Why Cell Phone Companies Need to Move Smartphone Users to WiFi

Nielsen reports that smartphone data use in the U.S. has increased dramatically while cost per megabyte has gone down.

Average U.S. Smartphone Data Usage Up 89% as Cost per MB Goes Down 46%

However, while the price of data per megabyte may have dropped for some plans (Sprint and T-Mobile), the tiered data caps for the two largest U.S. mobile carriers (AT&T and Verizon) creates a ceiling which appears to have been reached.

Nielsen reports that the average smartphone user used 230MB per month in Q1 2010. This went up to 435MB in Q1 2011 (and 89% increase). This means that the typical low-end data plans ranging from 100 to 250MB per month is far too low for the typical smartphone user.

The top 10% of smartphone data users use an astonishing amount of data per month and is increasing that usage even more per month. This group used an average of 1.8GB per month on Q1 2010 and 4.6GB per month in Q1 2011. The typical AT&T Wireless 2GB per month would be severely exceeded by someone in this top 10% group. Even adding tethering which increases the quota to 4GB per month would not be enough.

As time goes by today’s “average” user will move towards the kind of data use by today’s top 10% group. Data caps and throttling will not allow the data hungry web and app services to grow. We will either need to see much more efficient data exchange techniques, better data compression, or more WiFi use to continue growing the industry. The cell phone companies appear to be opting for the WiFi option to offload 3G and 4G data.