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GuyClapperton 12 Staff Writer

An interesting report from the BBC this morning suggests that smartphone sales will decline worldwide except in developing nations over the coming 12 months.

Well, duh. It's been known for a while at least in the UK that there are now actually more handsets than there are people. And as the functions on those handsets become more sophisticated yes, there will be many more people happy with what they've got. Be honest - how many of the functions on your phone do you actually use?

So sales will come down. That matters less in the UK than elsewhere because we have this system of subsidised handsets - you can get a great handset for nothing as long as you take out a contract for 18 months with your carrier (I paid a little for my iPhone 3G but only because I wanted 16 gigs on it - an 8 gig version would have been free on contract).

Elsewhere, though, it's going to hit R&D and other product development. Meanwhile the carriers are going to be expected to provide more and more data services while people have less and less money in their pockets to pay for the infrastructure.

This isn't actually going to be limited to the mobile world, either. Hard-wired Internet, the sort you're probably using now, has been getting faster and slicker over the years and the expectation is that this trend will continue. Well, if we're expecting the cost to continue to fall, where's the infrastructure improvement we'll need going to come from? I can't make the figures add up. In a global recession people are going to be less and less willing to pay for stuff they've perceived as effectively free up to now, just as the existing infrastructure is going to reach saturation point.

Should be an interesting year. My bet is that we're going to have to start paying for stuff just when we think we can't.

The BBC report is here.

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correctly pins the tension: handset saturation and subsidy models disguise the rising cost of delivering ever more data. The core issue is a widening gap between growing per-user traffic and the revenue models that sustained past buildouts. That gap forces operators, regulators and planners to choose how much of the bill shifts to end users, content providers, or taxpayers.

There are a small number of practical levers to close the gap. Pricing and packaging (tiered data, shared plans, wholesale models and targeted subsidies) change revenue flows. Network technology and architecture (better spectral efficiency with newer radio standards, small cells and densification, fiber backhaul, CDN and caching, plus NFV/SDN to cut OPEX) reduce cost per bit. Offload strategies (Wi‑Fi and edge caching) lower core load. And public measures (open-access fiber, spectrum policy, public‑private partnerships) can unlock funding where market incentives fail. Each lever has tradeoffs: tiered pricing and zero‑rating raise fairness and regulatory issues; densification reduces per‑bit cost but raises capital and site complexity.

Signals that indicate which path a market is taking include carrier capex vs revenue trends, spectrum re‑allocation auctions, rollouts of LTE/5G and small cells, and the pace of fiber to towers/home. In mature markets handset cycles lengthened and monetization shifted to data plans; in emerging markets low‑cost devices and prepaid data drove volume growth. For planners and technologists, focus on reducing backhaul costs, deploying caching and edge compute, and designing flexible business models that separate access from content.

The question posed in 2008—who pays when demand grows faster than willingness to pay—was answered partly by market redesign rather than a single fix. Costs were reallocated across users, providers and public actors while technology improvements kept per‑bit prices from rising as fast as traffic.

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