Mobile Data Revenue on the Rise, Thanks to Smartphones & Tablets

(Reuters) – Mobile data revenue is expected to jump 23 percent this year thanks to increased usage of smartphones and tablets, as the number of global mobile connections passes 5 billion.

Mobile data services revenue will total $314.7 billion this year, a 22.5 per cent increase from 2010, research firm Gartner said on Thursday. It added that, in four years, mobile data sales will reach $552 billion.

Worldwide mobile connections will reach 5.6 billion in 2011, up 11 percent from 5 billion in 2010, Gartner said, rising to 7.4 billion by 2015.

Telecom operators have pinned high hopes on surging mobile data usage but have been slow to turn high demand into high revenue.

“Data revenue will continue to grow but at a much slower rate,” Jessica Ekholm, principal research analyst at Gartner, said.

“This is causing a decoupling between revenue and data traffic, and is creating an increase in network costs for carriers as they try to sustain growing data traffic.”

Operators are struggling to manage capacity and pricing so that a few heavy users do not clog up networks and deny average downloaders reliable speeds, access and predictable bills.

At the same time they do not want to be relegated to “dumb pipes” or be stuck with the bill for network investment while services and application providers such as Google and Facebook reap the benefits.

“What carriers need are innovative ways to increase data revenue while finding smart solutions to manage a growing demand in data,” said Sylvain Fabre, research director at Gartner.

“Ultimately, it will be the consumer who chooses the content he or she wants to use, and carriers need to ensure the quality of experience is good. A sub-standard user experience may lead to higher churn.”

A number of operators have ditched unlimited offers on mobile Internet, instead offering capped data plans for dongles and fixed caps for smartphone users.

(Reporting by Nicola Leske; Editing by David Hulmes)