U.S. Mobile Data Traffic to Top 1 Exabyte

The final tally for the third quarter of 2010 is in, and the news — not that it will really come as a surprise — is that the demand for wireless data is on an upswing and is seemingly endless, despite the new tiered-pricing plans. According to Chetan Sharma, an analyst who tracks the wireless-data industry, the U.S. wireless-data market grew 25 percent in the third quarter of 2010 vs. the third quarter of 2009. The market gained seven percent over the second quarter of 2010 to total about $14 billion.

All that can be attributed to the brisk and seemingly unending demand for smartphones. In 2007, the year the iPhone (s aapl) was first brought to market, wireless data brought in about $25 billion for the mobile companies. Three years later, wireless-data revenues have doubled. The data ARPU (average revenue per user) at the time of the launch of the iPhone was about $8 a month; now it has roughly doubled to about $16.70 a month.

Sprint (s s) CEO Dan Hesse told me last month that by the end of 2010, nearly half Sprint’s subscriber base is going to be using smartphones. T-Mobile CTO Neville Ray said the new, more powerful smartphones and faster networks are only going to push the wireless-data consumption, perhaps to gigabyte-a-month levels, relatively soon.

“By the end of 2010, we expect the average U.S. consumption to be approximately 325 MB/mo, up 112 percent from 2009,” Sharma predicts. According to his estimates, “the total U.S. mobile data traffic will exceed 1 Exabyte for the first time by the end of 2010.” Exabyte is a unit of information equal to 1000 petabytes or a billion gigabytes. In comparison, global Internet traffic was estimated to be over 21 exabytes in March 2010.

Here are some wireless data highlights from the quarter:

  • In third quarter 2010, 47 percent of the devices sold in the U.S. were smartphones, compared to 24 percent globally.
  • U.S. wireless data service revenues grew 7 percent quarter over quarter to $14 billion in third quarter 2010.
  • Verizon (s vz) and AT&T (s t) accounted for 85 percent of the increase in data revenues in third quarter 2010.
  • Per month data (blended) ARPU: Sprint $18.7 (estimated), Verizon $18.61, AT&T $17.35, T-Mobile  $12 (estimated); average $16.7
  • Nearly 21 percent of T-Mobile USA subscribers are on smartphones.
  • Data now accounts for about 33 percent of total ARPU for carriers in the U.S.  Sharma predicts that in 2013, one should expect data and voice revenues to be roughly equal for the U.S. carriers.

According to Sharma, connected devices are going to be a major driver in the future. Already, devices such as the iPad are having a major impact. He predicts that in less than five years, “the connected devices category will generate more revenue for the operators than the entire prepaid segment in the US” which is a far cry from today when “connected devices represent only 3 percent of the quarterly data revenues.” No wonder folks like Hesse are all excited about the new Internet of things.

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