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Statement on New FCC Proceeding on Spectrum

“In opening this new proceeding, the FCC will conduct a rigorous and technical examination of whether Wi-Fi technologies can successfully use spectrum that is not in use today without causing harmful interference to existing, or future, radio systems that operate in the same frequency block.  This is of critical importance to U.S. consumers and businesses because Wi-Fi usage is simply exploding due to the widespread adoption of smartphones, tablets and laptops. Cisco data reveals that, by 2016, more than half of all IP-based traffic will traverse a Wi-Fi network.  Wi-Fi at the edge of fixed and mobile networks has become a critical broadband access technology.

“Cisco is grateful for the opportunity to engage in a process that elevates the technical examination to the forefront, ahead of any final determinations on the use of the spectrum.  If the technical issues can be satisfactorily resolved, it could lay the foundation for innovative new applications and technology by making available  up to 200 MHz of spectrum for Wi-Fi networks and devices, as well as improving existing access to 5 GHz.”

Privacy and Security in the Age of the Internet of Everything

Cisco today released an important new report on the intrinsic and economic value of the transition to the Internet of Everything.  The study, entitled “Embracing the Internet of Everything to Capture Your Share of $14.4 Trillion,” details major market-making opportunities for business and industry over the next decade.   The report concludes that advances in technology and innovation will put $14.4 trillion of value at stake through the combination of increased revenues and lower costs over the next 10 years. That’s a shift worth noting.

For me, the big takeaway is that we are entering a new wave of disruptive innovation, which will drive an increase in productivity and another round of the disintermediation of markets. This furthers an economic and technological march we have been on since before the industrial age. It is significant. It is global.  And it’s happening now.

It also impacts some areas very much in the public discussion today.  Among them:

  • Next generation manufacturing, efficiency, quality, and what this next phase means for the competitive advantage of nations;
  • Health care, and how better health care and efficiencies are captured by the transition, as well as what it means for patients and doctors;
  • The environment, and the reliability benefits, efficiencies and carbon reductions that arise from smart grid and networked commercial vehicle fleet management;
  • Retail trade, and the use of mobility and consumer preferences to deliver more value; and
  • Human capital, and the benefits that mobility and process productivity means to a global workforce.

In essence, these shifts have already begun, and the clock is running.  The challenge for each player and each sector of the economy, globally, is to understand what these shifts mean, and decide how and where they play.

The report also notes that for many of these shifts we need to get privacy and security policy right. At the front end, companies and industries undergoing these shifts need to build privacy and security thinking, processes and relationships in up front, and capture the benefits of this next wave of economic transition.

The way this happens is to get in front of the issue, understand the implications of what you are doing, have a reasoned, thoughtful, principled approach, and do your best to get buy-in from all of the stakeholders involved. Over the years, a great deal of thinking has gone into privacy and security policy, but it is evolving, and developing policies need to recognize these new market-by-market shifts as well.

We also know that across the markets in this new transition, one-size does not fit all. Each of the use cases set out in the paper (manufacturing, health care, retail, transportation, etc.) occur in separate markets, affect different players, relate to different types of information, and have separate regulatory environments. Therefore, it is incumbent upon the players in each of these markets to see around corners and include thinking, planning and process to ensure that privacy and security are an integral part of these market transitions as this $14.4 trillion of market value develops.

At Cisco, we look forward to joining with you in that journey. Market transitions are important things. Let’s get it right.

VNI Shift Driven by Smartphone Adoption and Offloading to Wi-Fi

For the fifth year, Cisco has released its updated Mobile Visual Networking Index Forecast.  This year, we’ve seen dramatic changes in consumer behavior as well as continued explosive growth in mobile data.

Global mobile traffic grew 70% in 2012 and traffic is forecast to rise 13 times between 2012 and 2017, a CAGR of 66%.  And in 2012, for the first time, video exceeded 50% of global mobile data.

The key take away from this year’s report, however, is the dramatic shift of mobile traffic offloaded to small cells, primarily Wi-Fi. The chart below (Figure 8 from the mobile VNI report) illustrates how mobile offload increases from 33 percent of total mobile traffic (cellular plus small cell/ Wi-Fi) in 2012, to 46 percent in 2017. This is significantly larger than we forecasted just a year ago when we estimated mobile offload would comprise 11% of total traffic in 2011, growing to 22% in 2016.

Fig8 - Mobile VNI 2013

Offloading is even more pronounced in the US where it will account for 66% of total mobile traffic in 2017.

While the underlying aggregate global mobile data traffic, cellular plus Wi-Fi, has been revised slightly from last year (2012 total traffic revised to 1.3 exabytes from 1.5 exabytes/month; 2016 traffic revised to 13.8 exabytes from 13.9 exabytes), the shift from cellular to Wi-Fi is occurring faster than we had anticipated. The table below compares the 2012 and 2013 forecasts.

VNI Forecast Comparison 7

So what’s happening in the mobile landscape that is driving these changes?

First, the mobile VNI report highlights an acceleration of smartphone uptake, and even faster adoption relative to the use of mobile connected laptops. While mobile connected laptops, mostly using dongles, helped drive early consumption of mobile data traffic, consumers are adopting smart phones and tablets faster than earlier forecasted. The shift from mobile connected laptops to smart phones and tablets lowers data consumption as the latter use less data per application (because of smaller screens size and lower processing speeds). Forecasting to 2017, smart phones and tablets are expected to overwhelm laptops and account for about 80% of connected devices in 2017 vs. only 14% for laptops (see graph below).

Fig3 - Mobile VNI 2013

The second trend is a dramatic uptake of offloading data traffic to small cells, primarily Wi-Fi. Offload is being driven by service providers (both mobile as well as fixed, such as cable) deploying and using Wi-Fi hot spots, as well as a by consumers using WiFi for bandwidth hungry applications such as high-resolution video.  Operators are offloading data connections to cope with limited and increasingly congested spectrum for macro cell networks while, at the same time, consumers are using WiFi offload for better indoor performance and to avoid exceeding their mobile data plans.

Working together, these two trends are driving dramatic change in the composition of total wireless data traffic (cellular plus Wi-Fi).

The full Mobile VNI 2013 report highlights this shift as well as other key trends driving growth in mobile IP traffic.

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Global Mobile VNI Reveals Shift in Consumers Usage of Mobile Devices

Cisco’s 2013 Global Mobile Visual Networking Index (VNI) once again shows that mobile networking traffic continues to rise.  Big picture:   by 2017, global mobile data traffic will reach unprecedented levels of 11.1 exabytes per month.  That’s the highest projection we’ve ever made in the Global Mobile VNI.  It’s the same story in the United States.  By 2017, mobile data traffic will reach new highs of 1.96 exabytes per month.  To put this in context, that’s the equivalent of 491 million DVDs each month or 5,410 million text messages each second.

As we dig deeper inside the numbers, we’re also seeing a couple of key trends that are a result of changes in how consumers are using their mobile devices.

First, the 2013 Global Mobile VNI has called out a significant shift globally away from consumers using laptops to access mobile networks. This shift is particularly important because data traffic from mobile-enabled laptops generates much more data traffic than smartphones or tablets.  While this shift is most pronounced in Western Europe, we’re seeing the same trends globally, including here in the United States.

Second, our 2013 study dramatically illustrates a more rapidly evolving shift toward accessing the Internet through Wi-Fi/Fixed networks, commonly known as “Wi-Fi offloading.”   By 2017, the study projects 46% of global mobile data traffic will be offloaded to Wi-Fi.  Compare that to last year, when we projected that by 2016, 22% of traffic would be offloaded.  The U.S. is well ahead of the global curve on this issue – by 2017, we project 66% of mobile data traffic will be offloaded to Wi-Fi.

Together, these two seemingly disconnected shifts in consumer behavior produce an interesting effect on mobile data growth rates. Globally, growth will be about 30% less than what we projected last year and about 25% less in North America. That’s the combined effect of consumers using fewer mobile-enabled laptops that generate 368X data relative to a basic cell phone, while increasingly taking advantage of Wi-Fi networks at home, in the office or on the go.  That’s an amazing shift in consumer behavior.

We learn something new with every new edition of the Global Mobile VNI, and this year, we learned how shifts in consumer behavior can have an impact on forecasted growth projections.  But the basic narrative, which the Global Mobile VNI has been telling us for these many years, remains unchanged.  Mobile data traffic keeps growing and growing and growing – and policymakers will have to take this into account as they consider ways to meet the ever-increasing demands on networks.

Shifting Focus in Trade Agreements: Boosting Supply Chain Efficiency to Grow Global GDP

Last week, the World Economic Forum (WEF), in collaboration with the World Bank and Bain & Company, issued the report, “Enabling Trade: Valuing Growth Opportunities.”  The report concluded that reducing supply chain barriers in two key areas – border administration and transportation and telecommunications infrastructure – could increase global GDP up to six times more than total tariff elimination.   The WEF paper calls on governments and the private sector to tackle these barriers through coordinated action, something which we here at Cisco strongly support.

Meanwhile, two other studies advocate similar approaches.

First, the World Trade Organization (WTO) and the Organization on Economic Cooperation and Development (OECD) have measured trade flow in relation to value added by a country in the production of a good or service that is exported.  This approach provides insight into the importance of services, the role of imports in production processes, the reality of economic interdependencies, and the role of emerging economies.

Second, a recent paper by Bernard Hoekman and Selina Jackson at the World Bank suggests that trade policy negotiations should be structured in ways that reflect the independencies of global supply chains. This approach would improve the commercial relevance and utility of trade liberalization agreements and is being explored in the Transpacific Partnership (TPP) negotiations. This is a groundbreaking approach to trade negotiations that better-reflects the imperatives of global supply chains.

Bottom line:  With these new analyses in hand, governments have an opportunity to adjust their thinking and realign their policy and funding priorities to capture the benefits of supply chain efficiency.  In doing so, they can accelerate global GDP growth around the world.