By Chris Osika, Cisco Internet Business Solutions Group
Only a few years ago, the challenges facing mobile providers seemed well within the realm of their traditional expertise. Their vast and complex infrastructures, built around towers, antennas, core networks, and the like, focused on providing the bandwidth and signal quality necessary for providing clear voice signals. Early mobile Internet applications were limited to services like weather, news, and stock quotes. As video entered the picture, it was mostly limited to a quick, manageable snack here and there on YouTube. After all, on a tiny, phone-sized screen, the prospects for a sumptuous two-hour movie feast were limited.
The situation, however, is being radically transformed. And at this years’ Mobile World Congress, which I attended last week in Barcelona, a clear focus was on a prime disruptor: the tablet and vast, media-rich applications. For with the sudden and phenomenal growth of the iPad—along with its Android-based counterparts—end users who had been limited to quick bites on YouTube are ready to indulge in long-form video buffets, anytime and anywhere. And while those game-changing tablets don’t quite provide an IMAX experience, their larger screens nevertheless offer the perfect mix of visual quality, mobility, and convenience.
For mobile service carriers, however, this has created a certain amount of havoc. Somewhat unexpectedly, all of that video traffic has opened the floodgates for a huge upsurge in data traversing the network. Concurrently, a vast and ever-expanding ocean of apps for smartphones and tablets continues to pull down an additional and staggering amount of data from the network at all times.
Nevertheless, there are great opportunities for service providers to meet these challenges and, in the process, become faster, more agile, and more cost effective.
At Mobile World Congress, I met with representatives of 26 mobile carriers from around the world. The bottom line for them is how to manage this huge influx of data, prevent slowdowns on their networks, and create new revenue streams.
Two core themes emerged:
- Optimization. A key question for providers is how to optimize network operations and cost structures to meet this tsunami of data traffic. Given that video dominates mobile traffic and our own research has shown that greater than 85 percent of that mobile video consumption occurs around fixed locations, a key opportunity is to offload this traffic onto more cost-effective Wi-Fi solutions. Wi-Fi is two-plus magnitude more cost effective than mobile’s radio-access spectrum. So, carriers are looking for efficient ways to allow end users to move seamlessly between Wi-Fi and mobile, lessening the burden on the mobile networks. Cisco is at the forefront in developing technology to drive that seamless handoff. In short, carriers are moving toward innovation on Wi-Fi offloading, along with business-model innovation that encourages end users to align to this cost optimization.
- Monetization. The challenge for mobile providers is that they may be delivering vast amounts of apps, but they are not receiving direct revenue from them. So how do they enter into that application ecosystem and partake in the monetization? From my perspective, there are two ways for them to do this. They are probably not going to jump into the business of creating apps, but they can offer value-added services and enhancements within the network to those who do (for example, Netflix and Zynga). This could include content management, app acceleration, and many other services. Thus, the app provider would pay for services that basically create an enhanced level of experience filtering down to the end user.
There is also a great opportunity for mobile providers through data and analytics. The carriers have a tremendous amount of data on their users that is underutilized today. Even considering privacy restrictions, SPs are more trusted in surveys than the government or any of the big web companies. As a more trusted intermediary, they have an opportunity to monetize their wealth of consumer data.
The way I see it, the overarching drive should be for more much more collaboration—among service providers themselves, and also with app providers. I’m certainly optimistic, and I believe that things are moving forward in a constructive way. Indeed, it is best for everyone if the industry is healthy as a whole, so that rather than looking at a win-lose proposition for one area, we collaborate to create a win-win for all: service providers, app providers, and end users.