Will "New Normal" Develop for Mobile Data?

We have become almost numb to statistics such as $240 billion lower sales, 2.5 million jobs permanently lost and 110,000 restaurants and bars shuttered because of Covid in 2020 alone, wiping out six years of industry revenue growth.

People have changed behavior during the pandemic as well. About 80 percent of meal purchases were made “off the premises.” Drive-through ordering, home delivery and take-out were the replacement behaviors. Cooking also made gains. 55 percent are eating at home and cooking more than they did pre-Covid.

So the issue is whether such behaviors persist, and at what level, after the pandemic ends. We hear endlessly about “new normal” behaviors in every part of life. We can disagree about the extent of changes, but if correct, people will not completely return to past behaviors.

As observers argue demand for urban office space, business travel and urban real estate will be permanently lower, will other consumer behaviors also be permanently altered? The possible changes will affect connectivity providers in some direct ways. Cell site traffic, for example, has historically been highly concentrated at 30 percent of total sites.

If work patterns shift towards home-based working, those cell traffic patterns will change, which will possibly shift the locus of radio, tower and backhaul investment. Demand for more upstream bandwidth from consumer locations will grow. 

Demand for mobile internet bandwidth should grow more slowly, since workers and possibly students are connected by Wi-Fi more often. It is possible mobile operator profit margins on mobile data could rise, if operators convince consumers to shift to pricier “unlimited usage” plans precisely at the same time as their actual usage either declines or grows slowly. 

It is the same set-up as used to be common when people purchased fixed usage plans that were larger--and hence more expensive--than customers actually needed, simply to avoid usage charges. 

This is an analogy to fines and fee revenue. Decades ago, when people rented videocassettes, the profit driver was late fees. In the same way, the gap between mobile data usage growth and incremental revenue growth could close somewhat, and perhaps significantly. 

That would reverse or ameliorate the gap between mobile data usage and revenue generation. 

This bears watching.