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.
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.
The significance of 6G
Henning Schulzrinne is known for speaking his mind.
A professor at the Department of Computer Science and the Department of Electrical Engineering at Columbia University, he previously expressed concern regarding what he saw as excessive hype surrounding 5G.
More recently, he has written about 6G, placing the emerging wireless standard in the broader context of societal needs.
“Research, particularly academic research, should be driven by the urgent needs of society, not just supplying patent-protected ‘moats’ against the competition, whether between companies or nations,” he wrote in an introduction to the book, Shaping Future 6G Networks.
Schulzrinne stresses he is not working on 6G standards but has taken part in an early 6G flagship project at the University of Oulu, Finland.
“My expertise is not on the radio; it is system architecture,” he says. “We have a lot of interest in my research group on issues such as automation and authentication, not specifically to 6G but to networks.”
Wireless generations
Every decade, work starts on a new-generation cellular wireless standard.
In the past, each generation represented a significant change. “You started with a clean slate, the [2G] digital system had very little in common with the analogue system that preceded it, and 3G was a different beast to 2G,” says Schulzrinne. “It made sense to call each a generational change.”
Now, release cycles are shorter, and there are what Schulzrinne calls ‘arbitrary markers’, such as when the 3GPP standards body issues a new Release or when the standard is suddenly called 4G.
Now, the notion of a new generation has become forced.
There is no solely-5G handset since it also supports earlier-generation standards. Supporting multiple generations is common in wireless; Wi-Fi devices may fall back to earlier standards for a connection.
He views 6G as more of an exercise for stakeholders such as consumers, policymakers and investors. “Putting a label on it helps to crystallise efforts, primarily outside the industry,” he says.
5G wireless
Schulzrinne notes how each 5G deployment still generates a press release: “You don’t see that for other things where people buy stuff.”
He also has doubts about some of the stated promises of 5G, such as its use to transform other industries.
“The question I don’t get a good answer to is, with the digitisation of industry, does it involve a plant that had no network at all, or a minimal networking capability and they wanted to create a network?” says Schulzrinne. “Why do they choose 5G; what value creation does it give?”
In US factories, robotics is usually fixed rather than mobile. Beating Ethernet on cost is also hard, he says, and factories can be hostile environments for radio.
In China, the three main operators are showing growth in service revenues from new ‘industrial digitalisation’ services. But then China is an advanced, large-scale manufacturer.
“I’m trying to have an open mind,” says Schulzrinne. “But where is that coming from, and what revenue is there outside of China?”
What 5G does bring is the opening up of radio spectrum, not just millimetre wave but also between 2GHz and 6GHz. 5G has also moved away from classical software to virtual network functions and cloud-based building blocks.
“This architectural transformation behind the scenes, which is hard to write flashy stories about, seems much more interesting,” says Schulzrinne.
Smaller carriers, and those outside the leading industrial countries, can now outsource parts of their operation to other parties; all that is needed is a cloud provider and software.
6G: uses and metrics
It is too early to summarise 6G.
5G’s main story is its three performance pillars: supporting many more devices, a tenfold hike in data speeds, and ultra-low latency.
For 6G, two stories are emerging.
One is consumer, involving the Metaverse, although Schulzrinne remains sceptical about the degree that is a motivating factor for 6G.
The second is technology related, and there are two parts here. One is AI and machine learning, although it is not clear as yet what role the technology will play with 6G.
The second, potentially transformational, is using 6G networks for sensing. For example, the position, movement and actions of entities in the field of view, adding sensing alongside the network’s communication capabilities.
“It’s almost like building a radar; it’s not the same technology, but it’s similar,” says Schulzrinne. Such sensing could be used outdoors and at home as a game controller or for motion detection.
6G will improve the critical performance metrics of 5G, but Schulzrinne believes the more meaningful metrics are cost-per-bit delivered and cost-per-base station-month.
Cost-per-bit is a crucial metric if cellular wireless is to replace Wi-Fi or Ethernet networks in the home and enterprise.
The average household data usage in the US is 400 gigabytes a month, 10x more than the heaviest mobile user.
It is also why Wi-Fi is used for data offload, given that fixed-line offers a cheaper solution than cellular with its base station and mobile backhaul costs. And this is before new data-intensive applications emerge, such as augmented and virtual reality headsets.
6G’s focus should be to reduce base station and backhaul costs.
“If you want to scale up the bits-per-dollar, its going to be a big challenge making that work,” he says.
Calibrating expectations
There will be a mismatch between 6G’s ambition and the likely outcome, he says.
A story told by the telcos is that they want to be the providers of higher-level services, not big data pipes. But this is misguided, says Schulzrinne. Instead, the telcos should aspire to be utilities.
“Many electric utilities, water utilities, don’t grow in double-digit percentages every year, and nobody expects them to, and that’s fine,” says Schulzrinne. “They have an expertise and a set of skills that are necessary and helpful from a societal perspective.”
Their metrics are reliability and cost-effectiveness.
He views 6G as a promising technology upgrade for the operators.
“What I want is fast and cheap, and I rely on the carrier to use modern technology to do that, “he says.
Comparing telcos to electric and water utilities can be taken too far, he says, but what the best of them share is that they provide vital input with changing technology to decrease prices and increase reliability.
They also share facing new challenges like cybersecurity.
“That is their job; it’s not other things,” says Schulzrinne.
Professor Schulzrinne and his research team developed the Session Initiation Protocol (SIP), the Real-Time Transport Protocol (RTP), and other multimedia signalling and support protocols.
Schulzrinne has been an advisor to the US Federal Communications Commission (FCC) and served as FCC Chief Technologist on public safety. He also served as a Technology Fellow in the office of Senator Ron Wyden, addressing data protection.
