If we turn the clock back a few years, entrepreneurs like myself and other industry pundits were predicting the rise of mobile data, but those lofty predictions were being met with a healthy degree of skepticism and also pushback that reached the level of ridicule. But, here we are, just a few short years later and, as has been widely reported, mobile data traffic is exploding and is on a path to continue to grow at a compound annual growth rate of more than 100 percent for the next several years (Figure 1).
Figure 1 – Cisco Visual Networking Index
While many consider this growth a phenomenal success, it also comes with substantial challenges for the wireless carriers. Some of these challenges are:
• Traffic volumes are growing at a rate that is faster than revenues, and with costs remaining close to flat, the operators are seeing diminishing margins. In the short term, the volume will mask the problem to some extent, but if left untreated, this will become a source of longer term financial strain.
• While the operators must work to drive down their cost per bit of delivery, they must also be careful not to push themselves into the role of a cheap bit pipe. Rather, they should drive down costs while maintaining a relatively strong position in the mobile eco-system.
• In years gone by, operators worried about their fellow operator competitors, but now they have to worry about a broader set of players who can be potential threats to their business – social networks, Internet services companies and new-age “over-the-top” players, such as Google or Apple.
Operators will no doubt have to respond to these threats on multiple levels, but in considering what role their mobile Internet infrastructure plays in those responses, they will see a couple of common themes:
• Video, Video, Video: As seen in Figure 1, video is already significant and is projected to become an even more dominant component of the data traffic mix.
• Intelligent Decision Making: The operators have the ability to apply or not apply network resources to traffic in a fairly granular fashion.
Figure 2 – Fundamental requirements of a modern MIP
Video
Based on a recent analysis conducted in conjunction with a tier-one European operator, we observed that more than 40 percent of the Internet traffic on the network is already video, and that more than half of this came from YouTube alone. We also observed that half of the videos watched are viewed only once. The volume of video traffic does put the overall networks under strain, but the strain occurs in hot spots. Vodafone Group recently reported that at peak times, their cells are on average 35 percent busy, but that 7 percent of the cells are experiencing capacity needs in excess of 90 percent. When you consider this collection of information, it becomes clear that any mobile Internet platform worth considering must not only support video, but it needs to be damn good at it. To be good at it, the mobile Internet platform must have a deep understanding of both the nuances of video and the delivery of video across a broad range of devices. Subscribers don’t care about how many bits are being delivered or in what formats, but they do care about getting a killer user experience.
Intelligent Decision Making (IDM)
There are many reasons to believe that IDM is a critical component of the mobile Internet platform, but let’s take video as a starting point. The platform must have the ability to make intelligent decisions about when to apply video management techniques, when not to apply them and how aggressively to act. Additionally, for the operator to maintain a strong position in the value chain, it must leverage its unique mobile assets, things like presence, location, identity, profile, etc., to enhance the service that is delivered from its business partners and to its subscribers. Having the ability to augment, modify or decrement traffic flows will be key for operators seeking a stronger hand against new competitors entering their markets. With over-the-top services becoming ever more popular, operators may need to open a new monetization income stream from these service providers. Optimizing the data stream per application as well as the ability to enhance user experience is an important aspect of the smart pipe offering. In some markets, such IDM capabilities will have to be managed against a backdrop or threat of net neutrality, but it is easy to see that this kind of capability is better to have than not have, even in such an environment.
Yes, the mobile Internet and mobile broadband space does represent a paradox of success, but with the right mobile Internet platform capabilities, the operators will be in a better position to not only meet their challenges, but thrive.
John Sims is a board member with Mobixell and the former CEO of 724 Solutions.
