Tuesday, March 31, 2015

Net neutrality... so what?

In the US, on February 26, days before the mobile world congress, the Federal Communications Commission released a declaratory ruling on “protecting and promoting the open internet”. The reclassification of fixed and mobile network services under title II telecom services by the FCC means in substance that network operators will be prevented from blocking, throttling, and prioritizing traffic and will have to be transparent in the way their traffic management rules are applied.  This is essentially due to an earlier ruling from the DC circuit Verizon v. FCC that struck down FCC’s rules against blocking and traffic discrimination but remarked that “broadband providers represent a threat to Internet openness and could act in ways that would ultimately inhibit the speed and extent of future broadband deployment.”

It is a great issue that broadband providers in this case are exclusively network operators, and not OTT providers, who have, in my mind the same capacity and have a similar track record in that matter. The FCC tried to provide “more broadband, better broadband and open broadband” and in its haste has singled out one party of the ecosystem, essentially condemning network operators to a utility model. This nearsightedness is unlikely to continue as several companies have already decided to challenge it. Less than a month after its publication, the order is being challenged in court by the United States Telecom Association, a lobbying group representing the broadband and wireless network operators as well as Alamo, broadband provider in Louisiana. There is no doubt that legal proceedings will occupy and fatten lawyers on both sides for years to come.

In Europe, the net neutrality debate is also far from being settled. After the European Commission seemed to take a no throttling, no blocking no prioritization stance in its “Digital single market” initiative, network operators, throughout their lobbying arm ETNO (European Telecommunications Network Operators’ association) started to challenge these provisions at the country level. Since the European Commission has not yet passed a law on the subject, the likeliness of a strong net neutrality stance will depend on support from each nation. In November 2014, compromises in the form of “non-discriminatory and proportionate” plans were discussed. The result is that net neutrality is still very much a moving target, with a lot of efforts being expanded to enable a managed internet experience, with a fast and a best effort lane. The language and ideas surrounding net neutrality is very vague suggesting either a great lack of technical expertise or a reluctance to provide an enforceable guidance (or both). It is more likely that countries at their individual level will start passing law to regulate some aspects of traffic management until a consensus is found at the European level.

In conclusion, there is obviously much debate over net neutrality globally, with many emotional, commercial, technical implications. There is at this stage no evidence of any regulatory authority having a good grasp of both the technical and commercial realities today to make a fair and enforceable ruling. As a result, politics, public sentiments, lobbying and lawyers will dictate the law for the next 5 years. In the meantime, it is likely that loopholes will be found and that collaborative approaches will show a lucrative business model that is likely to make the whole debate obsolete.

More analysis on traffic encryption, mobile advertising, data, video, mobile and media trends in  "Mobile video monetization 2015". 

Wednesday, March 18, 2015

OTT as MVNO… or MNOs

This is an excerpt from my latest report "Video monetization 2015" .

OTT providers on their side might have some slightly different plans and views from mobile network operators. Most of them have built a business predominantly digital, based on internet-based delivery and had had to navigate the intricacies of creating an ecosystem (content creation, aggregation, distribution,…) and a business model (free, freemium, ad sponsored, hybrid, subscription, sponsored…) for the internet. 

This effort has resulted in partnerships and value chains, where content delivery is a little part of the value and when third parties like CDN can’t provide suitable or economical service levels, they are replaced by homegrown solutions, as illustrated by Netflix and Google’s caching strategy.

As a result, I believe that Google’s SVP products Sundar Pichai’s announcement at mobile world congress 2015 is likely to be a sea change. The company has decided to put rumors of becoming an MVNO to bed by integrating vertically the value chain one step further. The company will launch a MVNO service in the US, probably on Sprint and/or T-Mobile networks, blending cellular and wi-fi coverage. It starts to look increasingly like the dystopian future described here.

It is very likely that Google being who they are, will be looking at extending their services to mobile in a very different fashion than a mobile network operator. One can muse that in all likeliness, a Google subscriber (!?) with an Android device on YouTube or G+ is unlikely to pay for minutes of voice or Megabytes of data. It is likely that this first attempt to translate the very basics of mobile network economics into an ad sponsored model will have a very disruptive and durable effect on the whole value chain.

If you remember, this is not the only initiative that Google has with mobile networks. Since 2013, the company has been exploring the possibility to build and operate wireless networks in Southeast Asia and sub-Saharan Africa. If you put this with the recent announcement that Telstra in Australia, Vodafone in New Zealand and Telefonica in South America have all agreed to participate in live trials of the Loon project, it is likely that Google will look at being increasingly involve in cellular networks. The project now supports LTE and balloons can stay up for about 6 months. 

Driving the nail farther in operator’s coffins, Mark Zuckergerg at the same show was advocating for Facebook’s initiative internet.org that is promoting free mobile internet access in emerging countries. The rationale here is that free internet promotes usage, which promotes engagement, which promotes new revenues. Current experiments in Millicom Paraguay or Tanzania, saw increases of data users by the tune of 30% and 10x increase in smartphone sales.

All in all, OTT providers have fundamentally different view of services and value different things than mobile network operators. The reconciliation of these views and the emergence of a new coherent business model will be painful but necessary.

More on the subject, as well as strategies from OTT and mobile network operators to monetize video in "Video monetization 2015". 

Wednesday, March 11, 2015

MWC15 newslist

If You have been struggling to keep up to date with all the announcements and releases at Mobile World Congress last week, here is the list of what has caught my eye from the companies I follow or I have met in the domain of video monetization and SDN / NFV.
As usual, interviews, trajectory, strategy and analysis in my upcoming report on "Mobile video monetization 2015".

Allot Communications

Allot Launches SmartEngage Enabling Mobile Operators to Increase Subscriber Service Uptake
Allot Communications to Acquire Operations of Optenet, a Leading Security-as-a-Service Solution Provider
Allot MobileTrends Report Reveals Security-as-a-Service is a Clear Revenue Generator for CSPs



Brocade to Acquire Connectem; Extends Leadership in New IP to Mobile Networks




Flash Networks


Huawei Collaborates with Intel to Deliver Public Cloud Solutions for Global Telecom Carriers
Huawei Redefines Hybrid Clouds with FusionCloud Omni Solution
Huawei Releases Industry’s First High Throughput Router (HTR) for an Optimized Ultra-HD Video Experience


Orange, Nokia Networks team up on Telco Cloud

Openwave Mobility



NEC enhances Traffic Management Solution that maximizes ROI for communication service providersNEC and F5 Networks form traffic management partnership

Procera Networks

Procera Networks’ NAVL Engine Powers Connectem vEPC for Telekom Austria Group
Procera Networks Deployed for Video Analytics by Tier 1 Broadband Operator
Procera Networks Partners with Dell for COTS NFV Solutions
ETSI NFV Proof of Concept Demonstrates Virtualized Real-Time OSS/BSS

Saguna Networks

SoftBank Ventures and Akamai Technologies make a strategic investment in Saguna Networks
Saguna Expands Open-RAN Platform Bringing CDNs, Content Caching and OTTs Together in the Mobile Radio Edge
Akamai and Saguna Win Best Innovation based on Network Intelligence Award at #MWC15


Kontron and Vantrix Smash DSP Cost and Performance Barriers With Network Functions Virtualization Speech Transcoding Solution
Vantrix Showcases Network Functions Virtualization Optimization Solution with HP at Mobile World Congress 2015
Vantrix to Demo Ultra-High-Density Media Optimization and Speech Processing at Mobile World Congress 2015

Vasona Networks

Vasona Networks Tackles Congestion Management Issues Caused By Rise Of Encrypted Traffic On Mobile Networks

Tuesday, March 10, 2015

Mobile video 2015 executive summary

As is now traditional, I return from Mobile World Congress with a head full of ideas and views on market evolution, fueled by dozens of meetings and impromptu discussions. The 2015 mobile video monetization report, now in its fourth year, reflects the trends and my analysis of the mobile video market, its growth, opportunities and challenges.

Here is the executive summary from the report to be released this month.

2014 has been a contrasted year for deployments of video monetization platforms in mobile networks. The market in deployments and value has grown, but there has been an unease that has gripped some of its protagonists, forcing exits and pivot strategies, while players with new value proposition have emerged. This transition year is due to several factors.

On the growth front, we have seen the emergence of MVNOs and interconnect / clearing houses as a buying target, together with the natural turnover and replacement of now aging and fully amortized platforms deployed 5/6 years ago.

Additionally, the market leaders upgrade strategies have naturally also created some space for challengers and new entrants. Mature markets have seen mostly replacements and MVNO green field deployments, while emerging markets have added new units in markets that are either too early for 3G or already saturated in 4G. Volume growth has been particularly sustained in Eastern / Central Europe, North Africa, Middle East and South East Asia.

On the other hand, the emergence and growth of traffic encryption, coupled with persisting legal and regulatory threat surrounding the net neutrality debate has cooled down, delayed and in some cases shut down optimization projects as operators are trying to rethink their options. Western Europe and North America have seen a marked slowdown, while South America is just about starting to show interest.

The value of the deals has been in line with last year, after sharp erosions due to the competitive environment. The leading vendors have consolidated their approach, taken on new strategies and overall capitalizing on installed base, while many new deals have gone to new entrants and market challengers.

2014 has also been the first year of a commercial public cloud deployment, which should be followed soon by others. Network function virtualization has captivated many network operators’ imagination and science experiment budget, which has prompted the emergence of the notion of traffic classification and management as a service.

Video streaming, specifically, has shown great growth in 2014, consolidating its place as the fastest growing service in mobile networks and digital content altogether. 2014 and early 2015 have seen many acquisitions of video streaming, packaging, encoding technology company. What is new however, is that a good portion of these acquisitions were not performed by other technology companies but by OTT such as FaceBook and Twitter.

Mobile video advertising is starting to become a “thing” again, as investments, inventory and views show triple digit growth. The trend shows mobile video advertising becoming possibly the single largest revenue opportunity for mobile operators within a 5 years timeframe, but its implementation demands a change in attitude, organization, approach that is alien to most operators DNA. The transformation, akin to a heart transplant will probably leave many dead on the operating table before the graft takes on and the technique is refined, but they might not have much choice, looking at Google’ and Facebook’s announcements at Mobile World Congress 2015.

Will new technologies such as LTE Multicast, for instance, which are due to make their start in earnest this year, promising quality assured HD content, via streaming or download, be able to unlock the value chain? 

The mobile industry is embattled and find itself looking at some great threats to its business model, as the saying goes, those who will survive are not necessarily the strongest, but rather those who will adapt the fastest.