As I publish my first report (description here), have an exclusive glance with the below summary.
Executive Summary
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ideo is a global phenomenon in mobile networks. In only 3 years, it
has exploded, from a marginal position (less than 10%) to dominating mobile traffic
in 2012 with over 50%.
Mobile networks until now, have been designed and deployed
predominantly for transactional data. Messaging, email, browsing is fairly low
impact and lightweight in term of payload and only necessitated speed
compatible with UMTS. Video brings a new element to the equation. Users rarely
complained if their text or email arrived late, in fact, they rarely noticed. Video
provides an immediate feedback. Consumers demand quality and are increasingly
assimilating the network’s quality to the video quality.
With the wide implementation of HSPA (+) and the first LTE
deployments, together with availability of new attractive smartphones, tablets
and ultra book, it has become clear that today’s networks and price structure
are ill-prepared for this new era.
Handset and device vendors have gained much power in the balance and
many consumers chose first a device before a provider.
In parallel, the suppliers of content and services are boldly pushing
their consumer relationship to bypass traditional delivery media. These Over-The-Top
(OTT) players extract more value from consumers than the access and network
providers. This trend accelerates and threatens the fabric itself of the
business model for delivery of mobile services.
This is the backdrop of the state of
mobile video optimization in 2012. Mobile network operators find themselves in
a situation where their core network is composed of many complex elements
(GGSN, EPC, browsing gateways, proxies, DPI, PCRF…) that are extremely
specialized but have been designed with transactional data in mind. The price
plans devised to make sure the network is fully utilized are backfiring and
many carriers are discontinuing all-you-can-eat data plans and subsidizing
adoption of limited, capped, metered models. Radio access is a scarce resource,
with many operators battling with their regulators to obtain more spectrum. The
current model to purchase capacity, based on purchasing more base stations,
densifying the network is finding its limits. Costs for network build up are
even expected to exceed data revenues in the coming years.
On the technical front, many operators
are hitting the Shannon’s law, the theoretical limit for spectrum efficiency.
Diminishing returns are the rule rather than the exception as RAN become denser
for the same available spectrum. Noise and interferences increase.
On the financial front, should an
operator follow the demand, it would have to double its mobile data capacity on
a yearly basis. The projected revenue increase for data services shows only a
CAGR of 20% through 2015. How can operators keep running their business
profitably?
Operationally, doubling capacity every
year seems impossible for most networks who look at 3 to 5 years roll out
plans.
Video
optimization has emerged as one of the technologies deployed to solve some of
the issues highlighted above. Deployed in over 80 networks globally, it is a
market segment that has generated $102m in 2011 and is projected to generate
over $260m in 2012. While it is not the unique solution to this issue, {Core
Analysis} believe that most network operators will have to deploy video
optimization as a weapon in the arsenal to combat the video invasion in their
network. 2009 to 2011 saw the first video optimization commercial deployments,
mostly as a defensive move, to shore up embattled networks. 2012 sees video
optimization as a means to complement and implement monetization strategies,
based on usage metering and control, quality of experience measurement and
video class of service delivery.
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