The Need For (And Cost Of) Speed

by Chuck Martin, Mar 28, 2012, 7:31 PM

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It’s still early in the higher-speed mobile revolution. And while faster mobile speeds are just around the corner, it could be interesting to monitor how the market adapts to the cost of that shift.

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 reality is that more data can be sent in a shorter amount of time, although consumers are not charged by time but rather by the amount of data used.

Remember those 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.

With U.S. smartphone penetration at about 50T, 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 wholeheartedly to high-speed mobile. But the reality is that high-speed mobile use is in its infancy.

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

So while the number of mobile phones in use exceeds the entire population of 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% of them are smartphones.
• In Latin America, smartphone penetration is not expected to hit 33% for two years, but should then take off into the 60% range in subsequent years.
• In Indonesia, smartphones account for only 6% of the market; in Kenya, 23%; and Nigeria, 9%, according to OnDevice Research.
• Smartphone ownership in the U.K. increased from 30% to 45% of the total population, according to a recent Google/Ipsos study.

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: play more games, text more, check location and send and receive photos more often. As mobile video gets better, more people watch.

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 10X 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 WiFi option.

And using data can be costly, depending on the market. In the U.S., the carriers talk in terms of gigabytes -- but when users are 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 the promise of that wave of technology that would lead to the paperless office.

So will being able to do everything faster on mobile let us get back to other things -- or will it just 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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