2016 sees a sea change in the fabric of the
mobile value chain. Google is reporting that mobile search revenue now exceed
desktop, whereas 47% of Facebook members are now exclusively on mobile, which
generates 78% of the company’s revenue. It has taken time, but most OTT
services that were initially geared towards the internet are rapidly
transitioning towards mobile.
The impact is still to be felt across the
value chain.
OTT providers have a fundamentally different
view of services and value different things than mobile network operators. While
mobile networks have been built on the premises of coverage, reliability and
ubiquitous access to metered network-based services, OTT rely on free,
freemium, ad-sponsored or subscription based services where fast access and
speed are paramount. Increase in latency impacts page load, search time and can
cost OTTs billions in revenue.
The reconciliation of these views and the
emergence of a new coherent business model will be painful but necessary and
will lead to new network architectures.
Traditional mobile networks were originally
designed to deliver content and services that were hosted on the network
itself. The first mobile data applications (WAP, multimedia messaging…) were
deployed in the core network, as a means to be both as close as possible to the
user but also centralized to avoid replication and synchronization issues.
3G and 4G Networks still bear the design
associated with this antiquated distribution model. As technology and user
behaviours have evolved, a large majority of content and services accessed on
cellular networks today originate outside the mobile network. Although content
is now stored and accessed from clouds, caches CDNs and the internet, a mobile
user still has to go through the internet, the core network, the backhaul and
the radio network to get to it. Each of these steps sees a substantial decrease
in throughput capacity, from 100's of Gbps down to Mbps or less. Additionally, each hop
adds latency to the process. This is why networks continue to invest in
increasing throughput and capacity. Streaming a large video or downloading a
large file from a cloud or the internet is a little bit like trying to suck ice
cream with a 3-foot bending straw.
Throughput and capacity seem to be
certainly tremendously growing with the promises of 5G networks, but latency
remains an issue. Reducing latency requires reducing distance between the
consumer and where content and services are served. CDNs and commercial
specialized caches (Google, Netflix…) have been helping reduce latency in fixed
networks, by caching content as close as possible to where it is consumed with
the propagation and synchronization of content across Points of Presence
(PoPs). Mobile networks’ equivalent of PoPs are the eNodeB, RNC or cell
aggregation points. These network elements, part of the Radio Access Network
(RAN) are highly proprietary purpose-built platforms to route and manage mobile
radio traffic. Topologically, they are the closest elements mobile users
interact with when they are accessing mobile content. Positioning content and
services there, right at the edge of the network would certainly substantially
reduce latency.
For the
first time, there is an opportunity for network operators to offer OTTs what
they will value most: ultra-low latency, which will translate into a premium
user experience and increased revenue. This will come at a cost, as physical
and virtual real estate at the edge of the network will be scarce. Net
neutrality will not work at the scale of an eNodeB, as commercial law will
dictate the few applications and services providers that will be able to
pre-position their content.
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