Do you know when YouTube had highest number of concurrent live streams?
Austrian skydiver Felix Baumgartner set YouTube live streaming record when more than eight million people flocked to their devices to watch the 43-year-old break the speed of sound live on Google's YouTube site.
And many of those devices were mobile. YouTube is one of the most watched mobile sites on any phone, tablet or platform. In fact mobile views of YouTube quadrupled during the 18 months between early 2011 and late 2012, and mobile devices now generate a quarter of all traffic across the video platform. YouTube Head of Content Robert Kyncl* has even said that mobile phones will soon be the “first screen”, ranking above television as the place users go to watch content. In fact, the biggest contributor to the increased volume of mobile data traffic is video, which analysts predict will reach 70% of overall traffic volume by 2016. Over the last two years, the U.S. mobile video audience increased by 77% to 36 million viewers.
So what does this all mean for mobile operators? It is obvious that mobile video will demand more and more bandwidth as consumers embrace it, generating more traffic, but little associated revenue.
According to Vodafone Germany’s CEO, Jens Schulte-Bockum**, video accounts for 85% of their LTE traffic. Voice, text, other messaging and data, everything that makes money for them, uses less than 15% of their LTE capacity. As a result, they are thinking about how to monetize video content and become a connectivity and service enabler rather than just a pure connectivity provider.
Most mobile operators are already pondering how to succeed in the content space, and many believe that over-the-top (OTT) service providers represent an opportunity for partnership, rather than a threat. For example, Verizon is building an end-to-end digital media distribution utility and also working with OTT partners, one of whom provides video streaming service for them.
And according to Telenor’s Andrew Kvalseth***, Head of Strategy at Telenor Digital Services, telcos shouldn’t necessarily control every link in the value chain. He says they are open to partnering and already have around 30 content partnerships in place. But as he explains: “It’s all about adding value so customers have a better experience with us.”
Cooperation also makes sense from the standpoint of the OTT players, who can’t control or affect the quality of their service as it travels through the last mile of delivery, in other words, over the operator’s network.
For OTT players, who have a subscriber base, this is a critical issue. Customers expect value for money when it comes to video quality. In fact, OTT’s are putting pressure on operators to deliver quality. One example is Netflix’s “name and shame” list, which ranks the ISPs and mobile operators who provide the best Netflix experience. Their 30 million members view over a billion hours of content per month, and they use the combined data about their experiences to compare the real world performance of the service providers.
On the other hand, mobile operators don’t necessarily welcome OTT traffic, notably video, as it is driving the data explosion on their networks. Charging for the traffic is one option, but is not well received by OTT players. Another option is to build partnerships where operators provide value to OTT players. This seems to be the most sustainable approach in the long term.
Providing profitable quality
So, how can mobile operators dynamically ensure good network quality for selected applications and services and make a profit in the process?
Quality of Service Differentiation is a good start, but operators need to go beyond the traditional Gold vs Bronze customers. There are clear drawbacks to prioritizing a customer’s entire package. Think of a Gold customer who expects premium video access but also has a nasty Peer-to-Peer (P2P) streaming habit downloading HD movies non-stop from an unofficial video sharing site like Bit Torrent. Due to their nature these P2P content sharing sites overload the network in an uncontrolled manner. Should operators prioritize all this traffic in the same package just so customers can get a premium video streaming service? It is clear that they need the flexibility to tailor the packages.
What if mobile operators could prioritize not only their customers, but also single applications? They could then offer premium (buffer-free) video streaming services. And what if they also had the tools to adapt video content to the actual network conditions. This would give them the capability to prioritize their customer’s video service and also to dynamically optimize it when the network was congested.
To provide this level of service, operators need to handle traffic according to the level of “urgency” in the network. In most cases, time-critical traffic like video and VoIP is treated at the same level of priority as other services like browsing. When congestion occurs, the equal treatment of all services has a direct negative impact on the experience of customers using content that requires an uninterrupted, steady communication channel. A congestion situation is almost like a queue: voice and video require a fast track line all the time.
In addition to flexible prioritization and content adaptation (optimizing video, for example) bringing content closer to the customer helps operators further in their quest for providing profitable quality. In a traditional setup, all content travels over long distances several times a day before it reaches customers, generating a heavy traffic load for the network backbone and exposing it to congestion.
An advanced Content Delivery Network (CDN) strategy could be the first step to bringing content physically closer to customers. As well as bringing caching capabilities closer to customers (bringing popular content to the packet core and base stations), an operator CDN reduces the load on the network backbone and further improves the customer experience. It also creates the opportunity for operators to offer services for OTT providers, for example to host OTT content in their networks close to customers and not on a remote cloud server farm. The result would be better service, better experience and lower costs, so everyone wins.
Now, for the first time, operators can bring real tangible value to OTT and enterprise players. They can go to OTT providers and propose partnerships to provide prioritized services to operator customers. Customers could then buy a premium OTT video package as part of their mobile broadband service agreement. Content prioritization would ensure a great experience, and as hit movies and series would be cached in the operator network, the downloading experience would be smooth and seamless. In this scenario, operators and OTT providers would work together on equal terms, and premium OTT revenues would be shared between them.
The key to these partnerships would be the operator’s capability to demonstrate that prioritized premium services/applications are indeed performing better than non-prioritized services. Operators would also need to be able to identify any problems related to the prioritized services and prioritize the resolution. For example, if a customer calls to complain that their YouTube is running slowly, can the operator find out in real time if the problem is in their network or at the YouTube server? And if it’s in their network, where, exactly, is it? In the core? Radio? Backhaul? One of their content servers? With the right kind of service quality monitoring tools and insight into their network, operators could revolutionize the way video services are sold and delivered by OTT players, who currently have no control or visibility of what happens on the path between their servers and their customers. With their tools to identify and address any problems, operators can solve any problems that occur, filling this gap and adding value for both OTT players and consumers.
So, we are talking about a fundamental change in the way operators position themselves in the OTT arena. For operators, this is a great opportunity to demonstrate the quality of their service delivery, in improved Netflix rankings, for example. It will also open the door to exciting new business models and new kinds of service offers. That would be innovating for a world in motionTM. And that is what we are doing at NSN.
* The Telegraph, 11 October 2012
** Mobile Europe, 11 September 2012
*** Eurocomms, 23 January 2013