Industry market research firm iSuppli Inc. reports that due to the continued growth in the cell phone market, worldwide factory equipment revenues associated with the wireless industry will hit $271.3 billion in 2011. That growth will be on top of the $235.5 billion generated in 2010, which was a 7.9% increased compared with the $218.2 billion posted in 2009.

“Continued revenue growth seems assured in the years ahead for mobile communications, a wide-ranging market encompassing cell phones, cordless phones, battery chargers, mobile infrastructure, mobile and fixed broadband access devices and wireless LAN equipment such as routers,” the report noted.

ISuppli added that total mobile communications factory equipment revenues will surge to nearly $360 billion by 2014.

As for a break out of segments, iSuppli predicts 3G handsets will generate $86.4 billion in revenues this year, which would be a 34.6% increase compared with 2009. The firm also forecasts that 1G and 2G device sales will combine for $55.6 billion in revenues this year compared to $68.3 billion in 2009.

While still trying to find its footing, iSuppli predicts the “4G” device segment will see revenues surge from $11 million in 2009 to $1.3 billion this year.

“Among mobile handsets, 3G continues to be the dominant technology in 2010 and likely will maintain that distinction beyond 2014,” said Francis Sideco, principal analyst for wireless research at iSuppli. “For their part, wireless carriers – while wrestling with the issue of heavy data traffic on their networks – are attempting to maximize investments in existing 3.5G and 3.75G technologies through incremental network upgrades. At the same time, carriers are deploying next-generation 4G technologies such as long term evolution, to begin in earnest by 2011.”

ISuppli added that total cell phone shipments will increase 11.7% this year reaching 1.29 billion units with smart phones singled out as the fastest growing with a projected increase of 40.6% this year. The firm added that its total cell phone shipments forecast does not include “gray-market” devices that are especially popular in China and could contribute $8.9 billion in revenues to the industry this year.

 
Wireless subscribers’ appetite and demand for richer and more data-intensive content is at odds with what carriers can handle at times, but it’s also enabling their continued growth.

It’s all a bit too much like a cat-and-mouse chase. It wasn’t too long ago when carriers practically had to beg their customers to consume and pay for data. Because of the low speeds delivered by first- and second-generation networks, carriers had a tough go convincing their customers of the value proposition of mobile data.

Of course, as devices got exponentially more powerful and carriers opened up to more Wi-Fi use and eventually launched 3G networks, there was a bit of a backlash over just how much data carriers were willing to let flow through their networks with no control.

In the early days of 3G, applications like SlingPlayer Mobile from Sling Media and other video-streaming services were routinely banned or regulated to Wi-Fi use only. Customers complained regularly, and quite understandably considering the fact that they once they finally saw a compelling proposition for unlimited mobile data plans, carriers began to block some of the most engaging apps and services of the day.

Before 3G, carriers made a systematic push to position their network upgrades as necessary capital expenditures that would deliver on the promise of ubiquitous mobile broadband. The problem is “broadband” had already been defined in the home as a vastly superior service and experience. The demand for that at-home broadband experience on a wireless network remains just as constant today.

When mobile entertainment finally arrived and began to gain a greater audience, carriers started to push back for fear of how these apps would impact the network. Up until this point in the U.S. market, carriers had essentially controlled which apps would be allowed to run freely on their network. If your app was blocked by all of the major carriers, your chance of success in the United States mobile content space was a nonstarter.

As smart phones became more powerful, particularly with the launch of Apple Inc.’s first iPhone, and social media began to really catch on, a general chant for open access to whatever consumers wanted to do on their mobile device was at a high point. A new world of mobile media seemed to converge all at once. Carrier’s walled gardens of yesteryear were being either torn down by sheer force and demand, as Apple did to AT&T Mobility with the iPhone, or slowly chipped away at brick-by-brick, as unsanctioned apps began to find their way onto users’ latest smart phones.

Before you knew it, open networks became a rallying cry of sorts. Subscribers and consumer advocates wanted to make sure that carriers couldn’t block or give preferential treatment to certain content. And eventually, all of the top tier carriers were trumpeting their newfound love for “open networks.”

Apps continue to wreak untold havoc on carrier networks and the “open” policies as it relates to devices and content running on their networks is only slightly clearer than it was a couple short years ago.

Blame it on the video

Video isn’t only all the rage, it’s also arguably the most network-taxing of all mobile applications on the market or even in development at this point.

“Video is really taking a bigger part of our daily lives,” Vantrix Corp.’s senior director of marketing, Beverly Wilks, told RCR Wireless News. “That’s putting the strain on the networks.”

In Cisco Systems Inc.’s Visual Networking Index Global Mobile Data Forecast for 2009-2014, it projected video will comprise 66% of all wireless network traffic by 2014. Overall that year, mobile data traffic will reach a total of 40 exabytes, which represents a 39-fold increase from 2009 or a compound annual growth rate of 108%.

Mobile video traffic is expected to increase 66-fold from 2009 to 2014, making it the highest growth rate of any mobile data application tracked in Cisco’s report.

To put it into perspective, a 30-minute TV episode will eat up 200 megabytes (MB) to 600 MB of data and the average YouTube clip consumes anywhere from 10 MB to 80 MB. Live streaming two-way video is on a magnitude much higher than either of those numbers.

All the towers and femtocells in the world won’t be able to handle any type of flood of unhindered video on those proportions. It will simply reach a point where demand is higher than what the limits of physics can deliver. Physics might catch up eventually, but putting up more towers and countless femtocells, for example, won’t make any business sense in the long run.

Wilks explained where so much of that wireless traffic goes wasted: buffered video that never gets watched.

While the average video is three to five minutes long, the average viewer will only watch for a minute. All of the video content that follows in that clip is typically buffered on the network at that point, rendering all of those bits of wirelessly delivered data wasted.

Vantrix and other companies are working to optimize mobile video traffic to diminish that unnecessary strain on carrier networks.

“it seems very complicated, but it’s not as complicated as adding femtocells or adding new hardware and infrastructure,” Wilks said.

Adaptive streaming, bit-rate throttling and transcoding are all part of a package of tools that can remove congestion in the network and enable more data to be sent while operating on the edge of the network.

“Video is certainly bandwidth hungry and how we use technology today isn’t going to change,” Wilks said. “I just really think we need to start thinking about what’s next.”