plans? They were popular when ‘unlimited’ data couldn’t really be received and ultimately were replaced by the current pay-by-the amount model.

What may not be so noticeable is the anticipated increase in the need for speed by mobile phones, now just at the tip of the proverbial iceberg that will impact both carriers and consumers.

With U.S. smartphone penetration at about 50 percent of the mobile marketplace and tens of thousands of tablets being sold just in the past few months, it might appear that the masses have moved to high-speed mobile. But the reality is that high speed mobile is in its infancy.

The latest estimates from the International Telecommunications Union (ITU) pegs the number of mobile subscribers at almost 6 billion. But only about 10 percent the market comprises smartphones and markets vary widely.

So while the number of mobile phones exceeds the entire population in 97 countries, the percentage of smartphones is just becoming poised to take off in earnest.

 

  • China, the largest mobile market, has 1.3 billion people and a billion mobile phones. Only 25 percent of them are smartphones.
  • In Latin America, smartphone penetration is not expected to hit 33 percent for two years, but then take off into the 60 percent rage in subsequent years.
  • In Indonesia, smartphones account for only 6 percent of the market, Kenya 23 percent and Nigeria 9 percent, according to OnDevice Research.
  • Smartphone ownership in the UK increased from 30 percent to 45 percent of the total population, according to a recent Google/Ipsos study.

 

Markets around the world are gradually moving to smartphones.

Smartphone unit sales last year were 472 million, according to a Business Insider study, but projected to more than triple within four years, representing two-thirds of all mobile phones purchased.

Research has continually shown that smartphone owners use their phones to do more. As mobile video gets better, more people watch. They do more, play games more, text more, check location, send and receive photos and more.

Higher communications speeds are allowing smartphone users to do more even faster and higher speed phones are coming. One projection from Strategy Analytics has sales of the higher speed LTE handsets increasing from seven million units last year to 67 million this year, a 10-X increase.

However, there is still the issue of consumers using the higher speeds on a continual basis.

For example, in the world of tablets, Localytics found that fewer than one in 10 tablet users went online by a cellular network, presumably preferring the no-cost Wi-Fi option.

And using data can be costly, depending on the market. In the U.S., the carriers talk in terms of gigabytes but while traveling the language changes to megabytes.

U.S. data plans for carriers such as Verizon and AT&T are in the range of $30 for two to three gigabytes if used domestically, with dramatically different cost structures for serious on-the-road travelers.

For example, while roaming in China, $30 would allow for 50 megabytes of data. For context, streaming an hour of video over an LTE connection in the U.S. is estimated to consume well over 500 megabytes.

Higher speed phones and networks hold all the promise of that wave of technology that would lead to the paperless office.

So will the promise of being able to do everything faster on mobile let us get back to other things or will it allow everyone to do more, continuously?

 

Chuck Martin is author of The Third Screen; Marketing to Your Customers in a World Gone Mobile, CEO of Mobile Future Institute and Director of the Center for Media Research at MediaPost Communications.

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