Mobile data to double every year through 2014, cost carriers $50 billion

mobile-traffic-forecast-cnn-ciscoThanks to the runaway success of the iPhone and devices riding off its coattails, mobile data network usage doubled in 2010 and is projected to more than double every year through 2014, reports CNN. The main culprit for the increase is video.By 2014, streaming services like YouTube and Netflix will help Internet usage grow to more than 17 times 2010 levels, from 18 million gigabytes this year to about 312 million gigabytes by the middle of the decade.

These numbers come from a tool by Cisco that enables mobile operators to estimate potential traffic usage by subscribers for the next four years. Mobile video alone will grow from 9 million GB in 2010 to 170 million GB four years from now. Video usage will roughly double all other forms of data usage.

Somebody has to pay

While these statistics are fun to read about, they pose a looming problem for wireless carriers, which are struggling to upgrade their networks and meet demand. Their costs are in the billions. Dan Hays, a partner at PRTM says that operators are spending a collective $30 billion to $50 billion annually to keep up with demand and remain competitive. Verizon spent $17 billion in 2009 alone and AT&T laid down $19 billion for upgrades in the last two years. With each carrier launching faster 4G networks, these costs are only increasing.

The question is, will carriers foot the bill or are we in for even higher data prices? This year, AT&T eliminated its unlimited data plan and makes users pay by the gigabyte, Verizon has not yet eliminated its plans, but introduced a new minuscule 200 MB data plan for $15 a month. Most carriers offer a $30 (or so) ‘unlimited’ data plan, a somewhat deceptive name since they usually cap out at 5 gigabytes. However, 5 GB will soon become a very constraining number for many users as they consume more audio and video on their smartphones at high 4G speeds. A few weeks ago, PC Mag reported that at 21 MB per second, the supposed speed of Verizon’s new LTE 4G network, users could blow through 5 GB in 32 minutes. That’s not a lot of time. Verizon charges $10 for each gigabyte used over 5 GB.

So who will pay? Somehow, it will be us. Though we already pay about $30 per device, new plans may charge more, based on usage. Other options include pools of data shared between multiple devices (much like family voice plans) or charges for specific services like Netflix, though charging services may bring on more net neutrality debates.