When it came to mobile video and 3G, it was always a clear case of video killed the radio star, with the surge in demand for video delivered to smart devices completely overtaking the ability of networks and operators to manage. It is expected that by 2017 worldwide cloud traffic will grow to to 5.3 zettabytes (… more zeros than you can fit on a line of text). According to CISCO VNI two thirds of this will be mobile video. Video already accounts for more data by volume than all other types of traffic added together, and at a CAGR of 75% it is growing faster than any other type of traffic.
In this article we take a look at what is driving this unprecedented growth from the perspective of people as well as technology, in developing as well as developed markets, and lastly we draw out some of the lessons the industry needs to take from this story so far.
People are changing faster than technology
Mobile video is quickly moving from niche interest to the most dominant form of communication and it’s not hard to see the shift in people’s behaviour. Ten years ago, the industry failure we used to call “video calling” is now all the rage – but it takes the form of Facetime or Skype, driven in part by front-facing cameras on our handsets. However, it is not just video calling pushing operators’ networks to the limit – video has become an integral part of everyday life. Clips and snippets are being uploaded and downloaded at sporting events, concerts and holiday destinations as a new “wish you were here” video trend becomes increasingly easy on every platform. And of course, social networking is also propelling mobile video usage – with “must see” viral clips from YouTube and Vine plastered across your Facebook and Twitter feeds.
These trends are even causing macro level changes in the business of film and journalism. At a recent conference on Video Optimization in Berlin, John Nolan from North-One TV, lamenting the TV industry’s inability to monetise mobile video, said ….“In the good old days, to make a movie you had to be rich, clever, and connected…..Today, everyone is a producer and everyone is a distributor!” The trend for citizen journalism has seen a huge rise in “everyday” people taking to the streets and reporting on events first-hand and as it happens. Bigger screens, front-facing cameras, HD technology, plus the fact that people no longer need a PhD in gadgets to work the camera on a mobile– all of these are factors causing a seismic shift in the way people are interacting and collaborating through video.
But technology is changing too
4G/LTE is called “LTE” for a reason, it’s a long-term evolution and it’s taking time for rollout and adoption. Strategy Analytics stated recently that there are now 320 million 4G/LTE connections. This may sound like a large figure, but when you consider there are around 4.7 billion unique connected users in the world, it’s actually a relatively small number. If you spin this statistic around, over 90 percent of people in the world are not using 4G/LTE. As well as coverage there remain serious issues of interoperability between handsets which will persist for some time.
But that said, of course there are significant developments in LTE that do help advance mobile video delivery and consumption. First there are the obvious ones: lower latency, higher throughput and spectral flexibility to aggregate carriers together. There is also the prospect of guaranteed Quality of Service (QoS) provided by LTE’s management of bandwidth, although that remains to be proven. Best of all there is the new upcoming technology of LTE Broadcast. For mass consumption, this provides a point-to-multipoint broadcast of video content in a limited space for example a sporting event or shopping mall, or during a limited period of time, for example a breaking news item. LTE Broadcast provides a colossal step-up in efficiency since it delivers rich video content to hundreds of users but using the bandwidth of only a single user. LTE Broadcast could certainly lead to new business models in the way mobile video is priced and distributed and as an enabler of location based video-ads. So LTE is certainly a helpful stop along the way even if it is not the final destination.
Developing markets are not excluded
The zettabyte video phenomenon is not limited to developed markets. We have seen in developing markets previously that areas lacking fixed line infrastructure will often leapfrog to newer technologies. This is helping to shape a mobile-friendly and mobile-focused attitude in emerging markets. Video usage on mobile devices has the potential to grow faster here because smartphones are often the user’s only access to the internet – individuals tend to use their phones for everything and mobile video can play a vital role in day-to-day life.
Mobile video is starting to provide huge opportunities in developing markets, and of course open up a whole world of entertainment and education. For example individuals in remote locations, who are suffering from medical issues, can use mobile video for a “face-to-face” consultation with a doctor or nurse, showing the actual ailments and problems without having to travel long and potentially dangerous journeys. Delivering education to remote locations is another example we are starting to see eg in Sub Saharan Africa.
Of course, users in developing markets users are typically on much lower incomes – ARPUs are often an order of magnitude lower. As a result operators need to align their offerings to meet that lower income, meaning that margins can be incredibly 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 can display huge disparity when it comes to where high and low income families live. 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.
3G to 4G – lessons to learn
Coming back to the more technologically advanced markets it is worth asking the question – what has the industry here learnt about bandwidth consumption in 3G?
Firstly optimization of mobile video does reduce the volume of data in the network but that does not lead to automatic benefits. So, the argument that “size matters” is proven false once again. Often, compressing data in the network can simply lead to more users downloading more video, more of the time – and inevitably causing more congestion. Video optimization makes complete sense whenever and wherever congestion occurs, but not otherwise. Solutions such as congestion-triggered optimization are the key to achieving optimum use of bandwidth, not just minimum use of bandwidth. Operator s have to learn to perform a three-way balancing act between cost of optimizing, bandwidth savings achieved and Quality of Experiece (QoE). In particular we are seeing a heightened awareness among many operators of video QoE as a number one factor in customer dissatisfaction. In commercial trials users overwhelmingly prefer a reduced quality video that starts quickly and does not stutter to a video that is of greater definition but takes a long time to begin and falters during playback. This is a far more complex formula than the “size matters” idea that dominated these discussions one to two years ago.
Secondly, net neutrality in mobile is going to run into trouble. A few countries such as Chile and, as of last year, the Netherlands, have adopted stringent net neutrality legislation for mobile, and the EU is currently wrapped up in discussions to bring about some measure of Europe-wide legislation. Rigid net neutrality can only hold back deployment and adoption of mobile services. It is one thing on fixed broadband to say that Internet Explorer should not be the only browser, and that traffic in big pipes should all be treated the same, but mobile networks are different. Mobile networks are inherently non-neutral. How can we say mobile networks are impartial when on the one side mobile operators bear the burden of paying – while on the other side OTT players take the revenue? This inherent bias that has been built into mobile from day one cannot be defused by adding a veneer of “net neutrality”. Video services bring a sharpened focus to this debate since they are the dominant form of traffic and potentially the most lucrative.
Lastly, to state the obvious, monetization of video really matters. The low price per GB of video is causing margin erosion worldwide and contributing to declining revenues for European operators year-on-year. Informa said recently: “Video streaming will account for a third of mobile data traffic on handsets in 2016; but money paid by mobile users for streaming will only amount to 0.6% of mobile data revenue”. This game has to change. And it is the right time to change. Today with the right technology in place, operators have the ability to treat every video flow individually, to decide in real-time how to charge for it, and how to achieve the best QoE. Some mobile operators most notably US regional carrier C Spire have started to experiment with “video-as-a-service”. This operator offers packages such as two hour and five-hour video streaming plans, as well as day-passes as add-ons to existing, low-cost plans. This separating out of video as a premium offering is being met with a popular response. Unsurprisingly, it seems that people will pay for what they want – as long as they understand what they are getting.
So changes in culture, yes; changes in technology, definitely; changes in revenue – well that’s just beginning!
This blog was published by Connect World on June 20. Click Here!