U.S. mobile network speeds dropped during 2017 when operators went all in with unlimited data plans, according to an analysis done by OpenSignal, a London-based mobile metrics consultancy. Carriers responded well, although speeds weren’t back up to pre-unlimited levels. But you can forget about mobile as a replacement for wireline service.
In the first half of 2017, AT&T and Verizon responded to competition from T-Mobile and Sprint and went back to offering unlimited data plans. Over the next few months, the average download speeds on their networks dropped. According to OpenSignal’s latest report, they’ve managed to reverse that trend…
A half year later, there’s both good news and bad news for AT&T and Verizon. The good news is Ma Bell and Big Red seem to have stanched the bleeding created by unlimited plans. After six straight months of tracking decreases in LTE speeds, in September speeds for both operators leveled out in our measurements, and in Verizon’s case, speeds started creeping back upward. The bad news is in November, both AT&T and Verizon were still well short of their 4G speed highs established in February. Meanwhile, Sprint and T-Mobile speeds have steadily increased over the same 11-month period.
OpenSignal also released some market-specific data, including four markets in California: San Francisco-Oakland (which doesn’t apparently take in Silicon Valley), Los Angeles (including Orange County), San Diego and the Inland Empire. In every one of those markets, Verizon had the greatest 4G availability and the fastest download speeds. AT&T had the best network latency performance in L.A. and the northern Bay Area and tied with T-Mobile in San Diego. There was a three way latency tie in the Inland Empire, between Verizon, T-Mobile and AT&T.
Mobile carriers need to continuing expanding the capacity of their networks and they will. 5G upgrades begin in earnest next year (2018 is the year of 5G pilots) and will continue over the next decade. But they are running as fast as they can just to keep up with mobile data demand. Any suggestion that mobile networks will meaningfully supplant wireline broadband service is nonsense.
Pricing has a major impact on mobile data usage, and when marginal bits are free – as with unlimited plans – traffic jumps significantly. That’s the conclusion of a study by NPD Group, a market research firm that covers a number of industries, including telecommunications.
Subscribers with unlimited plans use 67% more mobile data than subs who have caps. Interestingly, though, people with capped plans consume 8% more data overall, when WiFi offloading is factored in. The press release about the study doesn’t offer much detail – presumably, that’s what you’d get in a paid report – but it does offer one interesting data point: more and more data, particularly video, is streaming through smartphones, one way or the other…
The average U.S. smartphone user consumes a total of 31.4 GB of data on a monthly basis (including Wi-Fi and cellular consumption). This is up 25 percent from one year prior, when the total monthly data consumption averaged 25.2 GB per user…
Streaming video remains the number one driver of cellular and Wi-Fi data consumption on mobile and fixed networks, accounting for 83 percent of the total data used by smartphone owners. In Q3 2017, 67 percent of all smartphone users reported accessing video content via an app at least once a month, up from 57 percent in Q2 2017.
For the sake of playing around with numbers, take Ericsson’s estimate that the average North American smartphone currently consumes 7 GB of data a month and egregiously assume that there’s a 50/50 split between unlimited and capped plans in the market. In very round numbers, that implies that people with capped plans use about 5 GB a month and those with unlimited plans burn through 9 GB a month.
Whether those are the actual numbers or not, it’s an illustration of the dilemma facing mobile carriers. Do they stick with unlimited plans and hope that they can increase base rates quickly enough to pay for added capacity to meet demand – Ericsson predicts average North American consumption will be 48 GB by 2023 – or try to limit it with usage based pricing and reduce the need for capital spending on network expansion?
Mobile data traffic growth will continue on a hockey stick trajectory, according to Ericsson’s latest Mobility Report. North American smartphone users will, on average, be consuming 7 gigabytes of data per month by the end of this year, and by 2023 will be burning through 48 GB per month, the most of any region.
This growth is the reason that mobile carriers are pushing hard to increase the density, and consequently the capacity, of their networks. Equipment upgrades – from 4G to 5G technology – will help, but the big gains will come from putting more and more cells into a given space. At least in urban and suburban areas with sufficient return on investment potential.
Video is still the killer app – literally, given the impact traffic growth will have on 4G networks. Ericsson estimates that video will account for about 75% of usage in 2023 – that’s about 36 GB per month, more than a gigabyte a day, for North American smartphone users. Smartphones will increasingly be the device of choice for video viewing, at higher and higher levels of resolution…
The emergence of new applications and changes in consumer behavior can shift the forecast relative traffic volumes. Streaming videos in different resolutions can impact data traffic consumption to a high degree. Watching HD video (1080p) rather than video at a standard resolution (480p) typically increases the data traffic volume by around 4 times. An emerging trend with increased streaming of immersive video formats, such as 360-degree video, would also impact data traffic consumption. For example, a YouTube 360-degree video consumes 4 to 5 times as much bandwidth as a normal YouTube video at the same resolution.
Another driver is an increasing preference among consumers for on-demand and catch-up TV over scheduled linear TV viewing. Consumer research indicates that as early as 2020, half of all TV and video viewing will be done on a mobile screen.
Worldwide, total mobile data traffic will grow from 14 exabytes to 110 EB per month by 2023 (an exabyte is one billion gigabytes), and from 2.6 EB to 18 EB in North America alone, a seven-fold increase.
Los Angeles ranks 12th, compared against forty other cities worldwide, in its blend of broadband infrastructure and usage and social and economic benchmarks, as measured by Ericsson, a major provider of equipment and services to the telecoms industry. The latest edition of Ericsson’s Networked City Index has LA slipping one notch from the last time the index was run in 2014.
LA was on of three U.S. cities in the study. New York finished ahead at 7th, same as 2014, and Miami slipped two places further behind to 17th place. The index looks at the state of telecoms infrastructure, as well as its cost and the extent to which people are using it, and cross-compares it with several social and economic indicators that Ericsson thinks are particularly important – health, innovation, resources and economic competitiveness.
When you graph the rankings out on two axes – information and communications technology on one side and social markers, the so-called triple bottom line, on the other – LA’s peer group turns out to be Seoul and Taipei. There’s no narrative in the Index about LA, but there’s a short profile of Seoul, described as one of the “striving cities” – near enough to the top tier of world cities to be competitive, but with ample latitude to continuing growing in the direction that best suits it. That’s not a bad way to describe Los Angeles, either.
If there’s going to be 50 billion connected devices by 2020 – which is the goal set by Ericsson – then interoperability and interconnection standards will be necessary, according to Ulf Ewaldsson, the company’s CTO. He was speaking at a CES panel session on corporate research and development. Those standards aren’t there yet, but the likeliest path will be through open source collaboration, rather than propriety technology.
“Open source creates both standards and it creates a more rapid development process than before”, he said. “Open source is a very rapid way to increase the pace of software development”.
“Increasingly, gone are the days when a company can make a proprietary standard and make it successful”, said Todd Rytting, CTO for Panasonic North America. Particularly, killer apps “don’t often come from predictable sources”.
Both emphasised that corporate involvement in open source efforts has to active and wide ranging, if it’s to be effective. “There isn’t one open source consortium that rules them all, there’s a need for many different flavors” Rytting, said. “You have to participate. Participate isn’t just taking it in and using it, it’s about contributing”.
One role corporations can play in open source projects is to help turn the results into something that’s easily deployable. Ewaldsson pointed out that open source technology does not usually come in a “ready to go” condition, but companies like Ericsson are good at packaging software – open source and otherwise – and making it accessible to less technically capable users.
But being big isn’t a particular advantage, particularly when it comes to recruiting the kind of engineering talent needed to develop cutting edge software. “It’s interesting to try to compete against the start ups when you’re a big giant company”, Rytting said.
“Radio frequencies are going to become the most scare resource on the planet, more scarce than oil”, said Ulf Ewaldsson, Chief Technology Officer for Ericsson. “Frequencies are scarce because there are better frequencies and less better frequencies”.
Speaking at CES this afternoon, he said that current frequency allocations often reflect policy choices intended to keep particular interests happy rather than making the most efficient use of spectrum possible. Television broadcasters in Europe are one example, he said. In other places – he didn’t specifically point to the U.S. – it’s the military that’s the problem.
Vestberg was talking about the challenge in front of Ericsson, which was an early behemoth of the mobile phone business, but has remade itself as it fell far behind in handset manufacturing and its infrastructure business lost ground as voice networks were upgraded to handle broadband. But also it’s a deadly accurate description of the predicament that Microsoft is in, as its 30-year dominance of PCs becomes increasingly irrelevant in a mobile-centric world.
As a successful CEO and thought leader in the mobile industry, Vestberg can set a new direction for Microsoft. The bigger question, though, is whether he – or anyone else – can make the floundering company respond and steer it onto course. Other candidates have reportedly taken themselves off the list because Ballmer remains on the board and Bill Gates is still the chairman, potentially handcuffing any new CEO. Microsoft benefitted in the past but largely suffers now from harsh competition between internal fiefdoms. Vestberg joined Ericsson as a college student and has never worked anywhere else – it’s a fair question whether his experience coming up the ranks of a major Swedish company is the right preparation for a parachute assault on the baronies of Redmond.
There’s no doubt, though, that he’s a plausible and applaudable choice, far preferable to any internal candidate. The problem with Microsoft is that no one there seems to realise that the industry is in a new phase and it isn’t a winner anymore. More than anything, Microsoft needs the perspective and insight that an outsider like Vestberg can bring.
Left to right: Vestberg, moderately bright moderator Andrew Keen, Jacobs, Donovan.
Qualcomm’s outgoing CEO, Paul Jacobs, Ericsson’s CEO Hans Vestberg and AT&T mobile executive John Donovan sat down on stage at CES this morning, for a conversation about the “global innovation of mobile”.
The longest view ahead came from Jacobs. “One thing that’s cool and scary and at the same time is neuromorphic computing”, he said. Qualcomm is trying to reverse engineer natural brains – starting with insects and working up to humans – to build computers with high cognitive functions that operate on relatively little energy. The potential is there, as well, for networking brains directly into digital devices, something he said has already been done on a very rudimentary level with rats.
Vestberg talked about fundamental network infrastructure challenges. “A combination of broadband, mobility and the cloud will transform any business”, he said. It depends, though, on carriers transforming networks originally built for voice communications to completely broadband-centric designs. By 2019, he said, 85% of the world’s population will be covered by systems that deliver at least 3G data service. More people will have the means of using those systems, too. For every $10 drop in the price of smart phone, 100 million more people can afford one, according to Vestberg.
Mobile devices will get bigger, Donovan predicts. Much bigger. “I think that in three years the car will blow us away”, he said, describing a blending of cars, content and services that will fundamentally change how we spend time on the road. “It’ll be a productivity experience, if you want. It’ll be an entertainment experience”. I can only hope that vision includes someone – or something – else doing the actual driving.
Los Angeles ranks 11th out of 31 major metropolitan areas around the world in Ericsson’s 2013 City Index, behind 8th-ranked New York, barely ahead of of 12th-ranked Miami, the only other U.S. cities rated, and beats Seoul at number 13. The index compares cities on the basis of the level of information and communication technology (ICT) maturity and the contribution that ICT makes to the local economy, environment and social equity.
Overall, the result paints a somewhat different picture from what’s become conventional wisdom. In most rankings, which tend to be just based on broadband infrastructure and service availability, Asian cities like Hong Kong, Tokyo and Seoul top the charts. Not in this study, though.
In trying to assess how effectively telecoms infrastructure is put to use, Ericsson’s rankings also factor in quality of life considerations. There’s reason to suspect a bit of bias in the criteria used: Ericcson’s home town of Stockholm is number 1 on the list. But finding objective measures of quality of life is a fraught exercise. There are worse ways to go about it than using Scandinavian values as a benchmark. Given that, Ericsson’s analysis shows a link between broadband and living standards…
The 2013 Index supports the idea of a positive relationship between ICT maturity and economic development, which in turn is strongly linked to standard of living and opportunities for investment in healthcare, education and other public services. ICT can be a useful tool for increasing the social return on investments in new technology for cities at all levels of ICT maturity. It can also increase citizen inclusion and participation. ICT plays an important role in sustainable social development and the cities included in the Index demonstrate a strong relationship between ICT maturity and health, education and inclusion.
The cities in the study were chosen primarily on the basis of population, with a nod to regional importance. San Francisco didn’t make the list, but it has a prominent place on the cover of the report: numbers tell the story for LA, but if you want to show what a connected city that combines a high tech economy with a world class quality of life looks like, a photo looking back at The City from the Golden Gate Bridge tells it all.
If CES 2012 produced one quote that might be remembered in years to come, it was from Ericsson CEO Hans Vestberg: “Anything that benefits from being connected will be connected in the future.” It says two very important things about the consumer electronics industry.
First, going forward, mobile telecommunications manufacturers and core technology companies will be the primary innovators. Computer companies provided much of the innovation for the industry in the past ten years, but they are all but gone from CES.
Second, the business of consumer electronics will focus less on physical products and more on services connected to those products. As technology becomes more capable and cheaper – and it will – the differences between hardware brands and devices will become diminishingly small. Services will be the primary differentiator for products and brands.
Arguably, the most influential consumer electronics company of the past ten years began the last decade as Apple Computer, and finished it as simply Apple, a music, cloud service and telecommunications company. They were so far ahead of the curve that they didn’t have to join the other computer-oriented companies in pulling out of CES. They weren’t there in the first place.
The first revolution in consumer electronics products equipped with wireless machine-to-machine (M2M) communications and tied to differentiated services will come from home health and fitness devices.
Qualcomm launched its Qualcomm Life subsidiary to provide a cloud platform that will support medical services delivered through mobile communications devices, including but not limited to those powered by the chipsets it makes. It’s also putting up $100 million in venture funding to back connected medical device and service start-ups.
But that’s small change compared to the amount of money that health insurance companies can bring to bear as they move into the networked personal health care space, and mandate such services for their customers. The digital media and automobile sectors will follow closely behind, providing more opportunities and platforms for the consumer electronics industry.
Vestberg believes there will be 50 billion mobile telecoms subscriptions by 2020, the vast majority for M2M networking. Each one of those subscriptions represents at least one device, and potentially multiple contracts for wirelessly delivered services. It will be boom times for the CE companies that can make the changes necessary to take advantage of this huge new market, and an ever declining legacy business for those that don’t.