Cell Phone Bills Surpassing Land Line

Statistics often show just how much things are changing, and how quickly. Yesterday, a report was released that showed 2007 is likely to be the first calendar year in which U.S. households spend more on cell phone services.

"The most recent government data show that households spent $524, on average, on cell phone bills in 2006, compared with $542 for residential and pay-phone services. By now, though, consumers almost certainly spend more on their cell phone bills," several telecom industry analysts and officials said.

As recently as 2001, U.S. households spent three times as much on residential phone services as they did on cell phones. But the expansion of wireless networks has made cell phones more convenient, and a wider menu of services, including text messaging, video and music, has made it easier for consumers to spend money via their cell phone.

Let's take a minute and look at another statistic. In Q3 2006, smartphones represented a 3.8% share of US mobile phone market (Source: Telephia European Subscriber and Device Report, Q3 2006). In the same quarter this year, 4.2 million smartphones were sold (out of a total of 38 million devices) which is an 11% market share. Various research reports (Gartner, Yankee, IDC, etc.) all suggest that smartphones will have a 20-25% market share by 2010.

So what does all that mean? Well, this helps us understand the imminent need for significant investment in backhaul capabilities that we talked about in yesterday's blog. Even though smartphones do not currently have access to true 3G in the US (which would really let them shine), we're already seeing them utilizing large amounts of data on the existing 2.5G networks. Once 3G, LTE and Mobile WiMAX technologies are deployed, we will see a huge increase as 'any time, any place, any device' creation, collaboration and consumption of content becomes a reality, and the bottleneck then will be how we're going to move around that huge amount of data.

Between 2000 and 2006, internet traffic grew at over 100% per year (source: Nemertes Research) and, assuming that the necessary capital investments in infrastructure are made), look sets to continue to grow at this pace through 2012. Last year, the average internet usage was 350 Megabytes per day, which is equivalent to downloading about an hour of Internet video, or multiple hours of working, emailing, talking, sharing, uploading, downloading and watching video—often at the same time. Highlighting trends such increased multitasking, switching to IP-based versions of non-IP applications (e.g. 'Net radio and IPTV), increasing oil prices, raising the cost of travel, aging baby boomers caring for elderly parents, with college-age children, a far-flung, highly distributed population and rapidly maturing technologies such as Web 2.0 programming and development tools, HD displays, low-cost cameras and recorders, and data storage, Nemertes Research suggests that demand could grow to the average user consuming or generating 26 Gbytes/day by 2012.

Again, for that growth to happen, significant investment is needed in infrastructure and particularly in how to distribute that data, and avoid bottlenecks. It is going to take a combination of wireline and wireless technologies to deliver on the promise of 'any time, any place, any device', and NextPhase Wireless is well positioned (with its licensed spectrum, strong industry partners and rapidly expanding wired and wireless footprints) to take advantage of this opportunity.