Viewpoint
Whether putting together a marketing strategy for a corporate organization or updating a personal social media page, video continues to play an ever-increasing role in our business and personal lives and driving forward transformation. It has already had a huge impact on operators’ businesses, pushing their networks to the limit with minimum return on investment. So, what is the next step and how can operators turn this loss into profit?
The Rise of Video
OTT video continues to dominate not just the media space but also the telco space too, with video being responsible for a large proportion of network traffic. Indeed, according to Online Video Forecasts, a 2015 report by ZenithOptimedia in conjunction with Newscast, the average amount of time people will spend consuming online video each day will increase by 23.3% in 2015 and by a further 19.8% in 2016. In regards to mobile content specifically, the report forecasts that video consumption on mobile devices, such as smartphones and tablets, will grow by 43.9% in 2015 and 34.8% in 2016.
The impact this is likely to have on operators represents both a burden and an opportunity. On the one hand, the rising data – according to Rysavy Research’s Mobile Broadband Usage Constraints report a mobile voice call uses between 6kbps to 12kbps of bandwidth while streaming an Internet video uses 1 to 2 Mbps – places a huge strain on their network, pushing bandwidth capacity to its limits. For those advising operators to upgrade their networks in order to cope with demand, many would say ‘why should we?’ and the vast majority would agree they are right, with the majority of video content currently coming from OTT providers and therefore resulting in no Return on Investment (ROI).
This is undoubtedly a major negative and not one that operators should take lightly but, on the other hand, the opportunity video represents is just as great. The OTTs that currently dominate the market cannot provide the full package to end-users in terms of streaming speed and video quality, due to their lack of control over networks. This presents operators with a huge chance to take a significant slice of the video profit pie.
User experience impact
In order for them to do this, the main question operators must answer is: ‘What are viewers looking for when they watch a video?’ Again, just like with voice, the overall experience of watching content on mobile phones is key. This is reflected by a consumer survey from Huawei mLAB with Oxford of University, which questioned more than 4,000 people and used their answers to list the top three objective factors which reflect subjective experience in relation to video.
The first was the Interaction Experience – including initial loading time – with the best experience giving zero-waiting time before delivering the content. Next, was the Viewing Experience, for instance, blocking and stalling, while the third and final factor was Content Quality, which refers to the video source performance, in other words, resolution, definition, decoding/bit rate and frame rate.
Taking the consumer research and highlighting International Telecommunication Unit’s (ITU’s) Mean Opinion Score (MOS) as the base for a methodology, Huawei – which has been committed to the development of video service for more than 20 years – went on to recommend that a Video MOS should be developed to synthetically assess the multiple key performance indicators of video services. Its solution to this is Huawei’s U-vMOS, which measures indicators from sample analysis of subjective video experiences, coupled with analysis from related technologies, to provide objective assessments on the overall video service experience. This provides a unified standard to measure the user experience which guides operators and the video industry chain in enhancing user satisfaction.
Enter the operators: How to deliver a high-quality video service
Knowing what makes a good user experience is one thing but how can operators deliver this? The short answer is, of course, through network upgrades – but, according to Kunlong Li, Director of Huawei Carrier Video Service Department, this is not the only factor to consider, especially if operators are to deliver video cost-effectively, something which is undeniably important.
“Video has emerged as a primary revenue source for mobile broadband traffic. In fact, Huawei estimates that video traffic will make up more than 70 per cent of all mobile traffic by 2018,” said Li. “In the 3G era, high traffic fees and a poor service experience held back widespread user adoption, but the superior wireless pipes of the LTE era make an optimal customer experience possible. Nevertheless, to enable the golden age of video services, telcos need to tackle the challenges they face by designing suitable business models, strengthening network capabilities, and improving user experience.”
LTE, then, is one method operators should consider if they want to improve their network capabilities for video delivery. The technology is credited with delivering higher success rates and smoothness. In addition, the loading time for mobile video on LTE is claimed to be twice as fast as on a 3G network, with average initial buffering decreasing to 2.4 seconds compared with 4.5 seconds. In turn, deploying LTE will also bring benefits for the operators; new customers, attracted by the faster speeds and capabilities offered by LTE, for example, as well as higher spectral efficiency when compared to UMTS networks, leading to reduced network construction costs.
These benefits, says Li, can only be enjoyed if operators deploy end-to-end video solutions which also ensure they have the correct network monitoring system in place following installation. These should ensure that consumers’ experiences are consistent and that the new network is coping with increasing traffic.
“Key Quality Indicator (KQI) testing is one way which operators can ensure they are delivering an optimum viewing experience,” he continued. “KQI tests mainly cover initial buffering time, download rate, video streaming start success rate, frame freeze frequency and average freeze time. Areas with poor service experience are then subject to root-cause analysis to determine whether insufficient wireless coverage, roundabout bearer networks or insufficient caching space in content servers are to blame. After the problems are identified, video optimization solutions can be deployed, including wireless network TCP acceleration, Quality of Service (QoS) assurance for video services on IP networks and format conversion/bitrate adaptation/intelligent buffering of video on the PS network side.”
Taking on the OTTs – as partners
However, as Li has already suggested, if operators want to be truly successful in the video space and achieve ROI then it is not as simple as just upgrading their networks. While an operator might have the best network around, it will not bring them any additional revenue if they have no services leveraging the network to sell. Do operators also need to invest in this area, then, in order to overcome the OTTs?
Ovum’s Telecoms, Media & Entertainment Outlook 2015 would suggest not. In it, Steven Hartley, Practice Leader at Ovum, states:
“Most mobile operators face an uphill struggle to innovate in terms of services. Development budgets at the likes of Google dwarf the Research and Development (R&D) available to operators, which must also fund new networks. There’s also the fact that mobile operators can be limited to just one market, whereas the Internet giants have global customer bases.”
The solution, according to Hartley, is for operators to befriend their former enemies.
“We encourage operators to partner with those best positioned to develop new services,” he said. “The emphasis should be on developing the network platforms capable of delivering new services quickly, cost-effectively, and to a high quality.”
This approach is already beginning to happen in the industry, as highlighted in Ovum’s report and it is also one which Kunlong Li, Director of Huawei Carrier Video Service Department, agrees with:
“The partnership between the media and telcos is one of necessity – it is critical for both parties’ survival,” he concluded. “The question should not be who pays in this partnership but how they work together to create value for the consumers so that they pay for an improved user experience and telcos and OTTs can share those benefits together.”
Conclusion
Video is undoubtedly a medium which operators cannot afford to ignore – as the broadband value proposition changes, it must become a new growth point and a primary service of telcos. Those that experience the most success in this Video Everywhere era will be the ones that can forge friendships with the OTTS and work with them to create not only a user experience centric network but also a competitive service offering.
Huawei and ITU-T hosted a Video Everywhere Summit as part of their Digital Transformation Summit at the Crowne Plaza Barcelona, Fira Center, Barcelona, on Sunday, February 21 from 3pm to 6.30pm. For more information, please see http://www.huawei.com/en/mwc2016/summit for more information.
