(Reuters) - Between 2011 and 2016 the amount of mobile data traffic will grow at a compound annual rate of 78 percent as the number of mobile devices connected to the Internet exceeds the number of people on Earth in four years' time, according to a study by Cisco Systems Inc.
The United Nations projects that world population will reach 7.3 billion by 2016. By that time, according to Cisco's annual visual networking index forecast published on Tuesday, there will be more than 10 billion devices, generating global mobile data traffic of 10.8 exabytes per month.
That translates into around 130 exabytes of mobile data per year which is equivalent to 33 billion DVDs or 813 quadrillion text messages, according to Cisco, whose core business is the routers and switches that manage Internet traffic.
Most of the devices driving mobile data traffic will be smartphones, laptops and other portable gadgets.
But machine-to-machine connections are gaining momentum and by 2016 are expected to reach 2 billion, Cisco said. Machine-to-machine connections (M2M) include GPS systems in cars, tracking systems in fleets and ships or meters to record energy consumption.
Mobile data, especially video, puts a strain on wireless networks and while service providers are increasingly offloading mobile traffic to their fixed-line networks, the wireless industry has repeatedly said it needs additional spectrum to keep up with demand.
Mary Brown, director of government affairs for Cisco, said she hopes the new data on mobile traffic acts as a reminder to the U.S. Congress that the Federal Communications Commission needs the authority to hold incentive auctions.
An incentive auction is a process used by the FCC to compensate existing spectrum licensees for returning their licenses to make spectrum available for new uses like mobile broadband. The goal is to give broadcasters a financial incentive to return unused spectrum licenses so that the regulator can then auction off the spectrum to companies offering mobile data services.
"We are going to start to see quality-of-service issues arising in major metropolitan areas if we don't act to add more spectrum to these mobile networks," Brown told Reuters.
A 20-member panel of lawmakers, tasked with crafting a year-long extension to payroll tax cuts by the end of February, is mulling legislative language giving the FCC incentive auction authority.
A portion of auction proceeds could be used as a source of revenue to help pay for tax cuts, and analysts and industry sources say inclusion in the payroll tax extenders bill is likely the best shot to pass spectrum legislation this year.
Reporting by Nicola Leske in New York and Jasmin Melvin in Washington D.C., editing by Matthew Lewis