We're living in a time when there's more demand for mobile data than physics will allow. There is, after all, only so much radio frequency spectrum available.

At the same time, mobile data usage is skyrocketing. In fact, Cisco projects that the number of mobile devices will surpass the number of people on the planet by the end of 2012, with more than 100 million users eating up more than 1 GB a month. If this trend continues, in 2016 there will be 10 billion mobile-connected devices in operation, with two-thirds of data traffic coming from video transmissions.

The Big Opportunity

The thing is, the cellular network was designed for voice--not data, and certainly not video--and because consumers have become accustomed to streaming whatever they want whenever they want it, they're facing a veritable mobile data crunch.

This turns out to be a good thing for start-ups who know a thing or two about broadband, radio frequencies, and the like.

"The door is open to start-up companies," says Bob Goodman, a partner at Bessemer Venture Partners. Goodman sits on the venture advisory board of Sprint and says the carrier is very open to working with new companies that can help solve the mobile data crunch problem, as are AT&T and Verizon, as well.

"If you have a better mousetrap that can help carriers with this problem I think this is a time when they're extremely open to those solutions," he says.

Key Players

Several start-ups are getting in on the game.

According to Quantance CEO Vikas Vinayak, who recently wrote a guest column for Wired, carriers and others are scrambling to figure out ways to improve high-speed data, including increasing the density of towers, boosting power output from cell towers to wireless devices, as well as pushing more of a reliance on Wi-Fi and femtocells which provide relief to capacity issues.

He also says that the way his company enables envelope tracking--a technology that continually adjusts power amplifier voltage to make sure it is operating most efficiently--can also improve data upload speeds, network capacity, and service coverage for mobile devices.

Bessemer Ventures Partners has invested in two companies that are also innovating in this space--Intucell and Vasona Networks, both of which increase carrier throughput 10 to 20%.

Goodman says what makes Intucell unique is that the 80-person start-up is able to look at the cell sites and see the characteristics of the mobile phones using them,  then make real time decisions about how the network is configured. "They can raise or lower the power of the cell site," he says. "They can up- or down-tilt the antenna, they can cause the network to send messages to the cell phone to try to log on to a different cell site."

As for Vasona Networks, it also can see what's happening in the network and make changes in the way video gets downloaded--in essence smoothing out the video so it doesn't freeze up when someone tries to watch it.

"At the same time it uses much less bandwidth and allows all the data traffic to flow at the same time," Goodman says. "So they're kind of like a very sophisticated traffic cop who makes sure that all the cars are flowing through the intersection as fast as they possibly can."

He also points to companies like Ubiquisys and Pure Wave that are building small cell base stations that are half the size of a shoebox and can hang on places like telephone poles so as to reuse the frequency spectrum. And Blinq Networks is using low-cost, non-line-of-sight radios that can bend signals around buildings so as to get traffic back to the network.

"This is almost the golden age of start-ups selling to carriers... the Nortels, the Nokias, Alcatels are either out of business or just very weak and have financial problems and they're really not investing in R&D," Goodman says. "And the carriers have such real problems that they're basically willing to bypass those guys and go where they can get solutions."

Tech start-ups, are you listening?

For more on the mobile data crunch, check out the Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update.