Smartphones drive explosion in data demand

The rapid penetration of smartphones into the South African market has spurred massive demand for mobile data from consumers, a trend that looks set to continue as new devices such as the Apple iPhone 5 hit the market.
 
That’s according to Tim Walter, executive head of strategy and business transformation at Nashua Mobile. He says that the amount of data call number records the company processes has almost doubled year on year, reflecting a significant growth in data usage by the company’s mobile subscribers. Many players in the mobile industry have seen data revenues grow by 20% each year, even though the cost they bill per megabyte is falling all the time.
 
The reasons that data usage has taken off so strongly include the number of consumers switching from cellphones and feature phones to smartphones as well as the fact that the devices are becoming more bandwidth hungry all the time, says Walter. Around 80% of the new devices Nashua Mobile is selling are smartphones.
 
“With the Apple iPhone, Samsung Galaxy SIII and many Nokia Lumia models all boasting large high resolution touchscreens, they eat data at a rapid rate. Many of them are now set to download email attachments by default. Since the browsing experience on these devices is so enjoyable, users are spending more time on the Web and social networks on their smartphones than they did before,” he says.
 
The downside is that many consumers who do not carefully track their data spending either burn through their data bundles early in the month or receive a massive bill for the data they have used at the end of the month. As a result, the telecommunications industry is under pressure to deliver convenient data options that allow users to squeeze more data from their phones at an affordable cost.
 
One reason for the high number of BlackBerry smartphones in South Africa is the BlackBerry Internet Service, which offers users unlimited on-device browsing, social networking and email for a flat-fee, says Walter. “In time, we can expect to see more similar packages come to market to cater for users who want to enjoy similar services on other devices,” he says.
 
Nashua Mobile’s products Xtreme Data and Xtreme Data Premium, for example, are among the few flat-rate data packages available to people who don’t want to use a BlackBerry smartphone. Currently available with a wide range of Nokia handsets, these packages offer flat-rate data for users who don’t want to worry about the bill they are running up through social networking, email and Web browsing.
 
Yet in metro areas where mobile networks are already congested, mobile data is likely to always come at a premium over fixed-line broadband, says Walter. This means that operators and consumers are also likely to turn to tactics such as wi-fi offloading to take traffic off the mobile networks.
 
With the necessary technology rapidly maturing and complications of billing for services being addressed, the time is ripe for the operators to offer 3G to wi-fi offload as an option to their subscribers. “We can expect to see hotspot operators and cellular networks coming up with some interesting business models of wi-fi offloading in the months to come,” he adds.
 
Walter says that data tariffs are tricky for consumers to manage, with costs that vary between 14 cents and R2 per MB depending on the package they are on or the bundle that they buy. One of the challenges that the industry will face in future is making these costs simpler and more transparent while providing flexibility to consumers.
 
He adds that with tablets and ‘phablets’ (large touchscreen phones somewhere between a smartphone and a tablet in size) becoming more popular, data growth is set to keep growing into the future. Ensuring a high quality and affordable experience to the end-user while achieving decent margins will be a major challenge for network operators going into the future.