The Data Crunch Will Continue

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In the past few years, the amount of data we consume has exploded. Video has become more commonplace on the Internet, and the tools to consume data are only getting better. The recent release of Apple's (NAS: AAPL) iPad highlights how this may become a problem for wireless and wired networks alike.

Gadgets are making data too easy
During the first week of the NCAA basketball tournament, comScore said 20% of sports-related Web traffic was on a smartphone or tablet, nearly double other Web content. People aren't just using computers. They're increasingly going mobile. Streaming alone is expected to reach a total of nearly 18 million hours during March Madness.

Watching on wireless devices such as tables has already created problems for some new iPad consumers. In the first week after the new iPad was released, consumers were finding they could burn through their allotment of data in just a few hours. Verizon (NYS: VZ) and AT&T's (NYS: T) wireless networks are now so fast that streaming high-definition video can use up 5 GB in no time. As tablets from Amazon.com (NAS: AMZN) , Samsung, and a number of other manufacturers add 4G capabilities, this data crunch will only get worse.


The increase in streaming is done on wireless networks, but I'm also pulling more out of my cable Internet connection because of the new streaming options. Once wireless providers hit the point where they couldn't keep up with data, they started adding fees. Is your wired connection next?

Wireless has shown the way
Slowly but surely, wireless suppliers have eliminated unlimited data plans. Sprint Nextel (NYS: S) is the one provider left standing with unlimited options, but that's more a show of its weak position than a trend in the industry.

Wired Internet providers have been slower to adopt limits, because there's been little need to do so up until now. Comcast has a soft 250 GB monthly data limit that can lead to suspension of service if repeatedly exceeded. I never would have thought about passing that cap, but with an iPad and Apple TV downloading streaming content, that may not be excessive. Time Warner is testing data caps in Texas for the second time, hoping to entice customers with lower prices for less usage.

If wireless customers are consuming 5 GB of data in a number of hours, there will be similar amounts of data flowing through wired sources. Are we heading for widespread caps there? With devices making it easier to consume data, I think the pressure will mount on cable and DSL providers to institute caps. That may be the price of such cheap and easy data these days.

Apple and Android devices are driving data traffic, and we have some stock picks that will benefit from this trend. "3 Hidden Winners of the iPhone, iPad, and Android Revolution" is our free report that reveals these picks. Get free access.

At the time this article was published Fool contributorTravis Hoiummanages an account that owns shares of Apple. You can follow Travis on Twitter at@FlushDrawFool, check out hispersonal stock holdings, or follow his CAPS picks atTMFFlushDraw.The Motley Fool owns shares of Amazon.com and Apple.Motley Fool newsletter serviceshave recommended buying shares of Apple and Amazon.com and creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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