|Topic:||The mobile bandwidth crunch
Carrier infrastructure and video delivery strategies for the next decade
|Title:||President & CEO|
Allan Benchetrit is CEO of Vantrix. Allan Benchetrit has over 20 years of experience in the Information, Communication and Technology industry. He began his career in 1987 as an account manager for Dun & Bradstreet. He went on to hold sales, marketing, and executive management positions at HP, Oracle, and Wysdom, and is co-founder of Vantrix.
Allan Benchetrit holds a BA in Political Science from Concordia University and an MBA from the John Molson School of Business in Montreal.
This article warns of the impending bandwidth crunch caused by the fast ramping up of video content consumption. There are three drivers: content addiction, all-you-can-eat pricing plans and rising mobile video usage. The results are already manifested, by deteriorating network performance. Operators are abandoning the flat fee regime and imposing data capping in order to protect networks from overloading. They can expand the infrastructure and introduce LTE at great cost. They can also deploy fair usage policy and deep packet inspection for traffic filtering, and install mechanisms for offloading Internet traffic. However, the fastest and most cost-effective measure is to apply bandwidth optimisation through transcoding, adaptive bit rate, adaptive streaming etc.
We have all heard the saying, “It’s a small world”, but as the world becomes smaller our mobile network needs have become bigger—much bigger. So much so that mobile network infrastructures previously thought capable of handling consistently heavy traffic, are now showing the strain under the torrent of new data they carry every day.
While social networking explodes and consumers transfer their daily web habits to the mobile phone, network operators struggle to keep up with the demand. No one expects network congestion to abate, and what is being done about it is being met with mixed reaction. On the horizon is 4G/LTE, marketed as the “miracle cure for data congestion”. It is considered by some as a universal panacea and by others as a Band-Aid solution, that many fear is just another network pipe that is bound to fill up all too soon.
The reality is that mobile carriers have to seek solutions to deal with the expanding mobile internet and specifically the increasing use of mobile video applications. There is no magic wand solution, but with a combined approach to adjusting carrier infrastructure and content delivery strategies, the industry will be able to curb the skyrocketing network congestion problem.
Carriers the world over understand that there are major issues with mobile video. Derek McManus, CTO of O2 UK, famously said that “Watching a YouTube video on a smartphone can use the same capacity on the network as sending 500,000 text messages simultaneously”.
This rampant consumption can be explained in part by the growing adoption of mobile video. An often quoted statistic from Cisco’s Visual Networking index, which tracks and forecasts bandwidth consumption, found that video will account for 66 per cent of global mobile data traffic by 2014, growing at a compound annual growth rate (CAGR) of 131 per cent from 2009 to 2014.
In terms of growth, it is estimated that Western Europe and Asia Pacific will account for over half of global mobile traffic by 2015. Middle East and Africa will experience the highest CAGR of 129 per cent, increasing 63-fold over the forecast period. The emerging market regions (Central and Eastern Europe, Latin America, and Middle East and Africa) will have the highest growth and will represent an increasing share of total mobile data traffic, from 12 per cent at the end of 2010 to 20 per cent by 2015.
Drivers contributing to the mobile bandwidth crunch: The Big “3”
Over the last 12-18 months, the mobile industry’s greatest achievements have also become some of the biggest threats to its further expansion and advancement.
1. The Apple Effect: The introduction of the iPhone and iPad set the bar at a new level for mobile video experience that subscribers (even non-iPhone users) not only seek, but also expect now. In fact the proliferation of new smartphones and smart devices led by the iPhone and iPad (but followed closely by Android devices) has turned end-users into video content addicts. Subscribers measure their mobile experience by the amount of data content they can create, download, stream and share and it is the video-enabled applications that most enhance their experience. While transformative for mobile subscribers, the fascination with video content is crippling to the mobile networks that deliver it.
2. Subscribers have become used to “all-you-can-eat” data plans: Originally designed for mobile messaging, unlimited data plans were the hallmark of North American mobile operators’ service offering and were responsible for driving customer-base growth. However, with the emergence of the mobile video and video applications, all-you-can-eat plans have quickly become a drain on networks. Carriers are unable to recoup the costs of scaling networks to meet demand as more subscribers sign up and consume vast amounts of content. Earlier this year we saw the first major operator drawing a line in the sand by announcing capped data plans. This is a very clear signal that “all-you-can-eat” is coming to an end.
3. Unprecedented rise in mobile video usage: YouTube accounts for 30-50 per cent of all actual traffic over networks with some estimates indicating that video is responsible for 50 per cent of mobile traffic over networks. By most accounts, mobile video usage will continue to double year-on-year through to 2015. This isn’t surprising when, according to Yankee Group, the expected number of global mobile video/TV users will jump from approximately 250 million users in 2010 to around 450 million users in 2014. Video has redefined mobile networks and placed a premium on bandwidth, creating demand that the current networks are unable to support –at least for the time being.
Impact on end-users
For better or for worse, it cannot be denied that mobile content has redefined the mobile subscribers’ expectations. Unfortunately the bandwidth crunch now threatens to alter the user experience and in some cases permanently impacts end-users relationships with their network providers. Slow loading and jittery content, degraded video quality, the inability to access certain applications and service disruptions are becoming all too common. The effects are no longer isolated incidents and carriers are being forced to take action in order to preserve subscriber loyalty.
As discussed, user behaviour is driving the bandwidth crunch, via: content addiction, all-you-can-eat plans and rising mobile video usage. Eventually subscriber loyalty will be threatened. Most recently we’ve seen the introduction of usage limits to save networks from overloading. What will be difficult to mitigate, however, is that while data capping is imposed, service providers are banking on content to keep subscribers loyal. Therefore it becomes a delicate balance to maintain.
Others have suggested that 4G LTE technology is what is really needed to lessen the brunt of the bandwidth strain. However, isn’t 4G merely a partial solution? More powerful smartphones and the ever expanding range of video devices and applications (HD, 3D, full length features…) may prove 4G capacity insufficient by the time of its mass market roll out.
Finally, there’s the option of limiting what and when content is delivered to subscribers– an even more drastic alternative than data caps. It’s not realistic to think that this will offer any kind of long term solution. The fact is that consumers are more willing than ever to switch providers for the latest devices and applications. Subscribers’ loyalty is up for grabs and the winner will be the provider offering the fullest content experience.
There are five complementary mechanisms that operators can consider in order to curb the issue.
1: Cap usage / metered usage: Major carriers have already done it, and more operators will follow suit. This can be introduced in a 1-2 years’ timeframe as most operators need to implement sophisticated tools for charging differently per service, subscriber, content… The price range is in the tens of millions.
2: Make significant network infrastructure upgrades: These upgrades can be increasing the number of cell sites and backbone capacity, getting more spectrum, moving to 4G…. We first saw the first hints of network inadequacy as mobile messaging numbers spiked. Operators knew then that their infrastructure was not built for high volume data traffic. This has only grown worse as data usage skyrocketed and video was introduced to mass market. While this may buy operators a few years a major infrastructure overhaul comes at excessive cost. This is a five-to-ten year strategy with CAPEX and OPEX in the hundreds of millions.
3: Implement technologies that can intelligently manage mobile traffic: This can include: Deep Packet Inspection (DPI), Policy and Charging Rule Function (PCRF), and Flexible Billing Systems. These technologies are readily available and being deployed. Time frame is 1 to 2 years, and the price is in the tens of millions.
4: Offloading of traffic: This can be achieved by using femtocells, mobile CDNs, providing economy of scale through or edge caching…. Depending on where the traffic is offloaded (cell site, edge…), the costs and benefits vary greatly. In any case, it is a midterm solution approach (three to five years) with solutions in the hundreds of millions in investment.
5: Video Optimization: This is probably the option that can be deployed the fastest and is the least costly with the highest immediate benefit. Video Optimization (transcoding, adaptive bit rate, adaptive streaming, etc…) can address the bandwidth issue now with component technology while leaving the door open for adjustments later, at a reasonable cost. The heart of this solution lies in Bandwidth Optimization, or the ability to maximize the network capacity providers have now, by making adjustments to the way in which they deliver content to end-users on-the-fly. These are solutions that not only stop the network “waste” incurred by operators in delivering videos to smartphones, tablets and laptops, but can then effectively double the capacity of existing network infrastructure, while reducing the OPEX and CAPEX investments necessary to run converged multimedia. This can be deployed within a few months with an investment of in the millions.
How quickly will the mobile ecosystem evolve?
As we look toward the future, this is perhaps the greatest question: How quickly will demand grow and how long will it take for networks to adapt? Some of the solutions outlined here will take years to show real returns, but the industry doesn’t have years. With every passing day the bandwidth crunch is left ignored, operators are losing customers to the competition. Our industry needs to address the video growth now, in a holistic fashion. It has to become a core competency of network operators, just like voice or messaging have been until now.