Is network traffic growth dwindling to a trickle?

“Network capacities are sufficient, and with data usage expected to plateau in the coming years, further capacity expansion is not needed. We have reached the end of history for communications.”  

Willian Webb, The End of Telecoms History

William Webb has pedigree when it comes to foreseeing telecoms trends.  

William Webb

Webb wrote The 5G Myth in 2016, warning that 5G would be a flop.

In the book, he argued that the wireless standard's features would create limited interest and fail to grow revenues for mobile operators. 

The next seven years saw the telcos promoting 5G and its capabilities. Now, they admit their considerable investments in 5G have delivered underwhelming returns.

His latest book, The End of Telecoms History, argues that telecoms has reached a maturity that satisfies the link speeds needed and that traffic growth is slowing. 

"There will be no end of new applications," says Webb. "But they won't result in material growth in data requirements or in data speeds."    

What then remains for the telcos is filling in the gaps to provide connectivity everywhere.  

Traffic growth slowdown

Earlier this year, AT&T's CEO, John Stankey, mentioned that its traffic had grown 30 per cent year over year, the third consecutive year of such growth for the telco. The 30 per cent annual figure is the typical traffic growth rate that has been reported for years.

"My take is that we are at about 20 per cent a year annual growth rate worldwide, and it's falling consistently by about 5 per cent a year," says Webb. 

In 2022, yearly traffic growth was 30 per cent; last year, it was 25 per cent. These are the average growth rates, notes Webb, and there are enormous differences worldwide.  

"I was just looking at some data and Greece grew 45 per cent whereas Bahrain declined 10 per cent," says Webb. "Clearly, there will be big differences between operators."  

He also cites mobile data growth numbers from systems vendor Ericsson. In North America, the growth between 2022 and 2024 was 24 per cent, 17 per cent, and 26 per cent. 

"So it is fluctuating around the 20 per cent mark," says Webb.

Other developments 

What about trends like the ever-greater use of digital technologies experienced by many industries, including telecoms? Or the advent of artificial intelligence (AI), which is leading to significant data centre builds, and how AI is expected to change traffic? 

“If you look at all non-personal data use, such as the Internet of Things and so on, traffic levels are tiny,” says Webb. There are exceptions, such as security cameras generating video streams. “I don’t see that trend materially changing overall data rates,” says Webb.

He also doesn’t see AI meaningfully growing overall traffic. AI is useful for improving the running of networks but not changing the amount of wireless traffic. “If anything, it might reduce it because you can be more intelligent about what you need to send,” he says.

While Webb admits that AI data centre builds will require extra fixed networking capacity, as will sharing workloads over distributed data centres in a metropolitan area, he argues that this represents a tiny part of the overall network.     

He does not see any new devices emerging that will replace the smartphone, dramatically changing how we consume and interact with data.

5G and 6G

Webb also has doubts about the emerging 6G wireless standard. The academic community is busy developing new capabilities for the next wireless standard. "The problem with that is that academics are generally not grounded in the reality of what will make money in the future," says Webb. Instead, developers should challenge academics to develop the technologies needed for their applications to succeed.

Webbs sees two 6G camps emerging. The first camp wants 6G to address all the shortfalls of 5G using terahertz frequencies and delivering hundreds of gigabits speeds. 

"Let's max out on everything, and then surely, something wonderful must happen," says Webb. "This strikes me as not learning the lessons of 5G."

The second camp, including several telcos, does not want to spend any money on 6G but instead wants the technology, in the form of software updates, to address high operational costs and the difficulties in running different network types. 

"In this case, 6G improves the operator's economics rather than improve the end-user offering, which I think makes sense," says Webb.

"We may end up in a situation where 6G has all this wondrous stuff, and the operators turn around and say they are not interested," says Webb. "I see a significant risk for 6G, that it just isn't ever really deployed anywhere."

_________________________

Webb’s career in telecoms spans 35 years. His PhD addressed modulation schemes for radio communications. He spent seven years at the UK regulator Ofcom addressing radio spectrum strategy, and he has also been President of the IET, the UK’s equivalent of the IEEE. Webb also co-founded an IoT startup that Huawei bought. For the last 15 years, he has been a consultant covering telecom strategy and technology.

_________________________

Outlook

The dwindling growth in traffic will impact the telecom industry.

Webb believes the telcos' revenues will remain the same resulting in somewhat profitable businesses. "They're making more profit than utilities but less than technology companies," says Webb.

He also expects there will be more mergers, an obvious reaction to a market flattening out. The aim is to improve profitability.

Given his regulatory background, is that likely? Regulators shun consolidation as they want to keep competition high. He expects it to happen indirectly, with telcos increasingly sharing networks. Each market will offer three or four brands for consumers per market but fewer networks; operators merging in all but name.

Will there even be a need for telecom consultants?  "I have to say, as I've made these predictions, I've been thinking what am I needed for now?" says Webb, laughing. 

If he is right, the industry will be going through a period of change.

But if the focus becomes extending connectivity everywhere, there is work to be done in understanding and addressing the regulatory considerations, and also how best to transition the industry.  

"I do suspect that just as the rest of the industry is effectively more a utility, it will need fewer and fewer consultants," he says.

Comments

[Dr Mark Heath]

An intriguing view, but one that bears little resemblance to reality. The growth in the use of smartphones to stream, and increasingly upload, rich multimedia content seems to be continuing apace. With the widely reported trend from linear TV to multi-platform streaming (including YouTube, TikTok, Netflix and Disney) does anyone seriously believe that we're anywhere near peak smartphone usage? The big challenge faced by many users is that underinvestment and poor availability of 5G services (surely the major lessons to be drawn about 5G) mean that mobile users continue to be reliant on Wi-Fi to provide the performance and speeds required to access a multitude of the applications they use. While geographically-limited Wi-Fi networks are currently a critical means of carrying huge, and increasing, amounts of smartphone data, ubiquitous access with high-speed cellular networks has never been more required.