How Significant are Disagreements over Bandwidth Demand?

By Gary Kim February 15, 2013

It isn’t hard to find critics who disagree with Cisco’s annual forecasts of growth in data demand. Many would argue that annual growth of 40 percent is a safe long term rate of data demand growth.

Forecasting error is common.  But some now point to Cisco revising its data growth forecasts “substantially downward” as evidence that forecasts by Cisco have been too aggressive.

“Despite these downward revisions, the volumes for 2012 in Western Europe and North America still look much too high to us, and imply growth rates of around 100 percent for 2012 over what we already know about 2011,” say researchers at Analysys Mason. “This contradicts all the evidence we have seen for actual rates of growth last year in these regions.”

Analysys Mason’s mobile forecasts, for example, are not as robust as those projected by Cisco, even after the revisions.

Analysys Mason notes that estimates by CTIA: The Wireless Association suggest only that mobile data traffic increased by 21 percent during the six-month period between the second half of 2011 and the first half of 2012.

Cisco estimates show a growth rate of 87 percent over its own earlier estimate for year-end 2011, and a 118 percent over Analysys Mason estimates that mobile data traffic grew 53 percent in 2012, at most.

The discrepancies between published data and Cisco estimates are even starker for Western Europe, Analysys Mason argues.

“Growth in Western Europe in 2012 was about 35 percent to 40 percent,” Analysys Mason says, so even the revised Cisco forecast looks too high. Cisco’s revised mobile forecasts for Western Europe were revised downward about 50 percent. 

Cisco Visual Networking Index and Analysys Mason's Wireless Traffic Forecasts

Cisco has also indicated that it expects Wi-Fi offload to be much higher than it previously thought. The compound annual growth rate of 56 percent for North America and 50 percent for Western Europe “still look much too high to us,” Analysys Mason says.

“By our latest estimates, annual growth in 2012 was about 40 percent to 50 percent in North America and 35 percent to 40 percent in Western Europe,” Analysys Mason says.

Cisco's forecast of the volume of traffic in 2017 in Western Europe and North America is more than three times that of Analysys Mason.

The implications of such disagreements about data growth are many. For service providers and policymakers, the issue is how much investment and spectrum needs to be allocated, and how soon, to handle the expected growth in demand.

During the Internet bubble around the turn of the century, vastly over-inflated estimates of bandwidth growth lead to wild capacity over-investment. For a brief moment, it was said that bandwidth demand was doubling every 100 days.

The downside was massive wasted investment and equity declines of 75 percent to 80 percent for industry suppliers.

To be sure, disagreements about capacity demand growth of less than an order of magnitude probably are not too significant. But the caution is that overly-optimistic estimates have in the past had disastrous consequences.

Edited by Brooke Neuman

Contributing Editor

Related Articles

Microsoft Out-Pencils Apple, Adds Laptop

By: Doug Mohney    10/7/2015

If the stylus is the standard by which business tablets are now to be judged, Microsoft's Surface Pro 4 clearly one-upped Apple's iPad Pro and pencil.…

Read More

Microsoft Introduces the Surface Book, Newest Surface Pro and Lumia Models

By: Joe Rizzo    10/6/2015

Microsoft revamped their lineup at this morning's NYC demonstration, with a clear challenge to Apple. Here are the most notable additions to the Micro…

Read More

Parks Associates Study Sheds Light on SMD Viewing Habits

By: Kyle Piscioniere    10/6/2015

Recent Parks Associates research has determined that U.S households with a streaming media device (Roku, Apple TV, Chromecast, etc.) consume four more…

Read More

Dorsey Named Twitter CEO a Second Time

By: Christopher Mohr    10/6/2015

Twitter announced recently that Jack Dorsey, who had been serving as the company's interim CEO the past three months, will continue in the same role o…

Read More

Who Will Save Sprint?

By: Doug Mohney    10/5/2015

Sprint has been on the skids for a while, a long slow decline due to a combination of bad decisions. Currently owned by SoftBank, it's an open questio…

Read More