The very nature of predictions is that they can be wrong. But sometimes they’re more substantiated, sometimes the source is more credible, and sometimes you just want them to be true. The former two apply to Deloitte Touche Tohmatsu’s “Telecommunications Predictions” that I read every year. When they predict, for this year, a 100% growth for products that help decongest the mobile bottleneck, then I also confess to wish for them to be true.

While over-all mobile operator spending is expected to grow 7% in 2010, some pockets of technology – where one of the first segments they point out is deep packet inspection (DPI) – can grow more than 10x thanks to a pressing need. In 2009 the last walled gardens were torn down, smart phones became data smart, user interfaces encouraged use of data services, and 3G connections became a true option to fixed broadband (I use it as such at my summer home and when travelling). Data volume has grown and will continue to grow accordingly.

I’ve pointed out in the past that mobile operators are more sensitive to bulky traffic due to higher cost per megabit and fewer available megabits in the access network. Mobile networks become bitpipes, hence it’s more important than ever to know if, what and when the network is being clogged up. The ability to build out network capacity fast enough, and to do it with an intact and feasible business case, drives a great demand for mobile DPI; a demand that will grow this year according to Deloitte’s predictions.

Deloitte says that “at the start of 2010, there should be about 600 million mobile broadband connections between laptops, netbooks, and smartphones” and they predict that “cellular data wireless networks will have gone from underutilization to congestion”. Most mobile operators have designed their networks for some growth, but congestion, also known as over-subscription in this case, is part of the equation. Deloitte predicts an access network issue. My experience is that this is not a big issue since new technologies, like HSPA+, are constantly released. End-users also expect and accept a lower speed when going mobile.

However, the underlying network is typically not dimensioned to support constant increase in access speed or a changing user behavior with longer and more frequent sessions. “Congestion issues sometimes have less to do with providing very high broadband download rates to a few users, instead, they often revolve around providing highly variable two-way bandwidth to many mobile users whose usage requirements change from minute to minute” to once again quote Deloitte. This has an impact on the entire network – from access to backhaul, and all the way up to core and peering.

There will always be overloaded cells due to design, subscriber take-rate, and the dynamic nature of roaming users who occasionally are in the same geographical location. Capacity is a constant game of catching up. DPI is the tool that helps you to plan capacity, identifies issues and resolves them – long-term or until a long-term solution is in place. A DPI deployment pays off almost instantly through better customer satisfaction and timely infrastructure investments. A pretty easy investment decision, right?

Light Reading predicted in 2007 that mobile DPI would be the growth engine for DPI. They expected mobile DPI to catch up with fixed DPI in 2010 and exceed it in 2011. This seems to be a pretty accurate assumption. Especially since we hook on a second locomotive to the mobile DPI train this year – LTE. Thought LTE might resolve access bandwidth constraint, it causes the same challenge for the rest of the network – at an even higher degree.

I suppose all of this is primarily of interest to our investors. Mobile operators are a prioritized market segment for us. No one is actually better positioned than Procera for success in this space. We have the leading technology, we have traction with strong references, and we’ve grown at a healthy pace that beats the competition. To me the above says that we stand a good chance of delivering yet another year of extensive growth, following two remarkable years of 75%+ growth while in a global financial recession. Stay tuned for how this prediction comes true.