Home Latin America 2013 Mobile OTT video challenges

Mobile OTT video challenges

by david.nunes
Cam CullenIssue:Latin America 2013
Article no.:10
Topic:Mobile OTT video challenges
Author:Cam Cullen
Title:VP of Global Marketing
Organisation:Procera Networks
PDF size:301KB

About author

Cam Cullen is the Vice President of Global Marketing at Procera Networks. He joined Procera as VP of Product Management. Prior to Procera, Mr Cullen held senior Product Management and Marketing roles at Allot and Quarry Technologies/Reef Point Systems, where he was VP of Product Management and Marketing, and held various roles in business development, marketing, and sales at 3Com. Mr Cullen was previously a captain in the US Air Force working at the National Security Agency and the Air Force Information Warfare Center.
Cam Cullen holds a Bachelor of Science in Electrical Engineering from the University of Alabama.

Article abstract

DPI-based policy solutions and the analytics they provide are not just money saving tools to manage traffic and optimize infrastructure investments. By using traffic analytics to launch value-based services that consumers want and then provisioning, enforcing and charging for those services, policy is quickly becoming more familiar and relevant to the operators’ marketing department. As operators that deploy these solutions see revenues increase and churn decline, you can be sure that policy will become increasingly popular among business leaders as well.

Full Article

Market overview
While consumers are making DVD players obsolete by streaming OTT video on their fixed broadband network connections at home, mobile OTT video access is also gaining acceptance as mobile broadband services deliver faster bandwidth.
According to research from Informa Telecoms & Media’s Ari Lopes, Latin America (LatAm) has experienced some of the world’s fastest growth with mobile market penetration rates rising from 19 per cent in 2002 to 110 per cent in 2012. In 2013, Informa’s Marceli Passoni tells us the LatAm mobile market will grow 7.1 per cent , and although voice comprises 76 per cent of service revenues, data revenues will increase 18 per cent year-on-year, topping US$27.7 billion.

Currently, mobile video is more about viewing shorter length content from sites like YouTube than streaming longer TV episodes and feature-length movies, primarily because of data usage limits imposed by mobile data service plans. However, the popularity of fixed network video streaming has created a broad diversity of licensed content accessible through cost-effective, monthly subscription services from Netflix, Hulu, and others to which mobile device users may subscribe. At the same time, manufacturers are introducing a wide range of mobile devices with even higher resolution screens and processing speeds that are capable of supporting the video streaming resolution available from these services.

For mobile operators, all of these factors combine to create both challenges and revenue opportunities when responding to growing OTT video usage. This has to be achieved without operators overloading their networks, depleting the consumer’s bank account, providing a poor quality experience, or modifying the consumer’s behavior to watch only streamed video content on Wi-Fi access networks. On the plus side, the time for mobile operators to capitalize on mobile OTT video usage is now, and the technology needed to make it happen is available.

Market dynamics
There are several key market dynamics impacting mobile OTT video usage, including:

Faster mobile broadband networks are emerging – Mobile network operators are striving to enhance their appeal by deploying 4G networks that are an order of magnitude faster than 3G networks. 4G LTE networks, in particular, deliver high bandwidth while reducing per-subscriber costs. Video aside, mobile operators are driven to deploy LTE networks to improve their profitability. Monetizing video represents a huge opportunity to increase average revenue per user (ARPU) and to fund their 4G expansions.

Ubiquity of mobile devices with video capabilities – In 2013, Informa predicts smartphones in LatAm will account for 46 per cent of total handset sales, with the number of smartphone connections increasing 35 per cent year-on-year to 140.7 million. App store and Google Play are accelerating this trend. Devices with quad-core processors, large on-board memory, dedicated graphics processors, and high-resolution screens are the base technologies that make viewing high-quality mobile video content possible. With a small price increase over smartphones, tablets are providing a comfortable viewing experience, with larger screens displaying HD video.

OTT services can threaten a mobile operator’s service revenues and margins – OTT video service providers own their subscribers and the revenue they generate. Although they must invest in CDNs and content in order to deliver an attractive, high-quality service, their video service pricing does not have to directly account for network costs since the mobile operator makes this investment. Heavy consumers of video content can put a strain on the operator’s P&L statement since network resources can be disproportionally consumed by video streaming without a tangible revenue offset. So, unless mobile operators embrace and monetize OTT mobile video, it will remain a threat to their current business models. However, mobile video is one of the most compelling reasons for users to adopt smartphones and upgrade to high-performance service networks like LTE.

Consumers want more granular video pricing models and content selection – Fixed line operators have traditionally created “video service plans” that bundle specific channels and premium content. OTT video services break this model and give consumers the choice to pay for what they like at a price they are willing to pay. This dynamic will be even more relevant to mobile video usage as consumers are looking to optimize their video streaming service by selecting what they want as they go about their daily schedules. Ultimately, this will put the subscribers in charge of deciding what mobile video services they will use, whether or not mobile network operators embrace it. While heavy consumers of mobile video are willing to consume video on mobile networks, current usage quotas are too low for extensive viewing.

Solution Needs
Mobile operators looking to embrace OTT video face some fundamental questions:
• How should they respond to the growth of OTT video?
• What is the right approach to monetizing OTT without discouraging usage?
• How can they improve the user’s streaming video experience?
• How can they increase ARPU without causing churn?

As they execute their OTT video plan, mobile operators must consider three key steps.

Awareness of what is happening in their network is the first step to understanding OTT video usage in their network. Service planning should be cantered initially around subscriber, device, location, and application awareness in the operator’s network. Helping the marketing team understand mobile video usage characteristics and patterns enables them to define service plans users would be willing to pay for. Understanding who the popular content providers are, the locations experiencing the heaviest video use and video consumption patterns across different service tiers are all critical data points to optimize and monetize OTT video services.

Optimization is the next step, allowing mobile network operators to enhance users’ Quality of Service (QoS) and Quality of Experience (QoE) when streaming video to their mobile devices. This directly improves customer satisfaction and, ultimately, reduces churn rates. Traffic management, prioritization, video optimization, and congestion management techniques can be used to control bandwidth-intensive video streaming to improve the bandwidth per subscriber, application, device, service plans, and other traffic classifications.

Monetization is the third step for mobile operators to fully embrace OTT video. At the essence of monetization is the shift from ‘usage-based’ to ‘value- based’ pricing service plans that encourage mobile OTT usage. This includes service-centric pricing that accounts for who, what, when, where, and how subscribers are using their OTT video subscriptions in the operator’s network. Value-based service plan pricing matches a subscriber’s usage patterns to pricing based on what device(s) they are using, usage location, time of day, video-specific usage volumes, and video application prioritization. For example, offering an OTT video add-on service for a small additional fee. Because an approach that is too aggressive can limit monetization opportunities, detailed analytics to optimize pricing plans are critical to success.

What Technology is needed in Mobile Networks?
DPI (deep packet inspection) and Policy platforms are at the heart of addressing these needs. These platforms interact with various CDMA, 3G UMTS, and 4G LTE mobile network elements to provide policy enforcement. Together, they help mobile operators address the three critical steps for OTT mobile video success.

Awareness from Analytics
The policy platform is the main component in establishing subscriber-based video usage awareness. It does this by connecting with 3GPP mobile network Policy and Charging Control (PCC) components — the Policy and Charging Rules Function (PCRF), Online Charging System (OCS), and Offline Charging System (OFCS) — to establish subscriber awareness in the mobile operator’s network. Awareness properties can include subscriber (IMSI) and device (IMEI) identification, location (ULI), service plan information, and subscriber session connectivity with network elements such as the GGSN, S-GW, and PDN-GW. The information is associated with live traffic running through the DPI platform to monitor and gather video session traffic statistics that can be viewed in real-time or stored for further reporting and analysis to support business planning.

Optimization through Intelligent Policy Enforcement
Policy platforms feed the subscriber policies, or rules, that are provisioned to DPI-based policy enforcement platforms. In addition to monitoring mobile OTT video traffic, the DPI platforms can enforce policies regarding video services defined by the mobile operator. DPI platform traffic enforcement functions include congestion management, policy-based traffic management, packet queuing and prioritization, and dynamic video application recognition to help optimize mobile video traffic for the users who pay for it.

Monetization through Sticky Service Creation
The policy platform integrates tightly with PCC components to enable monetization of mobile OTT services. Video-content-aware services can be created to build incremental video service to the mobile operator’s base plans, including:
• Zero-rated application plans
• Time-of-day based prioritization or charging (i.e. Happy Hour plans)
• Application bandwidth prioritization
• Location-based plans
• Multiple video device shared data plan usage
• Time-of-day and Day-of-week prioritization
• Video application QoS management
• Incremental application specific quotas
• User-specified video limits

In summary, DPI-based policy solutions and the analytics they provide are no longer just money saving tools for network engineers to manage traffic and optimize infrastructure investments. By using traffic analytics to launch value-based services that consumers want and then provisioning, enforcing and charging for those services, policy is quickly becoming more familiar and relevant to the operators’ marketing department. As the mobile operators that deploy these solutions see revenues increase and churn decline, you can surely bet that policy will become increasingly popular among business leaders as well.

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