& cplSiteName &

Cisco: Tiered Pricing Drives More Data Usage

Sarah Thomas
2/14/2012
50%
50%

Mobile data traffic will increase 18-fold between 2011 and 2016, reaching 10.8 exabytes per month, according to Cisco Systems Inc. (Nasdaq: CSCO)'s latest calculations, but the data deluge isn't a result of those unlimited plans left on the market.

Consumers on tiered data plans are using more data than those on unlimited plans, says Thomas Barnett, Cisco's senior manager of service provider marketing.

Cisco has been studying tiered data plans at two global, Tier 1 wireless operators for the past 21 months. While at the beginning, the top 1 percent represented 52 percent of traffic on the networks, now that 1 percent only represents 24 percent of traffic, while the top 20 percent continues to grow in usage, Barnett says.

The wireless operators offering tiered plans all have different ways of dealing with their highest data users. For example, in the U.S., T-Mobile US Inc. throttles once a user reaches 5GB; Verizon Wireless does so only when it has to at a congested cell tower; and AT&T Inc. (NYSE: T) throttles its highest users for an entire billing cycle. (See AT&T's Prices Go Up, Up, Up!, T-Mobile Shakes Up Pricing Sans Unlimited Data and Is Backhaul Bottlenecking Verizon's LTE?)

But, no matter how it is handled, that traffic is harder to manage when it's 20 percent of users causing the backup. Cisco found that traffic on tiered plans increased 169 percent in the past 21 months versus 83 percent for unlimited plans. Cisco predicts that 60 percent of mobile users, or 3 billion people, will use more than one 1GB of mobile data traffic per month in 2016, whereas in 2011, only 0.5 percent did. (See Cisco Projects Massive Mobile Data Growth.)

"You might think they'd grow faster with all-you-can eat, but I think it's a testament to the fact that service providers are educating users more on their impact and IP footprint," Barnett says. "People understand they have a 2GB or 3GB cap or whatever, so they are consuming as much as they can to get their money's worth. Those with unlimited aren't concerned, but aren't using as much."

LTE, Wi-Fi to the rescue
Consumers are likely to flirt with the data cap more once they move to Long Term Evolution (LTE). Now only 0.2 percent of mobile connections are based on LTE, but they are generating 28 times more traffic than non-4G connections. Cisco says the number of LTE connections will grow to 36 percent of the total by 2016. With that will come more high-quality content, more devices, more users and more mobile video, which will represent 71 percent of all traffic by that time.

Luckily for wireless operators, consumers are also turning to Wi-Fi more and more. On a global scale, 11 percent of traffic was offloaded to Wi-Fi in 2011; that will double to 22 percent by 2016. Looking at connected tablets, the fastest growing data category, 60 percent are used on Wi-Fi today. (See Cisco: Tablets Hog More Data Than Smart Phones.)

Without offload, Cisco says the 2011-to-2016 compound annual growth rate of global mobile data traffic would be 84 percent instead of 78 percent.

So, can the wireless operators handle the ongoing flood of traffic? Cisco wants to sell them the gear to do so, of course, but Barnett thinks the answer is yes, with the help of 4G, Wi-Fi and continued infrastructure investments.

"Through a combination of LTE and offload strategies, I think they will be able to handle it," he says. "And, the growth we've seen over the past few years has indicated that they can thrive in this environment."

— Sarah Reedy, Senior Reporter, Light Reading Mobile

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
shygye75
50%
50%
shygye75,
User Rank: Light Sabre
12/5/2012 | 5:42:44 PM
re: Cisco: Tiered Pricing Drives More Data Usage


Lots of numbers here, all subject to interpretation in one way or another. I'm not sure there are many obvious conclusions to reach, beyond the idea that mobile network operators are staring up the barrel at demand that will be almost impossible to meet given current spectrum and technology limits.

From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
Flash Poll
Live Streaming Video
Charting the CSP’s Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it’s going from two industry veterans.
LRTV Custom TV
Cisco's Innovations in Cable

5|26|16   |   03:18   |   (0) comments


Marc Aldrich from Cisco discusses the latest in security, the evolution and momentum for CCAP and what the industry will be seeing next from Cisco.
LRTV Documentaries
Leading Lights 2016 Highlights

5|25|16   |   02:26   |   (1) comment


Some of the high points from this year's Leading Lights awards dinner at the Hotel Ella in Austin, Texas.
LRTV Documentaries
Light Reading Hall of Fame 2016

5|23|16   |   05:43   |   (0) comments


Find out who has been welcomed into Light Reading's Hall of Fame this year.
LRTV Custom TV
ZTE TM Forum Highlights

5|23|16   |     |   (0) comments


ZTE showcased its new ICT solutions at TM Forum in Nice.
LRTV Interviews
Gamma's MD on the Emergence of UC2

5|20|16   |     |   (0) comments


Gamma Communications Managing Director David Macfarlane believes the unified communications (UC) market has reached a tipping point.
LRTV Custom TV
The Ultimate 5-Minute Guide to Digital Customer Engagement

5|20|16   |     |   (0) comments


In this short video, you will hear all about how Digital Customer Engagement is the key to meeting customer expectations, keeping them happy, and maximizing revenue. VP Product & Marketing at Pontis, Ofer Razon, breaks down for us the five essential capabilities for successful Digital Customer Engagement. Don’t miss!
LRTV Custom TV
NFV in 2016: Part 1 – NFV Use Cases Get Real

5|19|16   |   05:57   |   (0) comments


Consensus is building around the key use cases for NFV, including managed IP services at the network edge and on customer premises, which can generate new revenues from enterprises/SMBs and consumers; Evolved Packet Core to support LTE migration; and adjacent technologies, such as TAS and IMS, to support VoLTE and next-generation charging and policy control ...
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 3

5|19|16   |     |   (0) comments


Steve Vogelsang discusses the challenges of operational transformation and how Nokia helps its customers. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Level 3: Why UC Is In Demand

5|17|16   |   04:12   |   (1) comment


Andrew Edison, Level 3's senior VP of sales, EMEA region, talks about the drivers of growth in the unified communications services market.
LRTV Custom TV
ARM's OPNFV Action

5|17|16   |     |   (0) comments


At the ARM booth at MWC 2016, Joe Kidder and Bob Monkman speak to Light Reading about OPNFV and their upcoming action.
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 2

5|16|16   |     |   (0) comments


Steve Vogelsang gives advice to service providers on how to move to NFV. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Interoute CTO on NFV's Maturity

5|13|16   |   06:46   |   (1) comment


Matt Finnie, CTO at international operator Interoute, explains how NFV has made life easier in terms of logistics and how Interoute can now enable a 'software-defined moment' for its customers.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
December 6-8, 2016,
June 16-18, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
DT: Telcos Must Escape Vendor Prison
Iain Morris, News Editor, 5/24/2016
AT&T to Start 5G 'Friendly' Trial by 2016 End
Dan Jones, Mobile Editor, 5/24/2016
Cisco's Patel Hails 'Microculture' Successes
Iain Morris, News Editor, 5/26/2016
Cable Is Eyeing Its Retail Options
Mari Silbey, Senior Editor, Cable/Video, 5/25/2016
AT&T's Margaret Chiosi Retires
Ray Le Maistre, Editor-in-chief, 5/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.