 | Issue: | Latin America 2013 |
| Article no.: | 6 | |
| Topic: | The El Nino of mobile data | |
| Author: | Liam Galin | |
| Title: | President & CEO | |
| Organisation: | Flash Networks | |
| PDF size: | 268KB |
About author
Liam Galin is the President and CEO of Flash Networks; he has over 15 years of experience in the communications field. Previously, Mr. Galin last worked at RiT as CEO. Prior to his joining RiT, Mr. Galin served in an elite technology unit of the Israel Defense Forces for nine years, holding several technical and managerial positions.
Liam Galin holds B.Sc. and M.Sc. degrees in Electrical Engineering, both from Tel Aviv University.
Article abstract
Operators need to balance various approaches to address the growing data challenges: invest in accelerating 3G and 4G, optimize congested cells, and adopt smart pricing plans, while planning for future network growth. In addition, operators must also find ways to monetize the mobile data traffic over their network. In today’s mobile reality, operators need to understand that there is no single silver bullet solution, but rather an ecosystem of coexisting solutions to cope with the mobile data El Nino.
Full Article
Mobile Internet traffic in Latin America is booming due to the increasing accessibility and affordability of mobile services, prosperity of the region, and the relative shortage of fixed line infrastructure.
Expected to be the third fastest growing mobile data market in the next four years, Latin America is surpassing Europe and North America, according to Cisco’s latest Global Mobile Data Forecast. The International Union of Telecommunications reported during La Cumbre Conectar las Américas that 20 of the 33 countries in Latin America have more mobile subscriptions than people, including Argentina, Brazil, Chile, Ecuador, Guatemala, Panama, Peru and Uruguay.
This massive demand for mobile data creates many obstacles for operators, including excessive data traffic, provision of consistently high quality of service, coping with a small number of users using a disproportionate percentage of bandwidth, deploying networks in sparsely populated areas, and the need for operators to minimize both capital and operational expenditures in order to remain competitive and ensure profits. In addition, high transit costs and regulatory requirements to keep roaming charges low add pressure to mobile operators’ bottom line.
Traffic is booming, video is at the forefront
The data traffic explosion poses major challenges for mobile operators. Data traffic generated from notebooks and smartphones is skyrocketing, especially as video content becomes increasingly popular, while revenues remain stagnant. This has caused a revolution in content traffic, leading to a disproportionately large amount of network activity while providing only a minor increase in revenues, and is mainly the result of the effect of intense competitive pressure on pricing.
Video is by far the heaviest type of data downloaded. From an entertainment perspective, mobile video services are gaining in popularity at a phenomenal rate, using applications such as YouTube, live streaming, downloads, and others.
Unrealized subscriber expectations
Mobile broadband is increasingly being used by mobile operators to offer an alternative to fixed broadband, especially in areas where fixed lines aren’t available. The spectacular growth in mobile broadband subscriptions is being driven by aggressive pricing from mobile operators, along with free laptop bundling offers and built-in mobile support for laptops and netbooks.
In 2011, mobile broadband had already overtaken fixed broadband as the top choice for Internet access in Latin America. The UN Broadband Commission’s September 2012 report showed that Latin America had 145 million fixed broadband subscriptions at the end of 2011, accounting for about a quarter of the global total.
Mobile broadband subscriptions have grown at 127 per cent per year for the last five years and are predicted to continue growing at 50 per cent per year for the next five years. By 2015, Latin America is expected to have almost a third of a billion mobile broadband connections based on the GSMA report, Latin American Observatory.
In urban areas there are already high levels of congestion. There are several big cities with huge population centers, like Sao Paulo, Rio Janeiro, Mexico City, Buenos Aires, and Caracas, which suffer from congestion in specific cells during specific times of the day. One of the challenges facing mobile operators is how to address these congested areas specifically, without handling all mobile data traffic unnecessarily.
Latin America’s Internet connectivity is expected to move ahead at a quick pace. If broadband penetration grew by just ten per cent, the region’s GDP could increase by an average of over three per cent, the World Bank predicts. But how to accomplish this is still not certain.
Addressing the data boom
Invest in expansion
One possible solution to meet data traffic turmoil is to increase mobile network capacity. Network upgrades bring some relief to mobile operators, but they are expensive and time-consuming. Operators assume that the radio, backhaul, and core network capacity will need to be expanded. However, by postponing these network expansions, operators can dramatically improve the return on investments already in place.
4G Networks
Operators are hoping that 4G networks will solve their data bottlenecks. The adoption of LTE (3GPP Long Term Evolution) will enable substantially higher throughput on backhaul and radio, together with improved latency. However, as in many other parts of the world, LTE in Latin America is still in its infancy, with only a handful of operators with very limited deployments. Ultimately, all operators will need to make the switch to 4G, both from a positioning and network capacity perspective. But, having said that, low ARPU, the prevalence of prepaid usage, high churn rate, and lack of spectrum and device availability are some of the barriers facing Latin American operators in deploying and developing LTE networks, especially in business model terms.
Shape traffic for heavy users
Another solution is to impose limits on subscriber bandwidth consumption, often combined with additional fees for ‘network hogs’ that exceed those limits (typically about two-five per cent of all subscribers). Bandwidth caps and throttling mitigate the problem by reducing the traffic for bandwidth hoggers, but do not address the huge amount of data generated by average customers who live within the fair-use limitation.
Throttling mechanisms can be used to protect the network from bandwidth-demanding applications. However, this can negatively affect quality of service and the smooth flow of data in applications such as video steaming. Throttling technologies are application agnostic and therefore apply the same techniques on web pages and videos, regardless of their actual quality of service needs. “Fair usage” policies are designed to protect the average user but, if pursued aggressively, this approach reduces the attractiveness of the service and may deter current and prospective subscribers.
Implement differentiated tariff plans
Recently, several operators have started using policy management tools to implement differentiated tariff plans. The logic behind this concept is the ability to offer different levels of service to different customers. Subscribers can be offered upgrade programs, or can agree to have access to certain types of content blocked for a determined period of time. Furthermore, upon agreeing to special payment terms, subscribers can attain access to higher bandwidth levels, for limited periods. This approach is gaining momentum and can be combined with other methods, such as network upgrades and optimization.
Applying data optimization
Another technique that has been deployed to reduce data traffic volume is the use of data optimization. Optimization algorithms reduce transmission bandwidth requirements on the radio, wireless backhaul, and IP transit by 20-60 per cent depending on the level of compression of images and video.
Some optimization solutions also provide an extra benefit – accelerating mobile video, downloads, and browsing by up to 50 per cent Such solutions have been successfully installed on operator networks and recent improvements have added a level of sophistication enabling operators to fine tune optimization based on location or network conditions.
Management of traffic growth – key factors
There are indeed several ways that operators can transcend these mobile broadband difficulties without having to make major investments. Operators can better manage network traffic, based on network analytics on user activity and application types, while generating expanding revenues through monetization services. The following capabilities are key to turning a crisis into an opportunity:
• Accelerating 3G and 4G networks: In order to remain competitive and provide the best quality of experience, especially when dealing with downloads, subscriber apps, and web browsing, mobile operators must accelerate their network traffic with advanced optimization techniques, such as TCP optimization. Optimization also has the added advantage of improving network coverage.
• Data optimization tuned by busy-hour, congestion, and location: As 3G networks and some 4G network cells become increasingly congested, operators can apply targeted optimization techniques to help reduce load. Selective data reduction during busy hours improves revenues for the operator (reducing OPEX) but the solution must be sufficiently sensitive to busy hour traffic and congestion, to avoid serious degradation of service.
• Accurately measuring network congestion: Insight into mobile data traffic can be used for network planning, to build subscriber profiles for monetization services, and to fine-tune optimization. Information collected includes user browsing behavior, device capabilities, top applications used, areas of congestion, network bearers and more.
• Ability to personalize the service: The operator should have the ability to fully personalize the optimization services, and to align programs with differentiated tariff plan strategies. The solution should be sufficiently flexible to attach different optimization techniques and levels based on tariff plans, devices, subscriber preferences, applications and congestion levels. The operator must be provided with a solution that can intelligently solve traffic pressure.
• Monetizing the mobile Internet: Using advanced and interactive engagement platforms, such as inserted page overlays with content recommendations and advertising, while browsing the web, operators can generate new revenue streams. Operators can leverage insight from their network to create targeted mobile offerings and engage with their subscribers to increase their share of the over-the-top revenue pie.
In conclusion, to address the growing data challenges, operators need to balance various approaches: investing in 3G and 4G acceleration, optimizing congested cells, and adopting smart pricing plans, while also planning for future network growth. However, this is only one part of the equation. Operators must also find ways to monetize the mobile data traffic over their network.
In today’s mobile reality, operators understand that there is no single silver bullet solution but rather an ecosystem of coexisting solutions to cope with the mobile data El Nino.
