Cisco predicts wireless-data explosion

If wireless operators thought they'd faced a deluge of data traffic from the iPhone, they haven't seen anything yet, according to a survey from network equipment giant Cisco Systems.

Cisco, which makes the routers and switches that shuttle Internet protocol (IP) traffic around the Internet, has been using its Visual Networking Index to forecast Internet usage. On Tuesday, the company announced results from its Global Mobile Data Forecast for 2009 to 2014.

By 2014, researchers predict, mobile data traffic throughout the world will reach 3.6 exabytes per month, or an annual run rate of 40 exabytes. This is a 39-fold increase from 2009 to 2014, or a compound annual growth rate of 108 percent.

Researchers believe that the amount of data traffic traversing the mobile network by 2014 will be equal about 1 billion DVDs. By comparison that is about the equivalent of 133 times all the data that has ever been transmitted across a mobile network since networks first were launched in the 1980s until today.

Today, the average mobile broadband connection generates 1.3 gigabytes (GB) of traffic per month. This is equivalent to about 650 MP3 music files. By 2014, the average mobile broadband connection will generate 7 GB of traffic per month, which is equivalent to about 3,500 MP3 music files, Cisco said. The rate at which data traffic is growing today is about 2.4 times faster than fixed broadband data traffic around the world.

What's driving all this growth? One major driver is the increase in devices that offer mobile data capabilities. Apple's iPhone, which was introduced in 2007, accelerated growth trends for mobile data. But in the next few years, there will be a whole slew of related devices that will hit the market, including dozens that will be powered by Google's Android operating system.

By 2014, researchers for Cisco's index estimate there will be more than 5 billion personal devices connecting to mobile networks, as well as billions of machine-to-machine devices also connecting to networks.

Doug Webster, senior director of service provider marketing for Cisco, said that mobile data traffic is growing faster than anyone had expected five years ago.

"The rapid consumer adoption of smart phones, Netbooks, e-readers and Web-ready video cameras, as well as machine-to-machine applications like e-health monitoring and asset tracking systems, are continuing to place unprecedented demands on mobile networks," he said.

Another important trend driving traffic growth is mobile video. Researchers estimate that mobile video traffic will represent 66 percent all mobile data traffic by 2014, increasing 66-fold from 2009 to 2014. This is the highest growth rate of any mobile data application tracked in the Cisco VNI Global Mobile Data Forecast, the company said.

Some wireless operators are already struggling to keep up with demand. For example, AT&T, the exclusive U.S. carrier for the Apple iPhone, has said that its network traffic grew 200 percent in 2009. The company has been criticized by consumers for dropped calls and poor service in densely populated urban areas like San Francisco and New York City.

The company said recently that it's investing an additional US$2 billion in 2010 to upgrade its network to accommodate the flood of traffic.

Other carriers are already starting to upgrade their networks to 4G wireless technology. Verizon Wireless is rolling out commercial 4G service using a technology called LTE later this year. And Clearwire is expanding its 4G WiMax network in 2010 and in 2011.

But Webster said that these newer, higher capacity networks could lead to even higher data consumption over the next few years.

"LTE and 4G wireless could exacerbate the problem and consumption may increase," Webster said. "The places where these networks will be launched first will be in areas where there is high demand for the service. It will be interesting to see what the monetization opportunities are with these new services."

Indeed, while many wireless operators have talked about upgrade plans for their networks, they haven't yet discussed how consumers will pay for these new services. All-you-can-eat data plans that encourage consumers to use as much bandwidth as they can will likely go away as carriers look for other ways to charge for these services. Whether new business models will change consumer habits and consumption is not yet known. But it's clear that consumers are hooked on mobile broadband.

This article was first published as a blog post on CNET News.