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FIXED NETWORK DATA TRAFFIC: WORLDWIDE TRENDS AND FORECASTS 2016-2021 - analysysmason.com
Fixed network data traffic: worldwide trends and forecasts 2016–2021

                 RESEARCH FORECAST REPORT

                 FIXED NETWORK DATA TRAFFIC: WORLDWIDE TRENDS AND
                 FORECASTS 2016–2021
                 RUPERT WOOD

                 analysysmason.com
© Analysys Mason Limited 2016
FIXED NETWORK DATA TRAFFIC: WORLDWIDE TRENDS AND FORECASTS 2016-2021 - analysysmason.com
Fixed network data traffic: worldwide trends and forecasts 2016–2021

About this report

This report analyses fixed data traffic trends worldwide, and draws                                           GEOGR APH IC AL COVER AG E                     KEY METR ICS
out implications for fixed and mobile operators, as well as content
players.                                                                                                  8 regions worldwide:                       Overall national and per
                                                                                                              Central and Eastern Europe (CEE):      broadband (BB) subscriber data,
It is based on several sources, including:                                                                     Poland, Romania, Russia, Turkey        year total and year end
                                                                                                              Developed Asia–Pacific (DVAP):        Internet, managed IP, multicast
 Analysys Mason’s internal research, including broadband and                                                  Australia, Hong Kong, Japan, South     data
  next-generation access (NGA) forecasts, 4K forecasts, wireless                                               Korea
                                                                                                                                                     NGA and non-NGA split
  traffic forecasts, Connected Consumer survey                                                                Emerging Asia–Pacific (EMAP):
                                                                                                               China, India, Indonesia, Malaysia     Median usage
 operator and regulator data                                                                                 Latin America (LATAM): Brazil         Fixed—mobile traffic ratios

 ongoing engagement with stakeholders in the fixed telecoms                                                  Middle East and North Africa          Asymmetry ratios
                                                                                                               (MENA)                                Internet bandwidth per
  sector.
                                                                                                              North America (NA): USA                subscriber, average and busy
                                                                                                              Sub-Saharan Africa (SSA): South        hour
                      WHO SHOULD R EAD T HIS R EPOR T                                                          Africa                                Global split by device (TV, mobile
    CTO and strategy teams in fixed network operators (FNOs)                                                 Western Europe (WE): France,           device, PC, other)
        This report will help them to understand how to tie their NGA conversion (and hence                   Germany, Italy, Nordic countries,
         ARPU uplifts) to changes in usage demand, and in emerging markets, to understand                      Spain, UK
         how soon patterns of consumption could encourage fixed broadband (FBB) take-up.
    CTO and strategy teams in MNOs
        The ability to substitute fixed (to gain greater share of wallet) is at the core of mobile
         revenue growth. MNOs urgently need a holistic fixed—mobile view of data consumption
         in order to plan for mobile and/or new fixed network investment.
    CTO and strategy teams in Content / TV businesses
        Rapid shifts to non-linear viewing present uncertainty for the continued use of RF (on
         unidirectional broadcast networks). More rational use of network options is possible,
         and spectrum used for RF could be of greater use to MNOs, for example.

© Analysys Mason Limited 2016                                                                         2
FIXED NETWORK DATA TRAFFIC: WORLDWIDE TRENDS AND FORECASTS 2016-2021 - analysysmason.com
Fixed network data traffic: worldwide trends and forecasts 2016–2021

Contents [1]

7. Worldwide trends                                                                    19. Central and Eastern Europe
8. Worldwide: Broadcast substitution, 4K and new emerging economy fibre                20. Central and Eastern Europe: Strong FMC effects in EU states will be offset
   investment are driving fixed traffic growth                                             by slower growth in Russia
9. Worldwide: Emerging markets will contribute 46% of Internet traffic by              21. Central and Eastern Europe: Peer-to-peer still affects the shape of traffic
   2021                                                                                    growth
10. Worldwide: Increasing availability of affordable fixed broadband in emerging       22. Middle East and North Africa
    markets is triggering key changes in Internet usage
                                                                                       23. Middle East and North Africa: Where fibre is in place, usage is high, but
11. Worldwide: Fixed broadband data growth is approaching that of mobile;                  limited investment elsewhere holds traffic back
    mobile networks’ share of data traffic will plateau
                                                                                       24. Middle East and North Africa: Lack of disclosure of usage may tells its own
12. Worldwide: NGA usage levels already demonstrate very strong cord-cutting               story
    tendencies
                                                                                       25. Sub-Saharan Africa
13. Worldwide: Larger screens – not mobile devices – are now the largest
                                                                                       26. Sub-Saharan Africa: Fixed broadband plays only a minor role in the SSA
    drivers of traffic growth
                                                                                           telecoms landscape
14. Worldwide: Virtual reality should accelerate data usage, particularly on
                                                                                       27. Emerging Asia–Pacific
    home connections
                                                                                       28. Emerging Asia–Pacific: Chinese usage dominates the regional totals
15. Worldwide: Busy-hour share, asymmetry ratios, and mean:median ratios all
    show slow, long-term trends                                                        29. Emerging Asia–Pacific: China and Malaysia’s markets already resemble
                                                                                           developed economies in terms of take-up and usage
16. Western Europe
                                                                                       30. Developed Asia–Pacific
17. Western Europe: Services, not networks, drive traffic growth
                                                                                       31. Developed Asia–Pacific: Fixed data traffic growth will overtake that of
18. Western Europe: Southern Europe has not yet had the surge in usage
                                                                                           mobile
    experienced in Northern Europe
                                                                                       32. Developed Asia–Pacific: Large screens and 4K will stimulate growth in
                                                                                           traffic

© Analysys Mason Limited 2016                                                      3
Fixed network data traffic: worldwide trends and forecasts 2016–2021

Contents [2]

33. North America
34. North America: While underlying demand for online video is strong, growth
    will be inhibited by cableco bundling strategies
35. Latin America
36. Latin America: The strength of growth is related to FTTP investment, which
    is patchy in the region
37. Forecast methodology and assumptions
38. This report measures and forecasts IP data generated by fixed broadband
    connections
39. The report covers three broad classes of data traffic: Internet, managed IP
    and multicast IPTV
40. The methodology focuses on shifts in video consumption and technologies
41. About the authors and Analysys Mason
42. About the authors
43. About Analysys Mason
44. Research from Analysys Mason
45. Consulting from Analysys Mason

© Analysys Mason Limited 2016                                                     4
Fixed network data traffic: worldwide trends and forecasts 2016–2021

List of figures [1]

Figure 1: Total global fixed IP traffic, by type, 2015–2021                           Figure 15: Average Internet usage per FBB connection, selected Western
                                                                                      Europe markets, year-end 2015
Figure 2: Total fixed Internet traffic, by worldwide region, 2015– 2021
                                                                                      Figure 16: Average Internet usage per NGA, non-NGA and blended broadband
Figure 3: GDP per capita, gigabytes per capita and relative mobile share of           connection, Western Europe, 2014–2021
traffic, selected markets, December 2015
                                                                                      Figure 17: Total NGA and non-NGA connections, Central and Eastern Europe,
Figure 4: Fixed and mobile Internet data growth, and mobile share of total,           2014–2021
Japan, 2H 2010–2H 2015
                                                                                      Figure 18: Total IP data traffic, by type, Central and Eastern Europe, 2014–
Figure 5: Mobile share of Internet traffic, selected regions, 2015–2021               2021

Figure 6: Average monthly data traffic per NGA connection (including non-             Figure 19: Average Internet usage per FBB connection, selected Central and
Internet), selected operators, year-end 2015                                          Eastern European markets, year-end 2015
                                                                                      Figure 20: Average Internet usage per NGA, non-NGA and blended broadband
Figure 7: Average blended, NGA and non-NGA Internet traffic per connection,
                                                                                      connection, Central and Eastern Europe, 2014–2021
worldwide, 2015–2021
                                                                                      Figure 21: Total NGA and non-NGA connections, Middle East and North Africa,
Figure 8: iPlayer share of TV content requests by device (excluding unknowns)         2014–2021
Figure 9: Device share of overall IP traffic, including mobile network traffic,       Figure 22: Total IP data traffic, by type, Middle East and North Africa, 2014–
worldwide, 2014–2021                                                                  2021
Figure 10: Busy and average hour bandwidths per connection, busy/average              Figure 23: Average Internet usage per FBB connection, selected Middle East
ratios, USA and Western Europe, 2015–2021                                             and North African markets, year-end 2015

Figure 11: Upstream share of Internet traffic, developed regions and worldwide,       Figure 24: Average Internet usage per NGA, non-NGA and blended broadband
2015–2021                                                                             connection, Middle East and North Africa, 2014–2021

Figure 12: Mean and median usage per connection, Western Europe, 2015–                Figure 25: Total NGA and non-NGA connections, Sub-Saharan Africa, 2014–
2021                                                                                  2021
                                                                                      Figure 26: Total IP data traffic, by type, Sub-Saharan Africa, 2014–2021
Figure 13: Total NGA and non-NGA connections, Western Europe, 2014–2021
                                                                                      Figure 27: Average Internet usage per NGA, non-NGA and blended broadband
Figure 14: Total IP data traffic, by type, Western Europe, 2014–2021                  connection, Sub-Saharan Africa, 2014–2021

© Analysys Mason Limited 2016                                                     5
Fixed network data traffic: worldwide trends and forecasts 2016–2021

List of figures [2]

Figure 28: Total NGA and non-NGA connections, emerging Asia–Pacific, 2014–          Figure 42: Scope of this forecast
2021
                                                                                    Figure 43: Simplified diagram of three classes of fixed IP data traffic
Figure 29: Total IP data traffic, by type, emerging Asia–Pacific, 2014–2021         Figure 44: Fixed data traffic forecast methodology
Figure 30: Average Internet usage per FBB connection, selected emerging Asia–
Pacific markets, year-end 2015

Figure 31: Average Internet usage per NGA, non-NGA and blended broadband
connection, emerging Asia–Pacific, 2014–2021

Figure 32: Total NGA and non-NGA connections, developed Asia–Pacific, 2014–
2021

Figure 33: Total IP data traffic, by type, developed Asia–Pacific, 2014–2021

Figure 34: Average Internet usage per FBB connection, selected developed
Asia–Pacific markets, year-end 2015

Figure 35: Average Internet usage per NGA, non-NGA and blended broadband
connection, developed Asia–Pacific, 2014–2021
Figure 36: Total NGA and non-NGA connections, North America, 2014–2021

Figure 37: Total IP data traffic, by type, North America, 2014—2021

Figure 38: Average Internet usage per NGA, non-NGA and blended broadband
connection, North America, 2014–2021

Figure 39: Total NGA and non-NGA connections, Latin America, 2014–2021

Figure 40: Total IP data traffic, by type, Latin America, 2014–2021

Figure 41: Average Internet usage per NGA, non-NGA and blended broadband
connection, Latin America, 2014–2021

© Analysys Mason Limited 2016                                                   6
Fixed network data traffic: worldwide trends and forecasts 2016–2021

Worldwide: Fixed broadband data growth is approaching that
of mobile; mobile networks’ share of data traffic will plateau
Normal growth in average usage on an already-installed base of                   Figure 4: Fixed and mobile Internet data growth, and mobile share of total, Japan,
devices is about 30—35% per annum. Supernormal patterns of                       2H 2010–2H 2015
growth are often achieved through the introduction of new classes                        140%                                                                  20%
                                                                                         120%
of devices. In developed markets, the smartphone boom is nearly                                                                                                15%

                                                                                                                                                                                                                                            Mobile share of
                                                                                                                                                                                                                                            Internet traffic
                                                                                         100%

                                                                                 Annual RoG
over, and in the absence of compelling new classes of mobile                              80%
                                                                                                                                                               10%
devices, the rate of mobile traffic growth is returning to normal.                        60%
From a volume perspective, the most significant new consumer                              40%                                                                  5%
                                                                                          20%
devices to date are connected TVs. This means that some of the
                                                                                            0%                                                                 0%
strong growth rates are shifting to fixed networks. Looking ahead,

                                                                                                                           2H 2010
                                                                                                                                      1H 2011
                                                                                                                                                2H 2011
                                                                                                                                                          1H 2012
                                                                                                                                                                    2H 2012
                                                                                                                                                                              1H 2013
                                                                                                                                                                                        2H 2013
                                                                                                                                                                                                  1H 2014
                                                                                                                                                                                                            2H 2014
                                                                                                                                                                                                                      1H 2015
                                                                                                                                                                                                                                2H 2015
NGA networks have the capacity to support new indoor services at
very low additional cost.
                                                                                                                                     Mobile share                             Fixed RoG                         Mobile RoG
In developed economies, mobile networks’ share of overall data
                                                                                                                                                                                                              Sources: MIC, Analysys Mason
traffic will stabilise and will start to decline (at least for the period
prior to any major mass market 5G mobile roll-out). Interestingly,               Figure 5: Mobile share of Internet traffic, selected regions, 2015–2021
this is already evident in Japan (see Figure 4). In general, 4G has
                                                                                                                     25%                                                                                                  World
proven largely unable to provide a viable alternative to NGA. Fixed

                                                                                  Mobile share of Internet traffic
broadband usage is setting ever-higher benchmarks for new
                                                                                                                     20%                                                                                                  Developed economies
competitive 5G-based home broadband services, which will
appear before mobile 5G. Even in some emerging markets, the                                                          15%
trends are shifting from mobile to fixed. For example, we estimate                                                                                                                                                        China
that fixed data traffic in Brazil is growing significantly faster than                                               10%
mobile.                                                                                                                                                                                                                   Emerging economies
                                                                                                                     5%
Much of the early interest in 5G is in its use as a fixed wireless
                                                                                                                                                                                                                          Emerging economies
access technology. As and when fixed traffic growth overtakes                                                        0%                                                                                                   (excluding China)
mobile, this interest will be reinforced.                                                                              2015 2016 2017 2018 2019 2020 2021
                                                                                                                                                                                                                            Source: Analysys Mason

© Analysys Mason Limited 2016                                               11
Fixed network data traffic: worldwide trends and forecasts 2016–2021

Worldwide: Larger screens – not mobile devices – are now
the largest drivers of traffic growth
In last year’s forecast, we thought that traffic to mobile devices                                              Figure 8: iPlayer share of TV content requests by device (excluding unknowns)
over broadband/Wi-Fi would continue to grow as a share of fixed                                                                                          45%
traffic. However, this assumption may not hold. Evidence points to                                                                                       40%

                                                                                                                 Share of requests
a phenomenon we now suspect (but cannot easily prove) that it is                                                                                         35%                                                                                               Smartphones
                                                                                                                                                         30%
TV sets, and not mobile devices on Wi-Fi, that are driving most of                                                                                       25%                                                                                               Tablets
the growth in fixed traffic. Usage in many markets is now far too                                                                                        20%
high for it to be credible that mobile devices, with smaller screens                                                                                     15%                                                                                               PCs
and lower-spec codecs, account for much of the growth.                                                                                                   10%                                                                                               TVs
                                                                                                                                                          5%
For example, BBC iPlayer stats for TV content showed in 2014 a                                                                                            0%

                                                                                                                                                               Mar-13
                                                                                                                                                               Jun-13
                                                                                                                                                               Sep-13

                                                                                                                                                               Mar-14
                                                                                                                                                               Jun-14
                                                                                                                                                               Sep-14

                                                                                                                                                               Mar-15
                                                                                                                                                               Jun-15
                                                                                                                                                               Sep-15

                                                                                                                                                               Mar-16
                                                                                                                                                               Dec-13

                                                                                                                                                               Dec-14

                                                                                                                                                               Dec-15
steady growth in the proportion of requests coming from mobile
devices (tablets and smartphones).1 However, in 2015 this trend
reversed, with the proportion of requests on TV sets (including via                                                                                                                                                           Sources: BBC, Analysys Mason
intermediary devices such as set-top boxes and games consoles)                                                  Figure 9: Device share of overall IP traffic, including mobile network traffic, worldwide,
starting to rise. Any request trend towards larger screens                                                      2014–2021
accelerates traffic growth, not only because they require the                                                         100%                                                6.0%

                                                                                                                    Device share of overall IP traffic
                                                                                                                                                                                               Mobile device
highest bitrates, but because we assume that there is a
                                                                                                                        80%

                                                                                                                                                                                                                              Mobile network share
correlation between large screens and long sessions. Netflix                                                                                                              4.5%
                                                                                                                                                                                               PC and other
reported in February 2016 that mobile devices accounted for only                                                        60%
10% of its outbound traffic. Netflix Internet traffic in the USA is                                                                                                       3.0%
about 5—6 times greater than that of all US mobile operators                                                            40%                                                                    TVs
combined.                                                                                                                                                20%
                                                                                                                                                                                                                       1.5%
                                                                                                                                                                                                                                                          Mobile network
Analysys Mason forecasts that 4K TVs will account for 60% of TV                                                                                                                                                                                           share Internet
                                                                                                                                                         0%                                                            0.0%
sales by 2021, by which time household penetration of 4K TVs will
                                                                                                                                                               2014
                                                                                                                                                                      2015
                                                                                                                                                                             2016
                                                                                                                                                                                    2017
                                                                                                                                                                                           2018
                                                                                                                                                                                                  2019
                                                                                                                                                                                                         2020
                                                                                                                                                                                                                2021
have reached 26%.2
                                                                                                                                                                                                                                                     Source: Analysys Mason
1   iPlayer does not distinguish between fixed and mobile networks, but one can estimate with a            2   See Analysys Mason’s 4K (Ultra HD) TV sets will be in 26% of TV households worldwide by 2021:
     degree of certainty that around 80% of smartphone traffic and over 90% of tablet traffic is fixed.        this presents a revenue opportunity.

© Analysys Mason Limited 2016                                                                             13
Fixed network data traffic: worldwide trends and forecasts 2016–2021

                 CONTENTS

                  WORLDWIDE TRENDS
                  REGIONAL TRENDS
                     WESTERN EUROPE
                     CENTRAL AND EASTERN EUROPE
                     MIDDLE EAST AND NORTH AFRICA
                     SUB-SAHARAN AFRICA
                     EMERGING ASIA–PACIFIC
                     DEVELOPED ASIA–PACIFIC
                     NORTH AMERICA
                     LATIN AMERICA
                  FORECAST METHODOLOGY AND ASSUMPTIONS
                  ABOUT THE AUTHOR AND ANALYSYS MASON

© Analysys Mason Limited 2016                                          41
Fixed network data traffic: worldwide trends and forecasts 2016–2021

About the author

                      Rupert Wood (Research Director) is the lead analyst for our Fixed Networks, Wireless Networks and Convergence Strategies research
                      programmes. His research focuses on the economics of next-generation networks and of convergence, and leads Analysys Mason’s traffic
                      forecasting. Rupert regularly participates at industry conferences, and contributes to the international press on a wide range of telecoms
                      subjects. Rupert has a PhD from the University of Cambridge, where he was a Lecturer before joining Analysys Mason.

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Fixed network data traffic: worldwide trends and forecasts 2016–2021

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