Industry Blog

Reality Check: The role of video optimization in developed versus emerging markets

Attitudes toward mobile data traffic tend to be very different in developed markets compared to emerging markets. As a result, so are the attitudes toward network optimization. In developed markets, the mantra is customer experience, how to improve their subscribers’ quality of experience on their networks. In contrast, in emerging markets, margins are typically razor thin and bandwidth can be severely limited by legacy technologies, so mobile operators need to optimize and minimize the amount of data they provide without added investment in the network. The result is that mobile operators are using the same technology to address two seemingly opposing trends.

Network optimization in developed markets
In developed markets, the use of mobile video has rocketed in the past few years. And as devices are increasingly released with the capabilities to stream and even upload high-definition videos, as with the recent iPhone 5 launch, the demand on networks from video data is only going to increase.

To help meet this increasing demand for video, congestion-aware optimization solutions are used to improve subscriber QoE. The video traffic is only optimized in areas of high congestion – traffic hotspots – leaving the rest of the network to stream video freely. By using intelligent video optimization the end-user’s viewing experience is smooth and buffer-free in congested areas, where normally the video streaming would be interrupted. Essentially, in developed markets, it acts as dynamic policy enforcement devoted to improving the viewing experience while dealing with higher-than-usual data demands wherever they arise.

Addressing video data in emerging markets
In contrast to this, in emerging markets, video in general has yet to take off on the scale that it has in developed markets. In these markets, because subscribers’ incomes are typically lower, operators need to align with that lower income, meaning that margins and ARPU are low. As a result, every byte of mobile data is important and needs to be accounted for. To add to this complexity, many emerging markets display huge contrasts with most of these countries’ subscribers exhibiting behavior as above, but, around major conurbations and capital cities there will often be hotspots of wealth and high-intensity usage making these very specific “island” areas more similar to a developed market.

With all this in mind, the use of network optimization solutions in emerging markets is mainly to ensure that mobile operators can meet data demand without having to increase investment in their network infrastructure, therefore maximizing their capital expenditure. So rather than use a congestion-aware video optimization which only activates in data traffic “hot-spots,” they will more typically use it to cover their entire network, so essentially it is a blanket policy enforcement to limit data traffic.

In emerging markets another way they might address video use moving forwards is through alternative forms of data charging. Even with video optimization, the provision of mobile video is costly – and if video use increases in emerging markets in a similar way to developed markets, it is only going to become more expensive for operators to manage. An application-based charging solution would give mobile operators the scope to continue to provide low-cost data plans for subscribers who do not use video, then charge extra for using video streaming – ensuring that operators can still operate within tight margins.

Despite the vast differences in emerging and developed markets and their experiences with video data, currently both markets have an important need for network optimization solutions. Whether it is to improve customer experience or to enable operators to work within tight margins, video optimization can play an extremely versatile role in two very different markets.

This blog was published by RCR Wireless on October 16th Click Here