Yesterday, Sandvine announced a video optimization implementation together with Mobixell at a new US customer, nTelos Wireless. Beyond the story of a new customer and the partnership between Mobixell and Sandvine, there lies another, more global story.

There’s no secret that the video optimization market is evolving. Needs are changing as operators adjust their vision of the future. While most optimization sales until now have been about cost savings or traffic volume control, mobile operators are talking more about what the next major source of revenue will be.

One thing is for sure: Video optimization will play a part in the future of winning mobile operators, regardless of whether they are looking only to reduce their bottom line or to add new services that can complement, and perhaps someday eclipse basic data sales.

As Don Bowman, Sandvine CTO, pointed out in a recent blog post, not all video optimization solutions are alike. And that’s an important fact for operators to remember as they consider future business planning. If an operator is looking to simply cut costs with optimization, then they can achieve that goal with one of the advanced optimization solutions available today.

But down the road, the winners among mobile operators will be those who are brave enough to accept that straight data revenue will eventually flatten out, (as did messaging and voice before it), and that they need to embrace new network monetization models to ensure a profitable future. Whatever those monetization models will be, they start with a network that can handle data intensive services – optimized networks.

Operators are starting to take baby steps – Mobixell customers are using policy management to offer targeted services, including video optimization; they are already generating millions of advertising dollars with our platform; and they are showing growing interest in the potential that mobile customer engagement tools hold for the future of their service strategies.

Eventually, some brave operator will step forward and do something crazy – perhaps set up a policy to buy and sell premium content for their subscribers, similar to the cable TV model. Whatever that crazy step into the future of mobile mega revenue, it will rely on optimized video. This vision of the future is not just a dream: It has to happen for operators to move past the commodity data model. It is what is driving our product goals today so that we can offer operators easy-to-use tools for generating new revenues. This is only a peek into the future with video optimization as a prerequisite for network monetization.

Tell us what you think.

We’ll be discussing this and related issues in an upcoming webinar on May 30th together with Teresa Cottam of Telesperience titled ‘What Video Optimization Experts Are Not Telling you‘. More in our next post.

Yesterday, I had a conversation with Nick Wood from Total Telecom. He wanted to know what I thought about the steps mobile operators are taking to handle capacity limits that are being threatened by the growing tide of mobile video.

Bottom line, operators are starting to come around to the realization that moving from 3G to 4G is not enough. It’s kind of like my commute to work. The roads authority decided that it was time to add two more lanes in each direction to the congested highway I take to work. Well, once the new lanes opened, driving was great… for maybe two months. When people heard how fast the traffic was going, I guess they all went out and bought a car. The result was worse traffic jams than before. Now, in the words of Yogi Berra, “Nobody goes there anymore. It’s too crowded.” For sure, no operator wants to hear their subscribers say that.

Adding capacity, like adding lanes on the highway, will only make people want to use it even more. Then it gets into a cycle of build and fill. With all the new devices and services coming on line, operators need to use a multi-disciplinary approach to keep the data, and especially ever more popular video flowing. In addition to building capacity, operators can reduce traffic loads with Web and video optimization, tiered charging plans and even giving subscribers more control over whether and when they want more performance or better economy.

I wish there were so many options for reducing traffic jams.

(You can read more about my conversation with Total Telecom here.)

Drive safely.

Noam Green
VP Marketing, Mobixell

7 billion minutes is more than 14,000 years. If you were to hold out that long (here’s to your health) and watch YouTube videos 24/7 the whole time (okay, never mind the health thing), you’d consume around 40 petabytes (40 BILLION megabytes) of video. That’s the combined average monthly traffic load of the 10 operators who have signed Seamless Access deals with Mobixell in just the last 6 months.

Mobile operators have, for years, expressed concern about the increasing tide of mobile data traffic. Now they’ve started to take practical steps to hold back the tide. Of course it’s satisfying to know that Tier-1 mobile operators are choosing Mobixell Seamless Access as their Mobile Internet Platform. But what these wins really mean is that the mainstream mobile industry is setting video optimization and traffic management as a priority in their network planning.

Declan Lonergan, vice president of Yankee Group’s Anywhere Consumer Research group says he’s been warning industry experts that “a wait-and-see attitude toward data, and specifically video traffic optimization can have a significant, negative impact on the economics of running a network.” He is encouraged to see that the industry is taking his advice seriously.

This trend is global, but with regional twists. In North America and Western Europe, where smartphones, tablets and other wireless device deployment projections are exceeding expectations, mobile operators are looking to push off capacity investments. One way they are doing that is by seeking out video and Web optimization technologies that improve user experience.

In Asia Pacific, where data traffic has not yet impacted capacity limitations to the same extent,. the immediate priority appears to be to implement unified, policy-driven Mobile Internet Platforms with centralized management for all data traffic and services. What we’ve seen, though, is that mobile operators in APAC are also making it a priority to select the platforms with strong video and Web optimization capabilities to be ready when the inevitable data traffic crunch hits their region.

This trend toward broader adoption of mobile Internet video optimization is good news for subscribers who want to watch video on their mobile devices. What positive mobile trends have you seen recently?

Noam Green
VP Marketing, Mobixell

Netflix are Going Mobile – Perceived as a Game Changer for ISPs and Cable TV, What Would Their Impact be on that Market?

Netflix recently announced the availability of their service on Windows Phone 7 devices, which, alongside the iPhone, represents the second mobile phone platform enabled for streaming from Netflix. Greg Peters, from Netflix product development, confirmed on Friday that Netflix streaming will be available on a third mobile phone platform, adding support on a selection of Android handsets in early 2011 (Netflix Blog).

Netflix, headquartered in California, offers rental-by-mail and online video streaming in the United States and Canada.

According to a new report released by Sandvine, 20.6% of all peak period bytes downloaded on fixed access networks in North America are Netflix.

According to the report, within North America, Real-Time Entertainment is the largest contributor to data consumption on both fixed (43% of peak period traffic) and mobile access (41%) networks. Within that category, Netflix is a major source of content, representing more than 20% of downstream traffic during peak hours on fixed access networks, and is heaviest from 8pm to 10pm.

Examining the top downstream applications on North America’s mobile networks, newcomer Netflix has 2.08% of the network traffic.

According to Sandvine, Netflix beats the shares of YouTube, iTunes, Hulu, and, perhaps most tellingly, the peer-to-peer file-sharing protocol BitTorrent.

On September 22nd, Netflix expanded into Canada with a streaming-only service. Within a few days, Netflix had attained shocking levels of success, and has no doubt caused alarm among Canada’s service provider community. Moreover, a growing number of subscribers drop their TV packages and use fewer pay-for-on-demand services in North America as services like Hulu and Netflix can fulfill much the same needs for significantly less monthly investment. This is even worse for service providers – not only are they losing revenue to these over-the-top offerings, but they are losing network capacity delivering these services.

With impressive statistics, a growing presence in the mobile market and the flexibility to switch to a new device and watch a video where one left off,  Netflix is surely on the right way to be a dominant player in the mobile market. It can now be said to compete directly with the pay video-on-demand services offered by many Internet providers and Cable companies. As Netflix CEO Reed Hastings sees it – “We are very proud to announce that by every measure we are now a streaming company, which also offers DVD-by-mail…”

Though operators generate significant revenue from content that travels over the delivery pipes, they may face major degradation in quality of service as those pipes become congested during peak hours. Hastings’ goal will  require network operators to take severe actions, having the control over those pipes. Operator must ensure that internet access is intelligent enough to be able to match the costs of traffic handling to the revenue associated with it. Various means may be used to intelligently manage the bandwidth;  Video Optimization is one of them. By targeting of video to playback platforms, optimizing video delivery and traffic reduction by real-time transcoding, operators can dramatically reduce video network volumes while maintaining the expected quality of service.

A new report, issued by the international research firm Park Associates, reveals that while annual smartphone sales will exceed 215 million units in 2010, voice ARPU from 2009 to 2014 will decline by almost 30% in north America, 27% in Western Europe and 25% in Asia-Pacific.

With decreasing revenues from voice services, a constantly rising number of smartphone users and an ever-increasing competition (trying to attract and hold onto high-value subscribers), mobile operators will have to accommodate their business plans by creating new opportunities for data services. As explained by Laura Allen Philips, research analyst, Parks Associates, “Mobile operators are looking to their data-based services for revenue generation and to offset losses in voice revenues”. Such initiatives will include new suites of internet services for mobile devices, subsidization of smartphone handsets, branded mobile-app storefronts, network upgrades and more.

comScore released latest data from its comScore MobiLens service relating to the 3-month period ending September 2010, includes some very interesting statistics about the  mobile market in the U.S.

Out of 234 million Americans using mobile devices, 25% (58.7 million) owned smartphone ones.

While Samsung lead the handset manufacturers market with a 23.5 percent market share, Research In Motion (RIM) lead among smartphone platforms with a 37.3 percent market share.

Despite RIM’s dominance in the smartphones segment, a breakdown of the numbers reveals a potential shift in that market.

During the 3 months period, RIM’s leading position has dropped by 2.8 percent and second-place Apple’s 24.3% share remained unchanged.  On the other hand, Google’s Android OS distribution reached 21.4 percent , a 6.5 percent increase from the previous report (ending June 2010) and only less than 3 percent from Apple.

According to ABI Research, smartphones made up 19% of all handsets shipped in the second quarter; that represents a 12% increase over the first quarter, and a 50% jump compared to the same quarter in 2009.

Senior analyst Michael Morgan says that these remarkable growth rates are being driven by falling (often heavily subsidized) handset prices. Cost is no longer much of an obstacle: “One of the key remaining barriers to smartphone adoption in subsidized markets is now the cost of the data plan rather than the cost of the handset.”

This report provides another insight to Morgan Stanley’s Internet Trends report showing Smartphones would surpass Total PC shipments in 2012.

Morgan Stanley also predict Smartphones would surpass feature phone shipments in North America in 2011:

Cisco updated their Visual Networking Index, providing very interesting information regarding the broadband usage.

As could have been expected, the VNI continues to focus on video as a significant game changer in broadband traffic. As stated in the VNI “The most striking shift in application mix trends continues to be the growth of video as a percentage of traffic compared to P2P file sharing”.

Video related highlights are therefore:

• Peer-to-peer has been surpassed by online video as the largest category. The subset of video that includes streaming video, flash, and Internet TV represents 26 percent, compared to 25 percent for P2P
• Over one-third of the top 50 sites by volume are video sites. There is a high degree of diversity among the video sites in the top 50, including video viewed on gaming consoles, Internet TV, short-form user-generated video, commercial video downloads, and video distributed via content delivery networks (CDNs). Video sites appeared more frequently than any other type of site in the top 50.
• Contrary to popular belief, none of the top 50 global web sites (by traffic volume) featured explicit adult content. This represents a shift in content compared to the composition of top global web sites two years ago
• Online video fluctuates more than file sharing traffic. Online video’s volatility (defined as the spread of traffic volume during the course of the day) is 51 percent higher than that of file sharing. The peak video hour is 91 percent higher than the average video hour, while the peak file sharing hour is 64 percent higher than the average file sharing hour.

As the graph below shows, the top 50 sites in terms of traffic volume (globally) are dominated by online video, followed by software downloads and updates.

SAN JOSE, CALIFORNIA – 21 September, 2010 – Mobixell Networks, a leading provider of rich-media mobile data solutions, announced today the results of its survey into user perception of mobile video quality in the UK. The survey found that up to a staggering 96 per cent of users are frustrated with their experience of mobile video, demonstrating that operators are still struggling to provide the expected quality and download speed to customers.

The survey, conducted by independent research company Gfk NOP on behalf of Mobixell, reveals that of the adults who watch video on their mobile device, up to 67 per cent are discouraged by non-continuous video playback and the length of time it takes a video to begin playing. Interestingly, the survey also reveals that the younger the users questioned, the more demanding they are about continuous video playing and their overall user experience.

Of the 16-24 year olds questioned 69 per cent of users prefer video to be optimised, rather than wait significantly longer for higher-quality streaming. Mobixell’s own traffic statistics also hint at that frustration, showing that just 50 per cent of mobile users watch approximately only half of the duration of YouTube® video clips, a likely result of their annoyance with the lack of instant gratification.

Noam Green, Associate Vice President of Corporate Marketing at Mobixell: “It is interesting to see that mobile users perceive video optimisation as a user experience enabler. When they had to choose between optimised video vs. HD Quality-like video which may stutter and stall while streaming, users very clearly preferred the optimised video. But let’s make no mistake – if the optimised video is of low quality, it can as easily backfire and have a significant effect on network quality perception and may lead to churn. Smooth and continuous video experience is one of users’ strongest indicators of network quality – and ultimately influences the perception of their operator’s network efficiency.”

Mobixell is a provider of data management and optimisation solutions for mobile operators, including Mobixell’s mobile video optimisation module which allows mobile operators to offer superior video optimisation to their customers while avoiding the expensive cost of network build-up.

Notes

The survey was conducted by GfK NOP, an international research authority, exploring and analysing the latest developments and trends in all the key markets in the UK and around the world. The survey was carried out across the UK, between 9-11 July 2010. A total of 1000 people were interviewed, of those, 388 regularly view online video content on laptops and mobile devices on the go. Those 388 were then asked additional questions on their experience and perception of online video on mobile broadband and mobile phones. The survey included a wide cross-section of society in England, Ireland, Scotland and Wales and all age ranges from 16 to over 65. www.gfknop.com

About Mobixell:

Mobixell Networks is a global provider of rich media, mobile internet and broadband solutions. These solutions enable mobile operators to achieve their ‘least cost, smartest pipe’ strategy by intelligently managing surging mobile data and video traffic while giving subscribers an exceptional user experience. Mobixell has more than 350 deployments, including Verizon, Vodafone, Bharti, Orange and Telefonica, providing specially adapted services in mobile video and TV, mobile messaging and mobile advertising. Founded in late 2000, Mobixell is a U.S.-based company with additional offices in the UK, Germany, Switzerland, India, China and Israel. For more information, visit the company’s website at http://www.mobixell.com.

http://www.mobixell.com/blog/

For further information

Jenny Taylor

Sonus PR

E-mail: jenny.taylor@sonuspr.com

Tel: +44 020 3373 5726

If we turn the clock back a few years, entrepreneurs like myself and other industry pundits were predicting the rise of mobile data, but those lofty predictions were being met with a healthy degree of skepticism and also pushback that reached the level of ridicule. But, here we are, just a few short years later and, as has been widely reported, mobile data traffic is exploding and is on a path to continue to grow at a compound annual growth rate of more than 100 percent for the next several years.

Based on a recent analysis conducted in conjunction with a tier-one European operator, we observed that more than 40 percent of the Internet traffic on the network is already video, and that more than half of this came from YouTube alone. We also observed that half of the videos watched are viewed only once. The volume of video traffic does put the overall networks under strain, but the strain occurs in hot spots. Vodafone Group recently reported that at peak times, their cells are on average 35 percent busy, but that 7 percent of the cells are experiencing capacity needs in excess of 90 percent. When you consider this collection of information, it becomes clear that any mobile Internet platform worth considering must not only support video, but it needs to be damn good at it.  To be good at it, the mobile Internet platform must have a deep understanding of both the nuances of video and the delivery of video across a broad range of devices. Subscribers don’t care about how many bits are being delivered or in what formats, but they do care about getting a killer user experience.