The Rise of the Gigabyte Phone

It might not seem obvious today, but we will soon be consuming nearly one gigabyte of data every month on our smartphones, thanks in large part to rapid improvements in technology and networks. This is a similar growth pattern we saw on wired broadband networks; the faster the speeds, the more data we consumed.

According to London-based market research firm, Informa Research, an average smartphone (globally) consumes a mere 85 megabytes of data every month. Nearly 13 percent of world’s phones qualify as smartphones, and these phones are generating two-thirds of all traffic on mobile cell networks, Informa notes. For instance, so far in 2010, an average iPhone(s aapl) user consumes 196 megabytes of data each month, while an average Android (s goog) phone consumes about 148 MB per month.

Informa predicts that over next five years, there is going to be a staggering 700 percent increase in data consumption every month. Actually, I think they’re being conservative, and it might not take that long. T-Mobile USA CTO Neville Ray turned me on to the concept of a Gigabyte phone earlier this month when we were chatting about industry developments.

A Gigabyte phone is one that pushes monthly data consumption to a gigabyte or higher, mostly because people use the wireless web more frequently. Sharing photos, watching videos, sending tweets or checking Facebook messages: These phones are powerful Internet terminals and easy enough to encourage usage.

We’re likely to cross the Gigabyte-per-month data consumption relatively soon, especially in the U.S. Why? Because of several factors influencing the U.S. mobile market:

  • The introduction of next generation wireless broadband technologies at scale by end of 2010. Sprint, (s S) T-Mobile, MetroPCS (s pcs) and Verizon (s vz) will have started introducing their WiMAX, HSPA+ and LTE based networks.
  • The availability of new smartphones powered by dual core processors, which have longer battery life, better screens and bigger memory footprints.
  • The rise of more and more web services and apps written specifically for mobiles.

There are some known events that are going to further  impact of data consumption in the U.S. For instance, the introduction of the iPhone on Verizon (s vz), a superior network, will likely encourage more usage of wireless web.

Another factor going in favor of the U.S.: higher smartphone penetration. Last week, Dan Hesse, CEO of Sprint, told me that by the end of this year, nearly half  Sprint’s customers will have smartphones, many of them powered by Android. Even BlackBerry (s rimm), the wireless web laggard has introduced new devices (BlackBerry Style and Touch) that are going to encourage more web usage because of a better web browser.

Juniper Research, a Hampshire, UK-based research firm, notes that carriers in North America will see their revenues from non-voice services almost double — to $96.7 billion by 2015, up from $56.0 billion in 2010 — driven by consumer adoption of data-hungry devices, such as smartphones and tablets.

This increased data consumption obviously has its own impact – both good and bad.

  • Cisco (s csco) is predicting there will be 3.6 exabytes of data a month on mobile networks by 2014.
  • Carriers are expected to spend about $117 billion by 2014, up 41 percent from 2009 expenditures of $83 billion on last mile backhaul, according to In-Stat, a market research firm.
  • By 2014, more than half of the capacity in the North American last mile backhaul will be dedicated to LTE.

The move to wireless is a big shift, something I’ve been predicting and writing about since 2005. It’s comparable to the introduction of the early incarnation of DSL technologies back in the late 1990s. Then came cable broadband and higher speeds, and just like that, data consumption jumped drastically on wired connections.

It spurred sales of faster desktops; remember we needed processors and memory to keep up with the data tsunami that was coming down the broadband pipe. Better processors, beefier machines and faster networks: They often add up to increased usage.

For carriers, this is a heaven-sent opportunity. While they were unable to introduce per-bit metered pricing on broadband networks, they can now use the somewhat valid excuse of “limited” spectrum and the huge cost of build-out as a way to introduce metered pricing. Guess what? One by one, they’ve all started to shank the much-loved flat rate monthly plan in the back. (Check out our handy mobile broadband buying guide.)

Nevertheless, we must all get used to it, especially as we start to move toward a future where we consume a gigabyte per month on our phones.

Related GigaOM Pro Content (sub req’d):