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Reflecting on the Mobile Industry and Looking to the Future PDF Print E-mail

2015 has been, and was always expected to be, a significant year for technology.

The mobile industry, for example, has rocketed forward with the potential of internet

of things as a hot topic, along with the potential of 5G, not to mention the huge

increase in global smartphone distribution. The Telecom Review Analyst Team gathered information from the 2015 mobility reports by Ericsson, ITU, GSMA and McAfee Labs, covering subscriptions, mobile traffic and security, to predict the future of the mobile industry, based on their findings and predictions.


Evidence & Predictions

In their 2015 Mobility Report, Ericsson predicts that smartphone subscriptions are set to more than double by 2020, which means that 70 percent of the population will have one. Ericsson also predicts a growing number of connected devices, driven by an increasing range of applications and business models, supported by falling modem costs, forecasting 26 billion connected devices by 2020.


So how does this compare to GSMA’s Mobile Economy Report 2015? For those of you who are unaware,

GSMA is an association of mobile operators and related companies devoted to supporting the standardization, deployment and promotion of the GSM mobile telephone system.


GSMA reports that the mobile industry is growing rapidly with a total of 3.6 billion unique mobile subscribers at the end of 2014. Half of the world’s population now has a mobile subscription, up from one in five ten years ago, according to GSMA, who further report that an additional one billion subscribers are predicted by 2020, which will bring the global penetration rate to approximately 60 percent.


In addition to reports by Ericsson and GSMA, we also looked at statistics provided by ITU, the Telecommunication Development Sector (ITU-D) which fosters international cooperation and solidarity in the delivery of technical assistance and in the creation, development and improvement of telecommunication and ICT equipment and networks in developing countries.


ITU generated statistics for key indicators for developed and developing countries around the world from 2005 to 2015. The results are fascinating, and show a steady increase in telecommunications in both the developed and developing world. So which has grown faster? On a global scale, ITU found that from 2005 to 2015, individuals using the internet grew from around one billion to three billion. But what was truly fascinating was their subscription findings.


Subscription Findings

In terms of mobile subscriptions, ITU formed a chart that depicts the progression of the developed world in comparison to the developing world. According to ITU statistics, fixed telephone subscriptions from 2005 to 2025 fell from 570 to 491 (millions) in the developed world. A similar decline was recorded in the developing world which fell from 673 subscribers to 572 (millions). However, this was a stark contrast from mobile-telephone subscriptions which in the developed world grew from 992 to 1,517 (millions), compared to the developing world where subscriptions rocketed up from 1,213 to 5,568 (millions) from 2005 to 2015.


Further information suggests that households with internet access grew significantly from 2005 to 2015 with an increase from 44.7 percent to 81.3 percent in the developed world, compared to an increase of 8.1 percent to 34.1 percent in the developing world.


In Q1 2015, Ericsson reports that the total number of mobile subscriptions was 7.2 billion, including 108 million new subscriptions, adding that global mobile subscriptions are growing by 1.5 percent quarter on quarter, and around 5 percent year on year. India has shown significant growth in terms of new additions, according to Ericsson, with +26 million, compared to China with +8 million, Myanmar with +5 million, Indonesia +4 million and Japan +4 million.


Ericsson further reports that global penetration reached 99 percent in Q1 2015, and smartphones accounted for close to 75 percent of all mobile phones sold, compared to around 65 percent during Q1 2014. Clearly the mobile industry is steadily growing, which could be attributed to the continued growth of LTE, which according to the report has reached around 600 million subscriptions, with approximately 105 million additions in Q1 2015.


Further to their subscription data, Ericsson reports that by 2016, smartphone subscriptions will undoubtedly surpass those of basic phones. Why? Because smartphones make up the majority of mobile broadband services today, and subscriptions are expected to have more than doubled by 2020.


According to the report, this is due to greater affordability in the Middle East and Africa. Ericsson also notes that the number of subscriptions exceeds the population in many countries, mainly due to inactive subscriptions and multiple device ownership. This means that the number of subscribers is lower than the number of subscriptions – the current figures according to Ericsson are around 4.9 billion subscriber’s versus 7.2 billion subscriptions.


In addition to this, statistics from the GSMA report unique subscriber penetration in the developed world is very high and approaching saturation, standing at 79 percent at the end of 2014, further predicting that this will climb modestly to around 81 percent by the end of the decade.


They contrast this to developing markets where less than half of the population has a mobile subscription, with the penetration rate at 44.6 percent at the end of 2014, which leaves room for growth, with the penetration rate expected to rise by about 11 percentage points by 2020 to 56 percent.


The major challenge facing mobile operators and other industry stakeholders, according to GSMA, is to connect the still unconnected populations in developing regions. GSMA predicts an eventual slow down in global subscribers due to the increasing level of maturity in developed markets, combined with recent strength in developing markets like Africa.


Increasing Mobile Traffic

Ericsson reports that mobile data traffic in Q1 2015 was 55 percent higher than it was in Q1 2014, which is a testament to how the mobile industry is moving away from calling and texting, and entering a world of LTE. By 2020, Ericsson predicts that 80 percent of mobile data traffic will be from smartphones. This isn’t exactly shocking. Just take a trip on your local subway train and it is more than likely that you will witness just about every single person staring into a smartphone screen.


But what are people looking at? Mobile data consumption varies a lot between different user segments, according to Ericsson’s report, stating that in mature mobile broadband markets, 20 percent of subscribers consume around 50 percent of all data traffic. In terms of content, video continues to be the key growth factor, with 60 percent of all mobile data traffic forecast to be from online video by 2020. It’s strange to think that ten years ago watching a video on your mobile was a thing unheard of.


According to the GSMA report, they confirm that on-demand video on mobile devices has become increasingly popular. It is what has driven mobile data growth, with a 66 percent annual increase through to 2019 compared with 57 percent for data as a whole.


Cisco estimates that smartphones generate 37 times more data traffic than feature phones, while 4G smartphones generate almost three times as much data traffic as 3G smartphones. This massive increased use of mobile broadband-enabled smartphones will, according to GSMA, generate an “explosion” of data traffic, with volumes forecast to grow at a CAGR of 57 percent out to 2019 - an almost ten-fold increase.


Security Issues

In early November 2015, Intel Security released its McAfee Labs Threats Predictions Report, which predicts key developments on the cyber threat landscape in 2016 and provides unique insights into the expected nature of that landscape through 2020, in addition to the IT security industry’s likely response. Their report reflects the informed opinions of 22 Intel Security thought leaders’ short and long-term trend implications for organizations working to keep pace with business and technology opportunities and the cybercrime community that threatens them.


The threats that Intel Security have predicted for 2016 include attacks on all types of hardware and firmware, in addition to attacks on wearable platforms which could be targeted by cybercriminals working to compromise the smartphones used to manage them. According to the report, the industry will work to protect potential attack surfaces such as operating system kernels, networking and WiFi software, user interfaces, memory, local files, and storage systems, virtual machines, web apps, access control and security software.


In addition, the report predicts that cybercriminals could seek to exploit weak or ignored corporate security policies established to protect cloud services. Home to an increasing amount of business confidential information, such services, if exploited, could compromise organizational business strategy, company portfolio strategies, next generation innovations, financials, acquisition and divestiture plans, employee and personal data.


Looking toward 2020, the McAfee report predicts that with an increase in new devices, we may see new attack surfaces. While there has not yet been a surge in IoT and wearable attacks, by 2020 we may see install bases of these systems reach substantial enough penetration levels that they will attract attackers. Thankfully, the report indicates that technology vendors and vertical solution providers will work to establish user safety guidance and industry best practices, as well as build security into device architectures where appropriate.


Telecom Review’s Prediction

The mobile industry is complex and clearly growing faster than we ever anticipated. Therefore, it is crucial to look ahead to build an understanding of what we can expect in the future. Based on the information we have sourced from Ericsson, GSMA, ITU and McAfee Labs, the mobile industry is only going to continue to grow rapidly, especially with the emergence of Africa, a continent with over a billion people, slowly joining the connected world. Africa’s growth will spell huge growth in the mobile industry if infrastructure in the continent improves. This will offer more potential mobile subscriptions for operators.


The mobility reports we have looked at clearly indicate that the mobile industry is moving away from calling and texting and embracing apps and increased data usage. This transition has happened very fast, with the increased acquisition of smartphones. The future of mobile is definitely headed to app usage and we believe that regular calling and texting is going to steadily decrease. As we look toward 5G, there is plenty to be excited about. It will offer unprecedented speeds, combining an estimated 10 gigabytes per second data rate with a significant decrease in latency. However, the industry’s goal is to begin rolling out 5G technology by 2020, but it would be foolish to expect widespread availability until a few years later.


According to a report by TCS, 5G “like” networks (like the one currently underway in South Korea) will be able to download a full-length movie in just over one second. There are further reports that telecommunications companies will have the ability to run neuro-science-based applications over the 5G network, bringing the internet of things together in ways previously unheard of. Excited yet? It’s clear that video downloading will continue to grow rapidly, as reported by Ericsson and GSMA, so the need for efficient downloading is paramount.


As smartphones spread across the globe, the regularity of them will eventually lead to a drop in price. Therefore, we predict that smartphones will, without a doubt, become the dominant device, in some cases eliminating the need for other devices. Furthermore, perhaps with increased efficient technology, people will not require so many devices because everything will be accessible from one device, therefore reducing the huge amount of device ownership as reported by Ericsson.


However, with more and more smart devices on the rise (such as smart watches and smart cars) this scenario could play out quite different. The internet of things is likely to determine this outcome, as we are still yet to see what new connections it will bring. The most anticipated outcomes are driverless vehicles and personalized healthcare monitoring.


Without a doubt, in the coming years there will be a strong need for cyber-security because of our reliance upon cloud. Confidential information is being circulated back-and-forth online in huge amounts, as most businesses have now adopted an entirely digital platform. Built-in security, as mentioned by the McAfee Labs report, is now essential for businesses to remain functional, efficient and safe. Cylance, for example, is revolutionizing cyber-security with products and services that proactively prevent, rather than reactively detect, the execution of advanced persistent threats and malware. This technology is exactly what we need as more devices become available and more information is shared, thus vulnerable.


As we look to the future, there are no guarantees of what is to come. But from what we have gathered from Ericsson, GSMA, ITU and McAfee Labs, our world is undoubtedly going to experience increased connectivity with more smartphones and devices, growth in the developing world, the emergence of 5G and IoT, and the rise of more apps.