News Column

'Shape-in or Shape-Out'

July 9, 2014

Prince Osuagwu

Latest Cisco forecasts on internet traffic growth for 2013-2018 is putting African mobile operators, particularly those operating in Nigeria, on red alert.

The forecasts, particularly, warn Nigerian mobile operators to be on their toes in terms of service delivery or risk losing customers.

This is following its discoveries of impending market trends in new services and offerings that may determine how subscribers in the region rate and value service providers in the coming years.

The trend may even become more of a determining factor, considering available statistics which pitches the growth of internet related services higher in Middle East and Africa, MEA, than in many developed countries of the world.

For instance, the Cisco forecasts, estimate that in Middle East and Africa, Internet Protocol, IP traffic will grow 5-fold by 2018, representing a compound annual growth rate, CAGR of 38%.

Internet traffic, the report said, will grow 5.5-fold from 2013 to 2018, a compound annual growth rate of 41%; IP video traffic will grow 7-fold from 2013 to 2018, a compound annual growth rate of 48%; Internet video traffic will grow 8-fold from 2013 to 2018, a compound annual growth rate of 50%.

It also predicts that HD will be 19.6% of IP Video traffic in 2018, up from 6.9% in 2013, while Mobile data traffic will grow 14-fold from 2013 to 2018, to represent a compound annual growth rate of 70%.

Meanwhile, other regions of the world like Latin America will grow 21%. Central and Eastern Europe 23 percent, Western Europe, 18 percent, North America 20 percent and Asia pacific 21 percent.

They are far behind MEA on these projections; the closest Central and Eastern Europe still trails with average of 15 percent on all indices.

Compelling factors

The factors that will propel these changes included the rising population of Africa which Nigeria spearheads, smart devices, growth of high definition videos.

Other major factors contributing to this development are private/government intervention in the deployment of data services, like the plan by Nigeria's telecom regulator, the Nigerian Communications Commission, NCC to license Infrastructure Companies, InfraCos, Broadband Nigeria initiative and several private investments in submarine cables like MainOne, Glo1, WACS among others.

The growth will see 2.0 billion networked devices in 2018, up from 1.3 billion in 2013. Particularly so, is that Fixed/Wi-Fi will be 60% of total IP traffic in 2018.

Again, there will be 3 million Internet households representing 5.1% of all Internet households generating more than 100 gigabytes per month in 2018, up from 438,224 recorded in 2013.

Global projections

Even in the global scene, MEA's potentials and forecasts are pushing projections expected to completely and dramatically shift the composition of IP traffic in the coming years.

By 2018, according to Cisco, the majority of traffic will originate from devices other than personal computers (PCs) for the first time. Wi-Fi traffic will exceed wired traffic for the first time, and high-definition (HD) video will generate more traffic than standard-definition video.

Mobile and portable devices other than PCs will drive the majority of traffic by 2018, building further from 2013, when 33 percent of IP traffic originated with non-PC devices.

However, the report noted that by 2018, the non-PC share of IP traffic will grow to 57 percent. Wi-Fi and mobile-connected devices will generate 76 percent of Internet traffic by 2018. Wi-Fi will be 61 percent, and cellular will be 15 percent. Fixed traffic will be only 24 percent of total Internet traffic by 2018. In comparison, Wi-Fi was 55 percent; cellular was 4 percent; and fixed was 41 percent.

Global broadband speeds will reach 42 Mbps by 2018, up from 16 Mbps at the end of 2013. Online video will be the fastest-growing residential internet service growing from 1.2 billion users to 1.9 billion users by 2018.

Desktop and personal video conferencing will be the fastest-growing business Internet service growing from 37 million users in 2013 to 238 million users by 2018.

The Internet of everything is also gaining momentum, and there will be nearly as many machine-to-machine (M2M) modules as there are people by 2018. For example, smart cars will have nearly four M2M connections per car.

A new challenge for operators

Now, considering all these projections, a new challenge sprouts with multiple tentacles for operators; meaning that a change of marketing perception, service offering and customer service initiatives is imperative.

To be able to succeed, Cisco says that Service provider networks must adapt to the increasing number of devices, such as tablets, smartphones and M2M connections, that will need to be authenticated to gain access to fixed/mobile networks with enhanced security and intelligence required.

The evolution of advanced video services, such as HD/ultra HD video, may create new bandwidth and scalability requirements for service providers. Residential, business and mobile consumers continue to have strong demand for advanced video services across all network and device types with quality of service, convenience, and price as key factors for success.

It also stated that: "Continued business video adoption, such as HD and web-based video conferencing and business VoD may prompt greater growth in network virtualization and leveraging the Internet for video transmission with network ramifications for service providers and over-the-top providers.

4G network growth and service adoption may grow faster as mobile users continue to demand similar service and content experiences from their fixed and mobile networks.

IP networks must be intelligent and flexible enough to support the constant introduction of new/updated applications for fixed and mobile networks.

As the company's General Manager for Nigeria and English Speaking West Africa, Mr Dare Ogunlade, aptly noted, "the reality of the IoE, the increasing demand for network mobility, and the emergence of 4K video are among the key trends that represent significant opportunities for service providers in Africa today and in the immediate future"

Although indications are that many service providers are actually collaborating with application developers to enhance their service offerings, fears are that time is running out for African operators to capitalize on enormous potentials to catch up and overtake the world. 2018 is merely 3 years away and the universal and dynamic nature of technology makes playing catch-up a dangerous game.

Today, major sporting events like the FIFA World Cup have highlighted the enormous consumer and business appetite for a better viewing experience over the Internet using either mobile or fixed devices. So, service providers must seek new innovative technology solutions that will deliver this enhanced experience.

The Cisco forecasts, therefore, could be a call for African operators to shape in or shape out.


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Source: AllAfrica


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