mobile subscriptions by region 2015 - 2021

The year 2015 had been massive for the mobile and smartphone industry. While phones themselves have not evolved as much, we have seen a definite trend towards more capable phones in the budget categories. The influx of cheap LTE-capable devices from various Chinese OEMs have changed the way people are accessing the internet. If we take a look at the Indian smartphone scenario, it is clear that mobile usage and interaction times have surged over the past year with nearly 60% of internet users using their phones as the primary gateway to the Internet. While India may be the forerunner in this regard with 13 million new mobile subscriptions in Q3 2015, other countries like China, US, Myanmar and Nigeria are not far behind.

Not only is the subscriber count growing, as people spend more time on their phones, they continue to use more mobile data as well. In a recent report by Ericsson, Mobile broadband subscriptions increased by 24.13% YoY in 2015, and estimates show a CAGR of 15% annually till 2021. Impressive as those numbers are when we delve a little deeper, we see that over 53.2% of the projected 7,700 million are LTE subscribers, a segment that has been projected to show enormous growth at a staggering CAGR of 25% in the period of 2015-2021. Today we dig beneath the projections to reflect the potential growth patterns and the future of mobile telephony.

An Overview of The Future

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“The past is the key to the future”- So goes the saying. And indeed, there is truth in those words, especially in a field as fast-paced as technology, the trends of today are manifested as the norms of tomorrow. So for us to have a complete overview of the mobile user base and their usage patterns, we need to see the present in the light of the past as well as the future.

LTE to Overthrow GSM/EDGE as World Moves towards faster Internet Speeds

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Taking a look at the overall mobile subscription numbers, there has been a growth of 4.2% YoY from 7.100 million to 7,400 million in 2015. Predictions place it at 9,100 for 2021 at a CAGR of 5%. While the slowdown in the last year can be attributed to the saturation of markets like Europe and US, the advent of cheaper devices with 4G LTE and often dual SIM capabilities are likely to push the subscriber count in developing nations in the coming years.

GSM-EDGE the slowest form of internet connectivity used to have the majority of subscribers with 43% of the total user base in 2014. Numbers, however, have been steadily decreasing, and the projected values see its command only 14.25% of the userbase come 2021. The steady decline of EDGE at -15% CAGR and the rapid progress in 4G LTE at 25% CAGR hints towards a shift in how we experience the internet as a whole.

4G is expected to have the majority of the market with 45% of the total subscriber user base and the highly developed markets like Korea, Japan and parts of US will start moving to 5G, the next generation of mobile connectivity. Along with faster internet comes bigger data demands and that is what we deal with in the next part of the article!

Data Traffic Set For A Mammoth Jump in Volume

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As LTE penetration has increased and the faster internet has become more accessible, data usage has shot up in the last year at a rate of 40% YoY, and analysts claim a tenfold increase in total data usage by 2021. This has led to a huge volume of network data traffic with Q3 2015 clocking up 65% higher volume of data traffic compared to Q3 2014. The Video seems to be the main consumable for customers and with projects like YouTube Red and Netflix is on the rise, it has been estimated that by 2021, 70% of mobile data will be consumed by video streaming. 

However, the majority of data transferred and shared will not be among mobile phones. Rather, with IoT coming to the forefront, we will have more than 15 billion machines communicating among themselves (M2M) and they will form the backbone of the consumer electronics market making up 53.37% of the total 28 billion connected devices in 2021. We will take an in-depth look at IoT device communications and the blanket nature of 5G connectivity in a latter part of the article.

The Changing Face of Mobile Subscriptions And Connectivity

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The global penetration of smartphone subscriptions stands at an average of 99%. This number sounds impressive, giving us a false sense of security in thinking we have connected almost all of humankind, but as is the norm with averages, they are not representative of the actual picture. Mobile penetration varies widely with the region as Central Eastern Europe has a penetration of 142% while even developing countries like India have only 77% mobile penetration. The disparity becomes, even more, apparent if we figure in smartphone penetration numbers and the type of networks that consumers use to access the Internet. So, we broke it into two parts, the future of the technology, and the markets that will be influenced by them.

LTE Capable Smartphones To Become The Primary Internet Gateway

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As newer communication technologies evolve, we see that basic phones are gradually getting phased out. By 2016, the number of smartphone subscribers worldwide will surpass those of basic phones. This has been a growing trend with 75% of all new phones sold in Q3 2015 being smartphones, a 5 percentage point increase YoY. Out of the 160 million new mobile broadband subscribers in Q3 2015, around 75% have been LTE while EDGE networks declined at a rate of about 60 million in this quarter.

However, some important factors are also to be considered in this growth which are listed below.

  • The number of subscribers is lower than the number of subscriptions as in the price conscious economies; people tend to have multiple subscriptions to enjoy better tariff rates.
  • Many devices such as PCs and Tablets are used without a mobile broadband, but it has been predicted that mobile subscriptions will increase by 50% by 2021. This will be fueled by smartphones that are expected to double in number and control 85% of all broadband subscriptions by the end of the timeframe.
  • 5G deployment and uptake in the consumer market is expected to be at a higher rate than 4G. Also unlike HSPA and LTE, 5G is not just limited to smartphones and mobile but also extends to IoT devices and is a wide communication protocol.

Untapped Markets Offer New Potential And Rapid Growth

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Asia Pacific and countries in the middle east and Africa are the new markets that will see higher penetrations of LTE and smartphones in the coming years. This is mainly due to the fact that developed markets like Europe and North America have already migrated a significant chunk of their consumer base to 4G LTE handsets and networks.

The growth potential in each region has been summarised in the following bullet points.

  • The Middle East and Africa:  They have the highest number of EDGE subscribers as of now with LTE is nearly non-existent. However, with an increase in GDP of African countries and lowering of prices of handsets, we can expect Sub-Saharan Africa to migrate to HSPA by 2021. An increase u\in GDP and the entry of low-cost 4G devices will also increase LTE subscribers in the region.
  • Asia-Pacific: Countries like India and China have been migrating to 4G networks, and it is expected that the world’s most populous country will have 1.2 billion LTE subscribers by 2021. Korea and Japan also will make their move to 5G during this period as they have achieved 80 and 60 percent LTE penetration already.
  • Europe and North America: These countries have developed smartphone markets, and they already have a high penetration of 4G in their markets, It will extend to almost all countries in these regions by 2021, and we will see these countries make a step towards 5G and IoT in the next half of a decade.

IoT and their Impact on Telecom

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There is around 400 million cellular connected machinery by the end of 2015. Around 70% of these functions on GSM networks. This number is expected to reach 1.25 billion by 2021. And most of them will be powered by LTE. There are a few key changes that are expected to happen that will make this transition possible.

  • M2M communications will become more extensive, and there will be more use cases in consumer electronics of connected devices that will communicate through their own capillary networks.
  • They will be used in more remote locations where the increased cellular coverage of LTE will come into use.
  • M2M communication is typically in bytes and does not bog down a network at all. That coupled with cheaper LTE modems that are configured to allow only M2M level communications will lead to devices that can be connected via low latency networks.
  • Modern battery technology together with shrinking chip sizes and simpler modules will allow IoT devices to have battery lives in excess of 10 years,

The M2M industry is expected to grow at a whopping 25% YoY and end up with around 28 billion connected devices in 2021. With massive improvements expected in Machine communication due to the introduction of 5G, 15 billion connected consumer electronics devices are predicted to make their way into our lives by 2021.

Final Observations

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When dealing with a report of this magnitude, covering half a decade and spanning all the continents, it becomes very difficult to draw very specific conclusions. That has mainly to do with how fast tech changes and the fact that technologies like IoT and 5G are at a very nascent stage. While we will keep a keen eye on them as they develop here are a few general conclusions that may point to very broad trends in the coming years.

  • Tablets are dying: While we have debated this at great length, and sales numbers obviously speak for themselves, one of the most consistent arguments against it has been that the tablets have a very solid use case scenario. However, if we look at the data usage statistics, we will find that in 2015 the data usage was 85.7% more on tablets compared to smartphones while those in 2021 are nearly at par with tablets holding onto a mere 14.7% lead.
  • Bigger smartphones are here to stay: With a major chunk of internet consumption being based on media consumption, bigger screen phones are here to stay. While Apple plans to reveal a smaller sized iPhone this year, the trend seems to be definitely leaning towards devices with upwards of 5 inches of screen real estate as evidenced by all the entries in the top 10 list of smartphones for 2015.
  • Convertibles might make a mark: With a major portion of broadband users predicted to switch from wired to wireless subscriptions, new age convertibles like the Surface Book and iPad Pro may make more sense for more users. As LTE subscriptions get cheaper, and the app environment on mobile Operating Systems becomes more conducive for professionals; tablets can become a viable alternative to PCs.
  • IoT devices are going to be intrinsic parts of our lives: A network of devices that communicate within themselves to automate our daily lives: a decade ago, this would have appeared in a sci-fi movie. Now with products like smart watches and self-driving cars becoming a reality, it seems the connected future is truly not so far away.
  • Developing Nations are the New Smartphone Battleground: The increase in the number of surprisingly capable yet affordable devices that are equipped with LTE in markets like India, Africa and Latin American countries in the past few quarters seems to indicate that the companies have shifted their focus and are trying to increase their penetration in these markets. India looks poised to be the next big stage where bigwigs like Apple will duke it out with startups like Xiaomi.
  • A change in the traditional app paradigm is coming: With faster internet across the world comes the ability to enjoy hassle-free streaming and Google seems to be taking this a step further by allowing users to stream apps itself from their browsers. The Apps themselves are evolving as they’re changing from becoming unidimensional sellers or content providers to providing a complete user experience. With more reliable and secure connections, we are also moving towards a future where we have mobile payments enabled on our smartphones.

To paraphrase George Bernard Shaw,

“Progress is impossible without change”

And we all look forward eagerly to the changes that the advent of these new technologies will bring into our technology and our lives in the near future.