Mobile data user demographics are evolving fast globally. Mobile data usage and services are becoming mainstream, with a growth in the number of people that download applications from the internet and stream video content using mobile devices. The Ericsson Mobility Report released in November 2014 shows that by 2020 there will be a significant increase in mobile subscriptions, subscriber base and traffic. As per the report, around 90 per cent of the world’s population will be covered by mobile broadband networks by 2020.

Further, 5G is expected to be commercially deployed by 2020 and its subscriptions are expected to have a faster uptake than 4G. This growth will be driven to a large extent by new use cases, especially machine-type communications. 5G will combine evolved versions of existing radio access, cloud and core with new complementary technologies, enhancing performance and supporting thousands of new use cases. The highlights of the report are as follows…

Mobile subscriptions

During the third quarter of 2014, around 110 million new mobile subscribers were added worldwide, taking the total subscriptions to 6.9 billion. Smartphone uptake continued at a brisk pace. These devices accounted for 65-70 per cent of the total handsets sold during the third quarter of 2014, compared to around 55 per cent during the corresponding quarter in 2013.

Smartphone subscriptions are expected to more than double by 2020, as more and more subscribers in the Asia-Pacific, the Middle East and Africa replace their basic phones with smartphones. The increasing availability of lower-cost smartphones will drive the adoption. However, adoption will vary across regions. For instance, smartphone subscriptions in Europe will reach around 95 per cent by 2020 while in the Middle East, penetration will hit 55 per cent.

In terms of technology, GSM/EDGE is a key technology in developing markets, as low-income phone users prefer low-cost handsets and subscriptions. In contrast, there has been a substantial migration to advanced technologies in developed markets, which has resulted in a slight decline in GSM/EDGE-only subscriptions. By 2020, WCDMA/HSPA will constitute the majority of all subscriptions with around 4.4 billion subscriptions compared to around 3.5 billion long term evolution (LTE) subscriptions at present.

Mobile broadband subscriptions are expected to reach 8.4 billion by 2020, accounting for a larger share of all broadband subscriptions in many markets. Mobile broadband will play a complementary role alongside fixed broadband in some segments and replace it in others.

Mobile traffic

Growing mobile data subscriptions, coupled with a continued increase in the average data volume per subscription, is driving the growth in data traffic. Data traffic grew around 60 per cent between the third quarter of 2013 and the corresponding quarter of 2014. In advanced markets, voice calls and SMSs are no longer the dominant service, as smartphone users increasingly make use of data-based services. Mobile data traffic is expected to rise at a compound annual growth rate of around 40 per cent between 2014 and 2020. This will result in an eightfold increase in traffic by end-2020.

Video is the largest and fastest growing segment of mobile data traffic. It is expected to grow by 45 per cent annually to 2020, by when it is forecasted to account for around 55 per cent of all global mobile data traffic. Social networking constitutes around 15 per cent of the total mobile data traffic. Its overall market share will remain at the same level in 2020, even though social networking will increasingly include data-rich content. The relative share of traffic generated by web browsing will decline by 2020 as a result of stronger growth in categories such as video and social networking. Consumer preferences are shifting more towards video and applications-based mobile use as compared to web browsing.

Cellular M2M

Machine-to-machine (M2M) communication is taking off on account of reduced costs, improved coverage, more capable radio technologies, regulatory mandates and a growing range of successful applications and business models. There will be around 230 million cellular M2M subscriptions by the end of 2014, and this number is expected to reach around 800 million by the end of 2020. Currently, almost 80 per cent of M2M devices have GSM-only subscriptions. These numbers are likely to change with 3G/4G subscriptions expected to exceed 50 per cent of active M2M subscriptions by 2018. LTE M2M device penetration is expected to increase from around 3 per cent at present to 20-30 per cent in 2020. Further, it will account for more than 40 per cent of M2M shipments by 2020.

5G subscriptions will be commercially available in 2020 and usage will be driven to a large extent by new use cases, especially machine-type communications.