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VNI Service Adoption Forecast

Cisco VNI Service Adoption Forecast, 2012–2017

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The Cisco® Visual Networking Index Services Adoption (VNI SA) Forecast provides a unique view into global and regional trends of next-generation end-user services and applications, as well as the underlying addressable markets (subscribers and users) and the relevant devices and connections that support the projections. This study includes forward-looking estimates for 27 select end-user application and service penetration rates in three primary user categories: residential, consumer mobile, and business.

What You Will Learn

The Cisco VNI SA Forecast provides a holistic view into global and regional trends of next-generation services and applications across mobile and fixed networks and business and consumer segments. These next-generation services are constantly redefining the manner and devices on which information and content can be accessed, and network requirements and business models for service providers. The services also help bridge the physical infrastructure gap in some geographical regions.

Who Can Benefit from This Research?

Service providers: Discover potential network-based monetization opportunities.

Businesses: Improve collaboration and productivity through network resources.

Consumers: Understand the broad range of residential and mobile service options.

Media and analysts: Use our research for your articles and reports.

Methodology

The Cisco VNI SA Forecast is closely aligned with the Cisco VNI Global IP Fixed and Mobile Data Traffic Forecasts, which focus on global network bandwidth consumption. Both the service adoption and traffic studies are based on the same global and regional estimates for population, network users and subscribers, and devices and connections. The Cisco VNI SA Forecast follows a rigorous methodology that uses various data sources:

• Publicly available data from international and national institutions (United Nations Department of Population, U.S. CIA, and National Census Bureaus)

• Regulatory and government reports (Ministries of Information such as CNNIC, NIC.br, ACMA, and OfCom)

• Independent research and survey data from respected research firms such as AMI, Arbitron, Informa, IDC, Gartner, Screen Digest, Strategy Analytics, SNL Kagan, Nielsen, Ovum, and Wainhouse Research

Cisco VNI analysts have developed and applied extensive data modeling techniques to analyze both supply-side data such as shipments of technology products and demand-side data such as user adoption and preferences. This approach provides a consistent and reliable means to predict how global and regional populations; addressable markets, devices and connections; and ultimately service adoption rates will grow over the forecast period.
The Cisco VNI SA Forecast begins with estimates of total population, households, and workers, globally and for six regions (North America, Latin America, Western Europe, Central and Eastern Europe, Middle East and Africa, and Asia Pacific), as shown in Figure 1.

Figure 1. Cisco VNI SA Forecast Parameters: Outside-In Approach

Next, we identify global and regional addressable markets for each of the following primary user categories:

• Residential (TV households and fixed Internet users)

• Consumer mobile (mobile subscribers)

• Business (business Internet users and business mobile subscribers)

Finally, we forecast the penetration rates of 27 specific services and applications globally and regionally in the context of the applicable population and addressable market parameters. Table 1 lists the Cisco VNI Service Adoption Forecast categories and services.

Table 1. Cisco VNI Service Adoption Forecast Categories and Services

Residential Services

Consumer Mobile Services

Business Services

Digital TV

Consumer Short Message Service (SMS)

Room-based videoconferencing

Time-delayed TV

Consumer Multimedia Message Service (MMS)

Desktop videoconferencing

Video on demand (VoD)

Consumer mobile email

Audio conferencing

Voice over IP (VoIP)

Mobile gaming

Business IM

Consumer instant messaging (IM)

Mobile music

Web conferencing without video

Online gaming

Mobile video

Business IP telephony

Online music

Mobile social networking

Business mobile location-based services (LBS)

Online video

Consumer mobile LBS

Business mobile email

Social networking

Mobile commerce

Business mobile SMS

For more information and details, please visit Cisco VNI Service Adoption Forecast Methodology.

Global Service Adoption Factors from 2012 to 2017

To fully understand service adoption trends, it is important to assess two main factors that significantly affect the penetration rates of all the services included in this study:

• The growing number of users (residential, mobile, and business) who rely on global network resources

• The increasing number of user devices and machine-to-machine (M2M) nodes that connect to global networks

From a compound annual growth rate (CAGR) perspective over the 2012-2017 forecast period, the total number of global devices and connections (10.5-percent CAGR) will grow faster than the global population (1.1-percent CAGR). As global network consumers acquire more powerful devices, they are also using more services and applications, so service adoption growth rates are generally outpacing both population growth and addressable market growth. In both mature and emerging markets, the impact of multiple device ownership and widespread increase in M2M applications are creating both challenges and opportunities for public and private network operators. Herein are some top-level projections to help quantify the current and projected views of global network users and their devices and connections.

Global Population, Households, and Workforce Growth, 2012 to 2017

• Global population is projected to grow from 7.2 billion in 2012 to 7.6 billion in 2017 at a CAGR of 1.1 percent.

• Global households are projected to grow from 2 billion in 2012 to 2.2 billion in 2017 at a CAGR of 1.7 percent.

• Global workforce will grow from 3.3 billion in 2012 to 3.6 billion in 2017 at a CAGR of 1.8 percent.

Global Addressable Markets: Residential, Consumer Mobile, and Business, 2012 to 2017

As the total global population grows, so too do the respective addressable markets for residential consumer mobile and business services.

• Globally, residential Internet users with fixed Internet access will grow from 1.8 billion in 2012 to 2.5 billion by 2017 (6.1-percent CAGR).

• Globally, the number of TV households will grow from 1.6 billion in 2012 to 1.8 billion by 2017 (1.8-percent CAGR).

• Globally, mobile consumers will grow from 3.8 billion in 2012 to 4.6 billion by 2017 (4.1-percent CAGR).

• Globally, business Internet users will grow from 1.4 billion in 2012 to 2billion by 2017 (6.9-percent CAGR).

• Globally, business mobile users will grow from 495 million in 2012 to 565 million by 2017 (2.7-percent CAGR).

Global Devices and Connections, 2012 to 2017

Following are projections for global devices and connections supported by mobile and fixed networks and including both the consumer and business segments.

• Globally, total mobile and fixed devices and connections (including M2M) will grow from 11.7 billion in 2012 to 19.3 billion by 2017 (10.5-percent CAGR).

• Globally, fixed Internet residential devices and connections will grow from 3.2 billion in 2012 to 6.4 billion by 2017 (14.8-percent CAGR).

• Globally, mobile Internet consumer devices and connections will grow from 6 billion in 2012 to 9 billion by 2017 (8-percent CAGR).

• Globally, business Internet fixed and mobile devices and connections (including M2M connections) will grow from 2.4 billion in 2012 to 4.3 billion by 2017 (10.3-percent CAGR).

Global Service Adoption Forecast Highlights

Residential Services

• Social Networking was the service with the highest penetration in 2012 (1.2 billion users; 66 percent of residential Internet users).

• Online Video will be the most highly adopted service by 2017. It will also be the fastest growing residential Internet service, growing from 1.1 billion users in 2012 to 2 billion users by 2017 (13.2-percent CAGR).

• Globally, digital TV will grow from 928 million households in 2012 to 1.4 billion households in 2017 (8.2-percent CAGR).

• Globally, Video on demand (VoD) will be the fastest-growing digital TV service, growing 256 million subscribers in 2012 to 402 million subscribers in 2017 (9.4-percent CAGR).

For detailed global residential services adoption data, please refer to Appendix D.

Mobile Consumer Services

• Globally, mobile commerce and mobile video will be the fastest-growing consumer mobile services. Mobile commerce will grow from 560 million users in 2012 to 2.6 billion users in 2017 (36-percent CAGR). Mobile video will grow from 435 million users in 2012 to 2 billion users in 2017 (36-percent CAGR).

• Globally, consumer SMS will continue to be the consumer mobile service with the highest penetration in 2017. In 2012, there were 3.1 billion users (82 percent of consumer mobile users), increasing to 4.4 billion users (95 percent of consumer mobile users) by 2017. As a mature mobile service, consumer SMS has the slowest CAGR (7.3 percent) in the consumer mobile service category.

• Globally, the consumer mobile segment has seven services with CAGRs exceeding 20 percent over the forecast period (2012 to 2017).

For detailed global consumer mobile services adoption data, please refer to Appendix D.

Business Services

• Globally, desktop videoconferencing will be the fastest-growing service, with 26.6 million users in 2012, increasing to 213.5 million users in 2017 (51.7-percent CAGR).

• Globally, web conferencing without video will decline from 16.7 million in 2012 to 14.9 million in 2017
(-0.9-percent CAGR).

• Globally, business mobile LBS is the fastest-growing business mobile service at 32.9-percent CAGR.

• Globally, business SMS is the business mobile service with the highest penetration, with the slowest CAGR at 5.1 percent.

For detailed global business services adoption data, please refer to Appendix D.

Top 10 Cisco VNI Service Adoption Forecast Findings and Trends (2012-2017)

1. Global Internet Access Mobile and Digital TV Continue to Outpace Population Growth

Global population is going to grow at 1.1-percent CAGR from 2012 to 2017. This modest growth continues to be superseded by growth in Internet users (fixed and mobile only), total mobile users, and digital TV (Figure 2). By 2017, nearly half-or 48 percent-of the population is going to have Internet access, up from 32 percent in 2012. This increase represents a CAGR of 9.5 percent from 2012 to 2017. Globally, 60 percent of the population had mobile access in 2012, and that percentage will grow to 73 percent by 2017. The number of mobile-only Internet users is growing (21.8-percent CAGR) nearly four times faster than the number of fixed Internet users (5.9-percent CAGR).

Figure 2. Global Population Penetration of Internet Access, Mobile, and Digital TV

The growth in Internet access and mobile access has also been linked to GDP growth in several studies by organizations such as ITU and GSMA. When we look at the Internet penetration data in conjunction with GDP growth rates and GDP per capita (Figure 3), we do find that the regions such as North America and Western Europe with high GDP per capita also have higher Internet penetration.

Figure 3. Regional Internet Penetration, GDP Growth Rate and Per Capita GDP

All the regions are projected to experience growth in Internet access, and the number of mobile-only Internet access users will grow faster than the number of fixed Internet access users (Figure 4). However, fixed Internet access in aggregate will still have more than twice as many users as mobile-only Internet users by 2017.

Figure 4. Fixed Internet vs. Mobile-Only Internet

2. Smart Devices and Connections Proliferation

Globally, devices and connections (10.5-percent CAGR) are growing faster than both the population (1.1-percent CAGR) and Internet users (9.5-percent CAGR). This trend is accelerating the increase in the average number of devices and connections per household and per Internet user (Figure 5). Each year, various new devices in different form factors with increased capabilities and intelligence are being introduced (and adopted) in the market. There are also a growing number of M2M applications that are causing connection growth (for example, smart meters, video surveillance, healthcare monitoring, transportation and package/asset tracking, etc.).

Figure 5. Global Devices and Connections Growth

Tablets are the fastest-growing device category with 41.8 percent CAGR over the forecast period, followed by web-enabled TV sets. Device categories such as non-smartphones are actually going to start seeing a decline over the forecast period, increasingly being replaced by smartphones, which will grow at nearly a 20-percent CAGR over the forecast period. In the Asia Pacific and Middle East and Africa regions, however, non-smartphones will grow at low single-digit growth rate. E-readers are also going to have almost a flat growth rate as tablets take over this category. In fact, PCs, while growing at 1-percent CAGR globally, will experience negative growth rates in North America and Western Europe over the forecast period.
Consumer share of the total devices, including the fixed and the mobile, is going to be about 80 percent, with business claiming the remaining 20 percent. Consumer share is going to grow slightly faster at a 10.6-percent CAGR relative to the business segment, which is going to grow at a10.3-percent CAGR.
The average number of devices and connections per household is going to grow from a little less than 5 to more than 7 by 2017 (Table 2).

Table 2. Average Number of Consumer Devices and Connections per Household

       

       

2012

2017

CAGR

APAC

Asia Pacific

3.98

6.33

9.7%

CEE

Central & Eastern Europe

4.01

6.08

8.7%

LATAM

Latin America

5.04

6.79

6.1%

MEA

Middle East & Africa

4.03

5.24

5.4%

NA

North America

9.23

14.62

9.6%

WE

Western Europe

6.17

10.00

10.1%

Global

Global

4.65

7.09

8.8%

If we look only at the end-user mobile devices, then globally, for the business segment, the average number of mobile devices per business mobile user will grow from about 1.5 in 2012 to 1.7 device by 2017. Similarly for the consumer mobile segment, there will also be about 1.7 mobile devices per mobile consumer by 2017 (Table 3).

Table 3. Average Number of Mobile Devices per Business Mobile User

       

       

2012

2017

CAGR

APAC

Asia Pacific

1.49

1.64

2.01%

CEE

Central & Eastern Europe

1.48

1.59

1.35%

LATAM

Latin America

1.51

1.72

2.66%

MEA

Middle East & Africa

2.06

2.18

1.13%

NA

North America

1.26

1.47

3.07%

WE

Western Europe

1.49

1.60

1.47%

Global

Global

1.51

1.66

1.99%

Increased network connectivity along with the proliferation of more powerful, full-featured devices encourages users to adopt real-time and multimedia communication applications as well as video-based entertainment and information services.
When considering the consumer mobile multiple device users in particular, service providers are looking for new ways to bundle and price services to satisfy existing customer expectations and attract new subscribers. For example, in the mobile space, Verizon Wireless' "Share Everything" mobile data plans allow customers to share a data allowance among up to 10 devices on one account. From the provider perspective, the shared-plan model shifts the customer engagement focus from subscription connectivity to account connectivity, with opportunities to increase average revenue per account (ARPA), strengthen user loyalty, and move customers to higher efficiency and more profitable Long-Term Evolution (LTE) networks. For end users, this type of offering provides better management of multiple devices through an integrated customer interface, a wider choice of popular devices, and options to cost-effectively upgrade devices and service levels.
Refer to the Verizon Wireless "Share Everything" case study on the VNI SA case study website for more details.

3. Increasing Network Speeds Enable Multimedia Services

Average network speeds, both mobile and fixed, are expected to increase significantly during the forecast period. Faster network speeds combined with lower latencies and enhanced device capabilities all act as enablers for the growth of interactive and multimedia services such as video streaming and video communications.

Wired Speeds

The leading indicator for the growth of fixed wireline speeds is the deployment of fibre to the home (FTTH). As the number of homes that FTTH will pass around the globe increases, so too does the potential for fixed broadband speed growth. For example, as part of National Broadband Network (NBN) initiative in Australia, more than 4.8 million homes and businesses are expected to have fibre construction commenced or completed by June 2016.
Globally, the average broadband speed will grow 3.5-fold from 2012 to 2017, from 11.3 Mbps to 39 Mbps. Western Europe will experience the fastest average speed of 43 Mbps by 2017, and Asia Pacific will have the greatest average speed increase-3.8-fold growth by 2017 with fixed speeds reaching 40.5 Mbps by 2017.

Mobile Speeds

A crucial factor promoting the increase in mobile speeds over the forecast period is the increasing proportion of 4G mobile connections. The impact of 4G connections on traffic is significant, because 4G connections, which include mobile WiMAX and LTE, generate a disproportionate amount of mobile data traffic.
Globally, mobile network connection speeds will increase sevenfold by 2017. The average mobile network connection speed (526 kbps in 2012) will exceed 3.9 Mbps by 2017. North America will have the highest average mobile speed (14.4 Mbps) by 2017, and the Middle East and Africa will have the greatest average mobile speed growth (13-fold) by 2017 with that region's average mobile speed reaching nearly 3 Mbps.

Wi-Fi Speeds (from Mobile Devices)

Historically, 802.11 and 802.11 b were the early types of Wi-Fi technologies. These access sources provided speeds from 2 to 11 Mbps, when Internet text browsing and email was made available wirelessly. The 802.11g/a standard, which is the third generation of the Wi-Fi standard, brought a maximum data rate of 54 Mbps, creating use cases with richer web experiences. The 802.11n standard, which was ratified in 2007, provides a much higher range of speeds with the maximum of 600 Mbps (prevalent speeds are much lower). This standard enabled medium resolution video streaming because of higher throughput. The latest standard, 802.11ac with theoretical speeds of 3.6 Gbps, is considered a true wired complement and can enable higher-definition video streaming and services with use cases that require higher data rates.
Globally, Wi-Fi connection speeds originated from dual-mode mobile devices will increase threefold by 2017. The average Wi-Fi network connection speed (7.7 Mbps in 2012) will exceed 20.3 Mbps by 2017. North America will experience the highest mobile Wi-Fi speeds of 23.2 Mbps by 2017, and the Asia Pacific region will have the highest Wi-Fi speed growth (threefold) by 2017, reaching nearly 18.7 Mbps.

4. Online Video Users Nearly Doubling over the Forecast Period

Globally, online video users are expected to grow from 1.1 billion in 2012 to nearly 2 billion by 2017 at a CAGR of 13.2 percent. It is going to be the fastest-growing residential Internet service and is going to have the highest percentage of residential Internet users (81 percent) by 2017.
With the proliferation of devices with screen and video capabilities, online video is going to be viewed on a wide variety of devices apart from PCs. As indicated by Figure 6, the relative traffic share of online video on PCs is going to decline from 88 percent in 2012 to 57.5 percent in 2017. Devices such as smartphones and tablets will increasingly gain online video share and grow from 3 percent share in 2012 to 29 percent share in 2017. Share of TV connected to the Internet either directly or through set-top boxes (including gaming consoles) is also going to grow from 8.5 percent in 2012 to almost 12 percent by 2017.

Figure 6. Global Online Video Device Share

Besides online video over fixed Internet connections, mobile video is growing as well. In fact, mobile video services are growing at a much faster growth rate than fixed Internet video services. By 2017, the number of mobile video users will surpass the number of fixed online video users (Figure 7). Streaming over fixed Internet and mobile networks creates provisioning challenges that can be met by intelligent networks. This video trend can also create opportunities for service providers to use popular content across multiple platforms, thus increasing revenue streams and enhancing network monetization.

Figure 7. Growth in Consumer Video Viewership

Not only do we find many examples of TV Everywhere services being launched by digital TV service providers, but we have seen content being developed specifically for online and mobile video viewing. For example, YouTube recently launched a paid subscription channel in cooperation with a few partners. Besides subscription fees, such content is often monetized by advertising revenue. There are also a variety of online video services that offer unique Internet video series and episodic content (free and subscription-based) that can be viewed only through the Internet (for example, blip.tv, tubefilter, and vimeo, etc.).
To see how regional service providers such as Du are delivering Internet TV as the key service portfolio differentiator to attract a larger audience, please visit Cisco VNI SA Case Studies.
Through our analysis video viewing data from ComScore, we found that Google sites lead worldwide in terms of time spent on online video sites (Figure 8). However, there are several regional and country-specific variations. For example, in China, Youku is the top site, whereas in Japan, Dwango Co is the leader.

Figure 8. Top 5 Global Video Sites Measured for Time Spent (February 2013)

5. Digital TV Accelerates VoD and Personal Video Recorder Adoption

Nearly 80 percent (1.4 billion) of the global TV households will have Digital TV service by 2017, up from 60 percent (928 million) TV households in 2012. This increase will represent a CAGR of more than 8 percent from 2012 to 2017 (Figure 9). Globally, video on demand (VoD) will have higher adoption by digital TV households relative to time-delayed TV services such as DVR and PVR. VoD will also be the fastest-growing digital TV service globally with 9.4-percent CAGR, growing from 256 million subscribers in 2012 to 402 million subscribers by 2017. However, in some regions, DVR and PVR services will grow faster than VoD, albeit from a smaller base.

Figure 9. Global Digital TV, VoD, PVR, and DVR Subscribers as a Percentage of TV Households

Regionally, North America will lead in adoption of digital TV service as well as VoD and time-delayed TV services followed by Western Europe (Figure 10). Latin America and Middle East and Africa are the only two regions that will have a higher adoption of time-delayed television (DVR and PVR) services relative to VoD.
VoD and time-delayed services are lucrative value-added services that increase the average revenue per subscriber for a service provider and may enhance customer loyalty, provided the content is compelling for the viewership.

Figure 10. Regional View of Digital TV, VoD, and PVR Adoption (2017)

We have some examples demonstrating how global service providers such as Virgin Media and others are taking advantage of their next-generation networks and content rights to provide value-add services such as VoD. To see more, please visit Cisco VNI SA Case Studies.

6. Mobile Banking and Commerce Increasing

Mobile Commerce is the fastest-growing consumer mobile service globally. It will grow at a CAGR greater than 36 percent over the forecast period, growing from 560 million users in 2012 to 2.6 billion users by 2017. Mobile commerce is helping bridge the gap of limited financial institution accessibility in many of the developing regions. We analyzed the latest available (2011) data from World Bank on population with accounts at formal financial institutions and juxtaposed it with percentage of population with mobile access (Figure 11). We found that globally and across all emerging regions there is a greater accessibility to mobile networks than to formal financial institutions. Globally, only little over half (51 percent) of the population had accounts at formal financial institutions, but 57 percent of the population were mobile users. The lowest financial institution coverage was in Latin America (39 percent of the population), whereas 69 percent of the region's population were mobile users.

Figure 11. Mobile Users vs. Access to Financial Institutions (2011)

Regionally, Asia Pacific will have more than 56 percent of the total mobile commerce users by 2017. Latin America will experience the fastest mobile commerce services growth with a 51-percent CAGR, followed by Middle East and Africa (40-percent CAGR) and Asia Pacific (37-percent CAGR). So, although North America and Western Europe lead in the adoption of mobile commerce as a percentage of their mobile user bases, emerging market regions are the areas with the highest growth rates over the forecast period (Figure 12).

Figure 12. Regional Adoption and Growth of Mobile Commerce

Mobile operators are engaging in partnerships with financial organizations such as banks and credit card companies to extend the reach of banking and commerce services over secure IP networks to mobile customers. As an example, Turkcell has developed an innovative mobile wallet service for its mobile customer base. To read more about that case study and several others, please visit Cisco VNI SA Case Studies.
User attitudes are also indicating a growing acceptance of mobile commerce services. In the 2012 University of Southern California (USC) Communication Technology Management (CTM) survey of 2000 mobile data users in the United States, 46 percent of total respondents indicated they use mobile commerce services (buying or ordering goods, making reservations, or mobile banking) as compared to 19 percent in 2011 (Figure 13).

Figure 13. U.S. Mobile Commerce Users 2011-2012 Comparison

Focusing on mobile banking, 26 percent of the USC CTM survey respondents indicated they use mobile banking services at least weekly, while another 15 percent use mobile banking services monthly. Security concerns relating to mobile financial transactions are present in the general population of mobile data users-31 percent indicated they believe there is more risk involved in using phones to conduct financial transactions. However, of those respondents who use mobile banking services at least weekly, only 13 percent agreed with that risk statement. It may be concluded that increased familiarity with using mobile banking services may alleviate some user concerns (Table 4).

Table 4. Agreement with Statement: "There is not more risk using my phone for financial transactions than by other methods"

       

Strongly Disagree/Disagree

Neutral

Strongly Agree/Agree

Total respondents

33%

36%

31%

Respondents using mobile banking weekly or more often

56%

30%

14%

Source: USC CTM, Global Mobile Survey, 2012

7. Desktop Videoconferencing Growing Eightfold

Among the business data services tracked by the VNI Service Adoption Forecast, desktop videoconferencing will be the fastest-growing service over the forecast period, with a CAGR of nearly 52 percent (Figure 14).

Figure 14. Growth of Business Videoconferencing Services

The number of desktop videoconferencing users will grow from about 27 million in 2012 to about 213 million by 2017-eightfold growth. We will clearly see video becoming a more mainstream business communication application globally. By 2015 there will be more desktop videoconferencing users than audio conferencing users.
Regionally, the Middle East and Africa and Latin America will be the two leading regions for videoconferencing in terms of the CAGR, although they will be growing from a smaller base than other regions. North America will be the only region to experience negative growth in web conferencing without video. However, the fact that North America has the largest number of users will affect the global decline of this service. All other regions will still see a growth in web conferencing without video, but at a rate that is quite modest in comparison to videoconferencing growth.

8. Business Mobile Services Trend

Among the business mobile services, LBS will grow the fastest (33-percent CAGR), projected to grow from 38 million users in 2012 to 156 million users by 2017 (Figure 15).

Figure 15. Business Mobile Services Trend

Mobile LBS for business should not to be confused with services such as discount coupons delivered over mobile phones to the consumers. Because we look at service adoption from the end-user perspective, those types of services would be part of the consumer mobile LBS category. Business mobile LBS as it pertains to this study represents applications in enterprise environments that are designed to track employees and assets. It is especially useful for businesses with a mobile workforce and is needed for applications such as field-force management, fleet tracking, emergency notification, security systems, etc. It provides navigational, dynamic, and timely information relative to the current location and content to enhance the productivity of the field and mobile workforce. These services are heavily used by a variety of industries such as transportation and logistics, security companies, and other public sector businesses, just to name a few.

9. Cisco Data Meter Offers View into Mobile Device and Data Usage Trends

The Cisco Data Meter mobile app for Android smartphones and tablets provides compelling insights into the usage of mobile devices and data in our daily lives. For example, at the height of the Boston Marathon manhunt on May 17, 2013, analysis of mobile data traffic as reported by the Cisco Data Meter shows that the average North American Android smartphone user consumed 18.4 megabytes of mobile data on that day, making it the highest daily average smartphone mobile data consumption rate since the U.S. presidential inauguration in January 2013. In addition, smartphone Wi-Fi data consumption on that date was three times higher than cell consumption (56.7 megabytes per smartphone). People were following the latest news and developments from wherever they happened to be through the immediacy and convenience of their mobile devices.
Trends in tablet usage are also beginning to emerge in the Data Meter data analysis. When comparing Android tablet data traffic by network type, globally, average monthly tablet Wi-Fi data usage was 581 megabytes per month as compared to 35 megabytes average monthly mobile data usage. Ninety-four percent of total monthly tablet data traffic was over Wi-Fi networks as compared to 6 percent over mobile networks. (At this time, Data Meter does not distinguish Wi-Fi traffic generated by mobile-connected tablets from Wi-Fi traffic generated by Wi-Fi-only tablets.)

Table 5. Top Application Categories Accelerating Tablet Data Consumption

Wi-Fi Tablets

Mobile Connected Tablets

Video streaming and communications: 45%

Lifestyle and information: 21%

Web browsing: 9%

Video streaming and communications: 48%

Web browsing: 16%

Social media: 11%

Average monthly Wi-Fi data usage: 581 MB/month

Average monthly mobile data usage: 35 MB/month

Source: Cisco Data Meter, 2013

When considering top application categories accelerating tablet Wi-Fi data consumption (Table 5), video streaming and communications is the leading app category at 45 percent. Lifestyle and information ranks second in tablet Wi-Fi data consumption at 21 percent, whereas web browsing comes in third with 9 percent of total Wi-Fi tablet data usage. Application usage on mobile-connected tablets follows similar trends, although at much lower average monthly consumption rates. It is of note that social media apps generated 11 percent of tablet mobile traffic as compared to 4 percent of tablet Wi-Fi traffic. The higher ranking of social media on mobile networks could be attributable to the more immediate nature of connecting to a mobile network rather than searching for a Wi-Fi connection for social networking.
The Cisco Data Meter has been installed on more than 22,000 Android smartphones and tablets globally. Download the free Cisco Data Meter app from Google Play and visit the Cisco Data Meter web visualization site to view global and regional mobile usage metrics.

10. The Changing Residential Internet Environment

Residential Internet connected devices are undergoing an evolution from traditional laptop and desktop devices to tablets, smartphones, and streaming devices (Roku, Slingbox, etc.). According to the USC CTM Digital Home Survey of 4000 U.S. residents, household ownership of at least one smartphone reached 64 percent in 2013. That figure is up from 51 percent in 2012. Tablet household ownership reached 46 percent, up from 27 percent in 2012. Streaming devices are being used in 25 percent of respondent households in 2013 compared to 14 percent in 2012.
Looking ahead to 2014, the survey data projects that nearly 75 percent of U.S. households will have at least one smartphone. Tablets will be owned by 57 percent of U.S. households, and streaming device ownership will climb to 32 percent of U.S. households (Table 6).

Table 6. U.S. Household Percent of Ownership by Device

Device

2012 Household %

2013 Household %

2013 Household % (Est.)

Desktop

78%

79%

81%

HDTV

69%

75%

81%

Laptop

74%

78%

83%

Game console

61%

67%

69%

Smartphone

51%

64%

75%

Tablet

27%

46%

57%

Handheld gaming

32%

37%

39%

e-Reader

23%

30%

36%

Streaming devices (Roku, Slingbox etc.)

14%

25%

32%

Source: USC CTM Digital Home Survey, 2013

With the residential Internet environment becoming more mobile, television viewers are interested in increased sharing of content and interaction among devices, including live streaming on any device, mobile and fixed device interoperability, and ability for viewers to influence programming (Figure 16).

Figure 16. Television Viewer Interest in Content Portability

Conclusion

With the proliferation of devices in consumer and business segments, there is also an increase in adoption of services and applications. Although new services and applications emerge, there is increased adoption of existing services as well. The adoption of services is influenced by a region's network readiness, physical and infrastructural resources, regulatory environment, and cultural preferences.
We can clearly see how the popularity of anchor services such as digital television is creating opportunities for growth of ancillary services such as VoD and PVR. There are also growing synergies between services offered on various platforms and devices, prompted by users' desires to access their content ubiquitously. There are instances of global providers offering "everywhere TV" services, making TV content available on PCs and smartphones alike, with growing integration with social media.
Higher adoption of mobile devices such as smartphones and tablets is redefining the service requirements for providers by creating demand for cross-device access to user content in a secure manner. While mobile SMS continues to be the most widely adopted service, advanced network services such as mobile video and mobile banking and commerce are among the fastest-growing consumer mobile services.
Growth in video services is not limited to just consumer or residential segments but is becoming more pervasive in business environments as well, as seen in the growth trends for adoption of both desktop videoconferencing and high-end room-based videoconferencing services. Web conferencing without video is giving way to increased adoption of conferencing with video. As businesses deploy next-generation networks, videoconferencing is increasingly becoming a viable option for increasing employee productivity and reducing business travel expenses.
New business models and ecosystems are being created for support and monetization of these varied services, as showcased in several Cisco VNI SA case studies. For a detailed view of the addressable market and service adoption growth, please visit Cisco VNI SA Highlights Tool and Cisco VNI SA Graphing Tool. Please send any questions to ask-vnisa@cisco.com.

Appendix A: Service Definitions

Residential Services

This category includes the following services:

Consumer instant messaging: Fixed-line instant messaging for consumers

Consumer VoIP: VoIP including both Internet VoIP such as Skype, and dedicated VoIP subscriptions from a broadband service provider or an independent VoIP service provider such as Vonage

Online gaming: Games downloaded from or played over the Internet, including Internet-connected console gaming

Online music: Songs or music tracks downloaded from or streamed over the Internet

Online video: Video downloaded from or streamed over the Internet

Social networking: Social media (such as Facebook or MySpace) and micro-blogging (such as Twitter)

Digital TV: Services such as digital cable TV, Internet Protocol Television (IPTV), digital satellite TV (DTH), and digital terrestrial TV (DTT)

Personal video recording: PVRs or digital video recorders (DVRs) that allow recording of TV content to be viewed at a user's discretion, using a digital TV service

VoD: On-demand video programming that is streamed or downloaded through a TV set-top box, using a next-generation TV service

Consumer Mobile Services

This category includes the following services used by consumer mobile users:

Mobile SMS: Short Message Service or mobile text service

Mobile MMS: Mobile services that include multimedia objects such as images, videos, audio, and rich text in addition to text

Mobile email: Email on mobile phones

Mobile gaming: Downloads of full games as well as online gaming on mobile phones, including single-player and multiplayer online games

Mobile music: Full-track downloads and music streaming services on mobile phones

Mobile video: On-demand video content downloaded or streamed to the mobile handset

Mobile social networking: Mobile services ranging from simple chat rooms with only texting tools, to comprehensive multimedia environments and user-generated content (UGC) sharing communities

Mobile LBS: Services that include personal navigation, point of interest (POI), friend-finder, and family-tracker services

Mobile commerce: Services such as mobile banking, local and remote mobile payments, and domestic and international funds transfer

Business Services

This category includes the following services (note that mobile enterprise services are included to provide a comprehensive view of global business services):

Business instant messaging: Fixed-line business instant messaging, including all business users of on-premises and hosted email

Business IP telephony: IP telephony lines or endpoints that are attached to a dedicated IP-enabled or a dedicated IP phone system; also included is an IP Centrex shared or multitenant solution

Business audio conferencing: Phone-based conferencing with no video

Business web conferencing without video: Collaborative sessions that use a standard web browser or downloaded client to share an application or to make a remote presentation over the Internet (web conferencing with video is included in the category defined next)

Business desktop videoconferencing: Includes client-server PC-software-based desktop conferencing, as well as integrated videoconferencing with unified communications and web conferencing solutions, and executive videoconferencing

Business room-based videoconferencing: Solutions that include executive videoconferencing, and multicodec and single-codec conferencing systems such as Cisco TelePresence® conferencing

Mobile business email: Business email for users on an enterprise mobile account; this email is considered an extension of office email service

Mobile business messaging: Messaging for users on an enterprise mobile account; this messaging is considered an extension of the office messaging service

Mobile business location-based services: Business LBS for mobile employees such as the salesforce and field-force automation services

Appendix B: Service and Application Bandwidth Requirements

The applications and services covered within the Cisco VNI SA Forecast range from those with basic network requirements (for example, text-based services) to those requiring advanced network requirements, as in the case of streaming services (Table 5). To learn more about the various bandwidth requirements of sample residential, consumer mobile, and business services, please refer to the Cisco VNI SA Services Gauge and Table 7.

Table 7. Sample Service and Application Bandwidth Comparisons

Segment

Application or Service Name

KB

Consumer mobile

SMS

0.13

Consumer mobile

MMS with Video

100

Business

IP Telephony (1-hour call)

28,800

Residential

Social Networking (1 hour)

90,000

Residential

Online Music Streaming (1 hour)

72,000

Consumer mobile

Video and TV (1 hour)

120,000

Residential

Online Video Streaming (1 hour)

247,500

Business

Web Conferencing with Webcam (1 hour)

310,500

Residential

HD TV Programming (1 hour, MPEG 4)

2,475,000

Business

Room-Based Videoconferencing (1 hour, multicodec telepresence)

5,850,000

Appendix C: Network Reach and Quality

Network reach and quality are essential to the efficient delivery of the services and applications included in this report. Faster, more reliable networks can support more devices, allowing network users to adopt new services. For details about global and regional network characteristics, please visit: Cisco Global Cloud Index Supplement: Cloud Readiness Regional Details.

Appendix D: Global Service Adoption by Segment

Tables 8 through 10 summarize the global service adoption of residential, consumer mobile, and business services.

Table 8. Residential Services: Global Adoption (Millions of Subscribers or Users)

        

2012

2013

2014

2015

2016

2017

CAGR
2012-17

Digital TV

928

1,048

1,151

1,248

1,316

1,379

8.24%

PVR

118

135

152

166

176

184

9.22%

VoD

256

293

328

359

388

402

9.44%

Residential VoIP

615

675

737

808

887

971

9.56%

Social networking

1,205

1,317

1,424

1,536

1,645

1,731

7.50%

Online music

1,090

1,216

1,347

1,495

1,635

1,754

9.98%

Consumer IM

1,106

1,144

1,178

1,216

1,246

1,272

2.83%

Online video

1,066

1,245

1,429

1,617

1,811

1,985

13.24%

Online gaming

1,070

1,186

1,303

1,425

1,545

1,639

8.92%

Table 9. Consumer Mobile Services: Global Adoption (Millions of Subscribers or Users)

       

2012

2013

2014

2015

2016

2017

CAGR
2012-17

Mobile Video

435

665

965

1,301

1,636

2,021

35.97%

Mobile banking and commerce

560

861

1,243

1,681

2,118

2,607

36.01%

Mobile music

553

727

947

1,209

1,456

1,716

25.40%

Consumer mobile LBS

672

857

1,099

1,396

1,778

2,280

27.67%

Mobile gaming

511

735

1,010

1,301

1,567

1,840

29.21%

Mobile social networking

969

1,347

1,784

2,223

2,611

3,018

25.52%

Consumer mobile email

609

814

1,075

1,366

1,641

1,952

26.22%

Consumer MMS

939

1,135

1,362

1,591

1,785

1,991

16.23%

Consumer SMS

3,105

3,423

3,712

3,968

4,194

4,415

7.29%

Table 10. Business Services: Global Adoption (Millions of Users)

       

2012

2013

2014

2015

2016

2017

CAGR

2012-2017

Business mobile SMS

421

456

486

509

525

540

5.14%

Business mobile LBS

38

56

79

104

128

156

32.87%

Business mobile email

103

128

157

186

212

241

18.48%

Desktop videoconferencing

27

39

72

119

186

213

51.68%

Business IP telephony

136

153

170

187

199

208

8.96%

Room-based conferencing

96

106

121

134

145

223

18.49%

Audio conferencing

69

74

79

85

95

105

8.63%

Business IM

598

637

649

668

684

703

3.31%

Web conferencing without video

17

17

17

16

16

16

-0.91%

Appendix E: 2012 Global Mobile Survey-University of Southern California Institute for Communication Technology Management

In 2012, the University of Southern California (USC) Institute for Communication Technology Management (CTM) conducted several iterations of its Global Mobile Survey. The longevity of this study offers the opportunity to consider trends over time in the areas of desired mobile device features, most popular applications, and motivations for using mobile data services. Cisco and several other companies have been cosponsors of the research. The surveys were conducted in partnership with local government and academic organizations, through in-person or phone interviews or online surveys.
When considering the U.S. Mobile Survey, several key trends emerge:

• Device features such as screen size and battery life are growing in importance to users. Communication applications continue to be the most popular, whereas mobile commerce shows the most increase in usage.

• The intensity of motivation to use mobile devices is growing, led by increased productivity, usefulness, and flexibility.

In 2008, battery life was identified as the most important feature in the user's next phone (76 percent of respondents), followed by memory and storage (62 percent) and screen size (60 percent). In the 2012 survey, four device features were deemed nearly equal in importance among users: battery life (84 percent), Internet access (83 percent), operating system (82 percent), and screen size (80 percent.) On the other hand, the importance of built-in apps dropped from 77 percent in 2010 to 69 percent in 2012 (Figure 17).

Figure 17. Features Important in Next Phone

In comparing the results of the 2011 U.S. Mobile survey to the 2012 survey, mobile communications apps including email, texting, and chatting remain the most popular among users (76 percent in 2011 and 77 percent in 2012). Web browsing and information service each grew 10 percent year over year; however, the strongest growth occurred in entertainment services (38 percent in 2011 to 55 percent in 2012) and mobile commerce (19 percent in 2011 to 46 percent in 2012). The graph in Figure 18 shows these results.

Figure 18. Most Popular Mobile Applications

The motivation to use mobile data services has also increased in intensity. Time saving, usefulness, and the freedom associated with mobile data services are the strongest motivators for usage. Saving money by finding deals and trying out new things are also key motivators for using mobile data services.

Figure 19. Motivations for Using Mobile Data Services