Conclusions

If global mobile broadband traffic growth is at all indicative of economic resilience, operators could declare themselves economy-proof. The substantial surge in video streaming, VoIP and App Store downloads traffic shows no sign of waning, as subscribers increasingly look to their mobile Internet as the primary source of entertainment, content and communication. However, a deeper look inside mobile broadband networks reveals that neither operators nor OTT application providers can yet rest on their laurels. For operators, disruptive, cross-platform messaging technologies like WhatsApp are eating away at legacy SMS revenues. OTT mega players like Facebook, Amazon and Apple are maintaining leadership through constant innovation, while YouTube is dominating video streaming. Established and new entrants are eating away at Operators traffic share. The answer? Collaboration. Operators and OTT application providers who join forces can identify new models to deliver value to subscribers and profitability to their broadband networks.

Key Findings from H2, 2011

Global mobile broadband traffic grew by 83% in the second half of the year with a CAGR of 234% during 2011. Video streaming traffic continues to dominate mobile broadband, with a 42% share of all global bandwidth. YouTube now accounts for 24% of global broadband traffic; 14% of total YouTube traffic is high-definition. VoIP and Instant Messaging (VoIP & IM) traffic grew by 114%, perhaps substantiating recent reports on the decline of SMS(i) and international voice calls(ii). Facebook messenger is an all-time killer app on mobile; rising from zero to 22% of total IM traffic in just four months. However, Facebook mobile traffic grew by 105%, relatively slower than the 166% in the first half of 2011. How will Facebook respond to this trend? WhatsApp now accounts for 18% of the IM total bandwidth, a dramatic increase in popularity from only 3% in H1, 2011. Android Market traffic grew by a phenomenal 232%, almost four times faster than the iOS App Store, increasing its momentum to become a true iPhone App Store rival.

Conclusions

Traffic Trends in Perspective H2, 2011

X 8.5 Growth

31% 29% 35% 2% 3%

H1, 2010
3% 5%

Application Traffic Share and Growth

Traffic Trends in Perspective

Mobile Application Growth

Global mobile broadband traffic grew by 83% with a CAGR of 234% in the second half of 2011, 6% faster than in H1. This remarkable growth seems unhindered by any global changes typically affecting the digital economy. The European sovereign debt crisis, the US administration clampdown on content pirating, the four-day Global BlackBerry outage in October, and most importantly, the expected demise (iii) of the unlimited mobile data plan did not seem to affect subscribers unquenchable thirst for mobile content and applications. However clear and distinct trends in mobile bandwidth consumption indicate the areas of most pressing consumer demand. Video streaming traffic continues its phenomenal rise, with a 88% growth rate in the second half of 2011. VoIP & IM traffic grew by 114%, consistent with recent reports marking the decline of SMS and international voice calls. File sharing growth rate is in decline, posting 29% compared to a 33% growth rate in the first half of 2011.

Global Bandwidth and Application Growth

Mobile Application Growth

Mobile Application Bandwidth Share

VoIP & IM, and Video Streaming represent key emerging trends in the subscriber behavior shaping the future of mobile Internet. Their share of overall bandwidth has been on the rise since 2009. These real-time, cross-platform and interactive applications are indicative of the type of experiences sought by mobile users. File sharing, which offers a delayed experience, is on the decline. Video streaming traffic continues to dominate global mobile broadband, with a 42% share, reflecting subscribers demand for real-time experiences. File sharing, consistent with the rise of video streaming, is in decline and now holds 26% of overall mobile bandwidth. Web browsing continues to show a slight decline, reaching 24% in H2, compared to 25% in the first half of 2011. Although the VoIP and IM applications are the fastest growing traffic segments, their respective share of global bandwidth, at 5%, is still relatively low.

Application Breakdown

Mobile data usage broken down by top Applications

Mobile Application Bandwidth Share

VoIP and Instant Messaging

Overall, the VoIP and IM space has emerged as one of the most vibrant, open fields for innovative new apps. In the second half of 2011, Skype accounted for 79% of the global mobile VoIP bandwidth. However, as already evident through the first half of 2011, Skype bandwidth share, then 82%, continues to gradually drop, now challenged by new VoIP entrants Viber, ooVoo, Tango and others. Viber, an entirely new entrant experienced rapid growth to over 2% of the Global VoIP bandwidth, surpassing incumbent IM applications such as GoogleTalk and Windows Live.

VoIP Application Bandwidth Share

Instant Messaging Application Bandwidth Share

The Instant Messaging applications landscape experienced a remarkable change during the second half 2011. Only four months after its release, Facebook Messenger for Mobile has become the dominant platform for Instant Messaging and a killer app, accounting for 22% of total IM traffic. WhatsApp, the cross-platform mobile messaging app finally experienced its overnight success during the second half of 2011. Usage of this application has increased dramatically from less than 3% in the first half of 2011 to 18% of total IM bandwidth share in the second half of 2011. With every door that opens, another one closes. The popularity of Yahoo! Messenger, which was the top IM application in recent years, dropped significantly, from 29% to only 17% of total IM bandwidth share. Other IM applications, such as GoogleTalk and Windows Live also suffered a significant decrease in their usage due to increased competition. The traffic generated by Google Plus Hangouts for Mobile that was launched in September, 2011 (iv) is still negligible.

VoIP and Instant Messaging

Social Media & Video Sharing

Twitter usage continued its surge during the second half of 2011 with bandwidth growth of 184%. Yet its growth was somewhat slower than the stellar 297% recorded in H1, 2011. Facebook traffic growth also diminished, relative to the first half of the year, only 105% compared to 166% respectively.

Social Media & Video Sharing Bandwidth Growth

Social Media & Video Sharing

Video Streaming
In the second half of 2011, YouTube increased its global bandwidth share to 24% from 22% in the first half of the year. YouTube now accounts for 62% of all global video streaming traffic.

YouTube as a percentage of total global mobile bandwidth

YouTube as a percentage of total global mobile video streaming

The growth in the smart devices market clearly affected mobile users demand for higher quality of experience, which led to a 300% growth in YouTube high-definition traffic. YouTube high-definition now accounts for 14% of total YouTube traffic, compared to 11% in the first half of 2011. Non-HD YouTube traffic grew by 118%. Overall YouTube traffic grew by 143%.

HD Video as a percentage of total YouTube streaming 8 Video Streaming

App Stores
App store download traffic - which is essentially new apps and updates - now represents a significant portion of the total bandwidth, consuming a similar amount of bandwidth as VoIP & IM.

App Stores Traffic Growth

Apple App Store preserved its dominance in the app store market. However, download traffic from the App Store decreased from 84% in H1 to 79% in H2 of 2011. Android Market is still far behind Apple App Store, with only 18% of the app download traffic. However, its growth was almost four times greater.

App Bandwidth Share

In the second half of 2011, download traffic from the Android Market grew by a phenomenal 232%, consistent with reports of a dominant market share for Android devices(v). The Apple App Store experienced a more moderate growth, only 61%.

App Stores

Glossary
App Stores
App stores refer to a service available to users of smartphones and mobile Internet devices, e.g., tablets, netbooks, etc., that enables them to download a wide range of free and paid applications, specifically suited for the particular MID. App stores include Apple App Store, Google Android Market, BlackBerry App World, Nokia Ovi Store, Palm App Catalog, Windows Marketplace for Mobile and others.

File Sharing
Refers to HTTP download services, in particular from One-Click hosting sites such as RapidShare and Megaupload and P2P applications such as Bittorrent and eMule. In previous reports, File Sharing was broken down into Peerto-Peer and HTTP download.

Instant Messaging (IM)

Originally, instant messaging applications delivered real-time text-based communications between two or more users over the Internet. Todays IM applications offer a wider range of communication services including video conferencing, voice communications and file transfer. Instant messaging applications include Windows Live!, Yahoo! Messenger, QQ and so on.

Video Streaming
Refers to communication directed through video sites including either user generated content (UGC) such as YouTube or content provided by sites such as Hulu, cnn.com and BBC iPlayer.

Voice over IP (VoIP)

Refers to software applications that allow users to make voice calls over IP networks in general and Internet in particular. Internet VoIP is provided by a range of applications such as Skype, GoogleTalk and also by most popular Instant Messaging applications. This traffic also includes video calls from these applications.

Web Browsing
Refers to HTTP traffic associated with website browsing or other HTTP traffic which is not downloading or streaming. In addition, web browsing also includes apps delivering real time updates and statistics over HTTP.

10

Glossary

MobileTrends Report Methodology

The Allot MobileTrends Report is an ongoing initiative to track global IP application, bandwidth usage and bandwidth growth in mobile broadband networks. The seventh Allot MobileTrends Report presents Allots key findings and conclusions based on anonymous data that was collected over the second half of 2011, from leading mobile operators worldwide with a combined user base of more than 250 million subscribers.

About Allot Communications

Allot Communications Ltd. (NASDAQ: ALLT) is a leading provider of intelligent IP service optimization solutions for fixed and mobile broadband operators and large enterprises. Allots rich portfolio of solutions leverages Dynamic Actionable Recognition Technology (DART) to transform broadband pipes into smart networks that can rapidly and efficiently deploy value added Internet services. Allots scalable, carrier-grade solutions provide the visibility, topology awareness, security, application control and subscriber management that are vital to managing Internet service delivery, enhancing user experience, containing operating costs, and maximizing revenue in broadband networks. For more information, please visit http://www.allot.com.
i http://www.wirelessintelligence.com/analysis/2011/11/sms-on-the-decline-as-third-party-messaging-gains-traction/ http://coleago.wordpress.com/2012/01/17/whatsapp-replaces-sms-12-year-on-year-decline-of-sms-traffic-in-taiwan/ http://www.telecomspace.com/content/sms-declining-with-the-rise-of-ott-messaging http://www.telecomtv.com/comspace_newsDetail.aspx?n=48379&id=e9381817-0593-417a-8639-c4c53e2a2a10 ii http://www.telegeography.com/products/commsupdate/articles/2012/01/10/international-call-traffic-growth-slows-as-skypes-volumes-soar/ iii 86.5% of operators have walked away from true unlimited data. Allot MobileTrends Charging Report H1, 2011 http://www.allot.com/index.aspx?id=3797&itemID=74804 iv http://googleblog.blogspot.com/2011/09/google-92-93-94-95-96-97-98-99-100.html v http://www.smh.com.au/executive-style/gadgets/iphone-hot-but-android-handsets-on-fire-20120209-1rncc.html

11

MobileTrends Report Methodology

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