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Summary

Video in mobile networks has been a hot topic in the past few months, and the public is still unsure whether operator activities are truly to their benefit. Issues of net neutrality, encrypted video, and content optimization are all making headlines – somewhat surprising for an area that has traditionally been very technical and esoteric to the operator network.

But the question is: are telcos still trying to protect their interests in a traditional way, or are they now opening up to the idea that they will need to embrace OTT company interests, particularly concerning video?

Is free video a new bargaining chip?

We have written extensively about mobile video the past few months (see for example our CRO’s discussion of T-Mobile’s Binge On and CEO John Legere’s antics) and why its strategy may be one to follow. Binge On has been a topic of extreme polarization in the past month, because it:

  • is opt-out (instead of opt-in) and is switched on by default for all subscribers with a monthly data package of more than 3GB
  • optimizes all video streams for mobile (with the exception of YouTube for technical reasons)
  • is switched on by default for unlimited LTE plans.

Setting criticism and financial performance aside, T-Mobile US has achieved something that very few telcos have even attempted in the past: to market the use of video optimization technology and present it as a tangible improvement to end-user experience.

This happens at a time when the rise of encrypted video is complicating existing video optimization technologies and even making them obsolete. For example, Citrix’s ByteMobile acquisition is one of the victims of encrypted video, and most video optimization vendors are pivoting to find new areas of growth or develop ways to optimize encrypted video. These vendors include Flash Networks, NEC, and Opera Skyfire.

Delivering video, particularly over mobile, is not an easy task. Mobile Edge Computing (MEC) is a new initiative that places processing power at the edge of the network, for example the base station. Early use cases for MEC include encrypted video optimization, which needs the cooperation of the telco and the content owner to be effective, although both parties may benefit.

After Binge On, many telcos may start to offer zero-rated video traffic, which will surely appeal to data-conscious end users. Content owners will certainly not be happy about this (especially as premium video will also be downgraded in quality), making this a potential bargaining chip to force them to cooperate with telcos. Intentional degradation of video quality by the telco was rarely discussed in the past and is one reason that big content owners started encrypting video streams.

One thing is for certain: 2016 will be a very interesting year for video in mobile.

Appendix

Further reading

“A lesson in how to bring the personal back into communications,” TE0005-000781 (January 2016)

2016 Trends to Watch: Mobile Video, ME0002-000638 (January 2016)

Author

Dimitris Mavrakis, Principal Analyst, Intelligent Networks

dimitris.mavrakis@ovum.com

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