LTE makes optimizing video service quality and customer experience possible. But to enable a golden age of video services, operators must prepare by optimizing their business models, enhancing network capabilities, and improving customer experience.
Video has emerged as a primary revenue source for mobile broadband traffic. In fact, Huawei estimates that video traffic will make up over 70% of all mobile traffic by 2018. In the 3G era, high traffic fees and a poor service experience held back widespread user adoption, but the superior wireless pipes of the LTE era make an optimal customer experience possible. Nevertheless, to enable the golden age of video services, telcos need to tackle the challenges they face by designing suitable business models, strengthening network capabilities, and improving user experience.
Mobile video trends
From the perspective of user behavior, mainstream demand in the 3G era covers browsing social networking sites (SNS) and web pages, whereas LTE users like to watch videos on mobile devices. Huawei's MBB Lab (mLAB) and Sohu Video jointly released the Mobile Video Insight Report for Q3 2014, which lists the main factors that influence online video experience as smoothness, definition and traffic consumption.
LTE is better than 3G for playing online videos, delivering higher success rates and smoothness. Loading times for mobile video on LTE is twice as fast as on a 3G network, with average initial buffering decreasing to 2.4 seconds compared with 4.5 seconds. HD video is rising as a percentage of total mobile video and, notably, a total of 36% LTE users choose HD video, compared with 16% of 3G users.
In the context of the industry chain, smart LTE devices are equipped with larger screens and batteries, yet prices are continuing to drop. According to the report, 43% of all smart devices launched by Q3 2014 have screens larger than five inches, and 35% have batteries over 3,000mAh. Bigger screens, larger batteries and HD combine to make video services even more popular. The price of smart devices also keeps falling, with LTE-enabled handsets for less than CNY1,000 (USD160) available everywhere.
There is an increasing trend of integrating telcos and media companies. Mainstream global telcos have embarked on inter-field operations using advantageous video resources to build future-oriented competitiveness. They employ multiple methods to do so. First, direct investment in content and TV services, such as BT’s TV service - BT Sports. Second, acquisition of video or TV companies to launch integrated services, such as AT&T’s purchase of DirectTV. Third, cooperation with OTTs, an example of which is the targeted traffic package China Unicom developed for Sohu Video. And fourth, launch of an innovative video service, such as when Jiangsu Unicom launched its LTE Evolved Multimedia Broadcast Multicast Service (eMBMS) for the 2014 Youth Olympic Games, and the BBC partnered with EE to provide LTE eMBMS for the Commonwealth Games.
Chances and challenges
Mobile video gives telcos a chance to cultivate new users, enhance network competitiveness, and increase revenues. First, video services help telcos attract more LTE users; for example, SKT in South Korea plans to attract users through LTE-enabled HD and UHD video services. LTE networks allow users to shoot and upload pictures quickly and easily. Services like WeChat's short video shooting (6-to-8 seconds) tap into users' passion for shooting videos and fuel the explosive growth of user-generated content (UGC) on mobile terminals. Second, LTE can enhance telcos' network competitiveness. Spectral efficiency is higher than on UMTS networks, which indirectly reduces telcos' network construction costs. Since over half of all traffic will be generated by mobile video in the future, reducing network construction costs means enhancing network capabilities. Third, video services will become the main revenue source for telcos in the future. NTT DOCOMO, for example, plans to build a future business operation model centered on video. Huawei also forecasts that, as video traffic increases, mobile data revenue will grow rapidly from CNY400 billion (USD64 billion) per month in 2013 to CNY1 trillion (USD160 billion) per month in 2018.
As a double-edged sword, video services also create challenges for telcos in terms of increasing ROI, guaranteeing user experience, and enhancing pipeline capabilities. First, how can ROI be increased? Faced with the dilemma of increased traffic and static profits, telcos are seeking new ways to boost ROI. For video services, they can design new business models and reduce the per bit cost of pipelines to increase profits. Second, how can a consistent service experience be ensured for 3G and LTE users, users with different operating services, and different scenarios like unicast and multicast scenarios? New users should be provided with easy-to-use services that are easy to order, provide traffic use notifications, and offer flexible tariff packages.
Finally, how can pipeline capabilities be enhanced, including pipeline capacity and network agility? Pipeline capacity is affected by a growing demand for uplink capacity due to the popularity of sharing selfies and videos, coupled with the fact that users are becoming less tolerant of delay. Reducing E2E delay involves optimizing wireless, bearer, and core networks, as well as content sources.
Tackling mobile video challenges
New business models
For OTT video services, in addition to traditional traffic billing, telcos can design new business models such as targeted OTT traffic packages or ad sales. Huawei lists four scenarios for its broadcast and multicast video service – live sports, mobile TV, file delivery, and M2M. For live sports broadcasts, telcos can cooperate with sponsors to gain content rights. They can then charge users a certain fee each month for the content. Alternatively, they can offer the content for free and profit through reverse charging on multi-screen ads. For mobile TV, telcos can learn from the cooperative model between EE and the BBC where EE broadcasts BBC TV content live on its eMBMS network.
To enable file delivery, telcos can deliver content in batches to users when the network is free and the charge is low. To facilitate M2M, telcos can deliver ads to screens in airports, elevators, and bus stations, cutting labor costs and ensuring rapid content delivery. To guarantee a viable business model, Huawei is willing to share its successful experiences in different projects around the world to discuss the commercial scenarios of LTE video services with telcos.
Improved mobile video experience
Boosting video experience is an E2E task that requires special tools for key quality indicator (KQI) tests. KQI tests mainly cover initial buffering time, download rate, video streaming start success rate, frame freeze frequency, and average freeze time. Areas with poor service experience are then subject to root cause analysis to determine whether insufficient wireless coverage, roundabout bearer networks, or insufficient caching space in content servers are to blame. After the problems are identified, video optimization solutions can be deployed, including wireless network TCP acceleration, QoS assurance for video services on IP networks, and format conversion/bitrate adaptation/intelligent buffering of video on the PS network side.
Leveraging its monetization solution lab for mobile broadband traffic and network solution lab for mobile broadband quality, Huawei has established a complete set of benchmark databases and methods for evaluating video experience, alongside a corresponding test platform. Huawei can work with telcos to help them assess video experience and give optimization suggestions accordingly.
Enhanced pipe capabilities
In terms of pipe construction, telcos need to carry out E2E network transformation in service provision capability, network architecture and support for multicast video services. To enhance service capabilities, telcos should transform their current voice- and data-bearing networks into video-bearing networks that offer superior network capacity, architecture, and video coding/decoding. IP-based bearing networks are needed to support multicast, clock synchronization, user authentication, content error correction and compensation, and interworking with third-party platforms.
Network elements (NEs), such as a multi-cell/multicast coordination entity (MCE) and broadcast/multicast service center (BM-SC), are also needed to support evolved multimedia broadcast/multicast service (eMBMS). In terms of traffic models, the current voice- and data-based traffic model will gradually give way to a data-based model that primarily carries video traffic. The traffic oversubscription ratio for access/MAN/backbone networks will shift from 4:3:2 to 1:1:1. Telcos need to fully analyze user data and user behaviors to effectively plan future network capacity. Moreover, flexible resource scheduling should be employed for unicast and multicast scenarios to maximize spectral efficiency. To optimize billing models, telcos should evolve their simple voice- and data-centric billing to flexible billing that supports diverse video services.
To date, Huawei has deployed LTE networks in more than 110 cities around the world and carried out 30+ video optimization projects and six LTE eMBMS joint innovation projects. We have accumulated rich experience in terms of evaluating and planning mobile video networks, and are willing to help telcos offer superior mobile video services.
Industry chain coordination
To achieve business success, industry participants should collaborate and coordinate effectively and take the following actions. They should expand the industry scale and promote smart terminals and chips to jump the barriers to industry development; explore new business models to promote the penetration of video services; optimize service experience from the content source at the network side to guarantee user experience; conduct E2E reconstruction and adaptation of networks to satisfy the future needs of video distribution; and accurately identify high-value areas of video services, and invest modest resources in these areas to optimize ROI.