Wireless Informatics Forum

Data usage at an all time high, a dream or a nightmare for Carriers? April 14, 2010

The increasing popularity of Smartphones within the mass market coupled with all you can eat data packages from network carriers has resulted in data traffic increasing at a rapid rate with roughly 30% of all handset consumers now using internet and email services on a weekly basis. However over the last few years the mobile data market appears to have been regressing with less data being offered now than when the service was first brought to market.

At the recent CTIA Wireless 2010 conference in Las Vegas, Ericsson representatives announced that in December 2009 the volume of data traffic surpassed that of voice. Data is now the dominant service, however unfortunately for carriers, there are fewer data customers that make up this traffic and comparatively profit margins are smaller due to intense competitive pressure and subsequent high customer expectations. Although carriers have longed for such a successful penetration of this service in the mass-market the reality is not what they anticipated.

WDSGlobal recently conducted a study which in part explored the weekly usage patterns of consumers. The study found that over a quarter of consumers are now actively browsing the internet on their handsets. Whilst data services such as social media and app store access were inevitably used more by younger consumers (16-34yrs), email was used just as much by the older consumers (55yrs+) and IM was used by this segment more than any other. With such a wide potential audience, the rapid growth in data usage is set to continue to potentially unmanageable levels.

In the same study WDSGlobal found that around 25% of consumers encounter issues with email configuration. The study also highlighted that almost half of consumers turn to the manual for support followed by around 20% that sought advice from family and friends, neither of which is likely to be fruitful when in reference to tasks such as email configuration which explains the 30% of consumers that ultimately gave-up, presumably abandoning the service altogether.

Heavy data traffic is leading to a reduction in the level of quality the service offers to consumers and is ultimately damaging the user experience. The reliability of data service is insufficient and third party services and applications are transforming the previous support infrastructure into a mine field. The probability of a frustrated consumer is at an all time high and the carrier that initially manages these issues most successfully will reap the rewards both in terms of consumer loyalty and long-term profitability.

Traditionally technology industries look to the next generation of technical solutions to solve the problems presented within existing technology. Carriers are now depending on the arrival of new 4G spectrums such as LTE to increase bandwidth availability and resume an acceptable level of quality for data services. However the arrival of these spectrums may take longer to arrive than previously anticipated. So how will carriers manage data consumption meanwhile?

Carriers are looking to tackle the levels of data traffic with tiered pricing plans, increased user education and tactics to encourage consumers to offload data usage onto available fixed line channels via wifi. The objective of these strategies are structured around increasing the quality of data services. Whilst carriers can not immediately offer additional bandwidth to fulfill the levels of demand, the support infrastructure for data services can be strengthened to reduce the growing levels of unsatisfied consumers. Whilst improvements to the support infrastructure would ultimately lead to more data traffic, it is imperative for the future profitability of data services that the carriers make this adoption process painless enough for the consumer to actively seek to adopt the next generation of services and for the data service segment to reach its potential revenue generating ability.