They're spending $50 billion. You'll be paying.

chart_network_infrastructure.top.gif By David Goldman, staff writer


NEW YORK (CNNMoney.com) -- The explosion of Internet video viewing on smartphones and tablets is costing wireless carriers tens of billions of dollars each year -- and that growing tab is going to land in your cell phone bill.

The amount of data downloaded to mobile devices doubled this year compared to last. Video was the largest contributor to that growth, according to Cisco's Visual Networking Index.

Cisco (CSCO, Fortune 500) expects that trend to continue, with mobile data downloads more than doubling every year through at least 2014. By that time, mobile Internet traffic will have grown to 17 times 2010's levels. Over the next four years, total mobile video traffic will expand to 197 million gigabytes -- or about 13 billion YouTube videos.

The growth of smartphones isn't the sole cause of the mobile data boom. Tablets and laptops with wireless access are rapidly multiplying, and bigger screen sizes typically correlate to higher demand for data, especially video.

Experts say the wireless companies have fallen behind the data-demand curve and are desperately playing catch-up.

"It's akin to putting a big fire out with a garden hose," said Ken Rehbehn, principal analyst at Yankee Group.

To handle all that traffic, the carriers are scrambling to make their networks larger, faster and more efficient.

But that's an expensive task. The U.S. wireless industry is spending $30 billion to $50 billion annually to improve their networks, according to Dan Hays, partner at consultancy PRTM.

Verizon Wireless (VZ, Fortune 500) spent $17 billion alone improving its network in 2009, and AT&T (T, Fortune 500) spent about $19 billion over the past year on upgrades. Sprint (S, Fortune 500) laid out about half the money for the $14.5 billion it cost to launch its 4G network venture with Clearwire and other partners. T-Mobile said its network improvements have cost less but are in the same ballpark as its competitors.

As a result, some companies have begun to pass those costs on to their customers.

Sprint is charging its customers $10 extra for its faster "4G" service, and AT&T has opted to charge its users more for higher amounts of data usage. Verizon is toying with changes to its unlimited data plans, and may charge customers more if they choose faster speeds.

The days of "all you can eat" mobile data pricing are vanishing.

For instance, if you want to watch Netflix (NFLX) all day on your iPhone using a mobile connection, that's going to cost you. A lot. AT&T charges $10 per gigabyte for downloads over its 2-GB-a-month limit, which only gets you between six and 12 hours of streaming movies and TV shows, depending on the bit rate.

Experts say all that spending by the wireless carriers to deal with the video-induced stress on their networks is inevitably going to force all mobile providers to demand that consumers to pay for what they use.

"The wireless industry clearly has to move in a direction that better matches pricing with consumption," said PRTM's Hays. "That's going to be necessary to maintain the overall health of the industry and to drive the right behaviors among consumers."

Where's the $50 billion going? Here's a breakdown.  To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Sponsors

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.