One of the primary reasons that more and more mobile operators are rolling out their 4G networks is to accommodate the growing demand for video content, which is expected to comprise 75% of all mobile network traffic within the next few years. Even the most bullish of predictions about mobile data and smartphone growth have fallen short of today’s reality. So here’s my prediction: mobile data, especially video, will outgrow 4G networks sooner than anyone would care to admit.
According to a Yankee Group report, by 2014, there will be more than 1.4 billion smartphone subscribers, up from over 600 million in 2010. Cisco forecasts that video will account for 66 percent of global mobile traffic by 2014.
This new 4G world will be different from previous technology upgrade cycles because of the abundance of over-the-top (non-operator) services that will use 4G networks for only the cost of access. Building more infrastructure capacity cannot be a complete solution if operators are to manage this growth and expect to turn a profit. So how do operators build a sustainable business model in this new 4G world?
A more immediate approach would be to take a combined software and hardware approach to manage a variety of traffic types in real time. Quality mobile video viewing experiences can be enabled through “self-optimizing” techniques: solutions that automatically trigger optimization only when the network conditions reach certain congestion thresholds that cause video quality to degrade. Rather than compressing all of the traffic all of the time, which is expensive and can stifle networks, optimization is triggered only when there is a video quality issue caused by too much data traffic.
Operators all over the world do not want to touch data traffic unless there is a problem, and for many, their problems are pertain to a specific region, a specific user type, or a specific type of long-form video traffic. Understanding these patterns allows for strategic deployments of congestion-aware optimization at the busiest cell sites and activated at peak times.
Intelligent caching — a technique that prevents additional bandwidth consumption every time a popular video is requested — is another strategy that could work for many operators. Caching the most frequently viewed videos closer to the network edge results in faster download and playback, and prevents wasted bandwidth that occurs from retrieving the same video repeatedly from the server of origin.
It is no secret that after years of unlimited data services packages, operators are beginning to deploy tiered pricing and service bundles in earnest. Many of these approaches are still in their early stages of rollout. As North American operators move to 4G they will have to conscript intelligent, integrated software to offer more varied options that drive up ARPU.
Inevitably, monetization must be part of the discussion around video optimization, which is why analytics and policy must be addressed. Here’s an example of how a combined approach to optimization, analytics and application policy might play out:
Subscriber Bob has a premium data plan, a mid-level offering that gives him a pretty good size bucket of megabytes per month. Bob likes to watch streamed Netflix movies on his smartphone. What Bob doesn’t realize is that the HD movie he just started streaming is too big for his data plan. No problem. With the right analytics-driven solution, the operator can detect that Bob is attempting to access content outside of his plan, and in the context of the browsing session, can send an warning plus an offer for an immediate upgrade to allow Bob to watch his movie uninterrupted and without the bill shock that would result from an overage charge. The operator could charge the Bob a flat $2 to watch the HD movie or offer him an upgrade him to a data package that can accommodate this type of content.
These on-the-fly offers and responses are recorded in the operator’s database. A detailed report can be run to see the rate of uptake and segment the subscribers for additional promotional offers depending on their behavior. This data can help subscribers build the next generation of tiered pricing bundles. (More real-life examples here.)
4G is fast becoming a reality and opportunity is knocking. Software solutions that enable cost-effective utilization of the network can help operators deliver a high quality video experience to their subscribers and thus ensure their profitable success in the new world of 4G services.