It didn’t take long for 4G to become the most sought-after network for many users frustrated with the pains of 3G. The 4G network, before the hype around the technology created overarching anticipation, promised incredible speed and bandwidth. Especially after such a love-hate relationship between consumers and 3G networks, 4G’s introduction offered a relief to frustrated texters, movie streamers and dropped-call makers around the globe. It also presented a prime opportunity for content and service providers to develop new services and to increase revenue in a time where the phrase “cord cutting” became a documented subscriber behavior.
However, the fast-paced move to launch 4G around the United States already has presented a host of fears relating to service-provider readiness. It wasn’t so long ago that carriers and consumers swore by 3G — but the infrastructure was not able to handle the onslaught of consumer demand along with the resulting strain. If service providers don’t prepare themselves by learning from the lessons of 3G, consumers may face similar frustrations. Subsequently, content providers like Netflix and Hulu could face another hurdle to reaching consumers — all connected to the success, speed and delivery of mobile video over 4G.
The Capacity Crunch
Service providers invested in the mobile Web long before smartphones became a “must-have” item for consumers. The investment did not pay off initially because the technology to access the new network was not available. When Web-enabled devices began to emerge in the market, service providers heavily marketed unlimited data plans to increase average revenue per user (ARPU) against the initial technology investment. However, the influx of 3G usage was not anticipated, and the overwhelming demand began to create a capacity crunch.
The quality of streaming mobile video was a feature heavily impacted by the slowdown because upload delays caused viewing and broadcasting interruptions. Despite the congestion, consumer demand for mobile-video content remains high even today, resulting in the development of new services from content providers and operators.
The introduction of “TV Everywhere” was one such service developed as a result consumption on mobile devices — and it exacerbates the issue of congestion management.
Saving The Day
The next-generation network theoretically is well-suited for consumers’ insatiable demand for speed and bandwidth. In early tests, editors at one technology publication found that, with the Verizon Wireless 4G LTE network, a consumer conceivably could run through a 5-Gb data limit in 30 minutes or so.
More to the point, there has been some skepticism in the industry as to whether speed tests will hold true once users begin to adopt 4G networks and devices. There are many ways this could shake out, from offering services solely for 3G to providing premium services deployed on 4G with managed end-to-end QoS.
In addition, pessimism is starting to surface in the release of pricing and data plans for 4G networks. Many operators are setting up tiered data plans that allow for more controlled data consumption among early adopters who easily could overwhelm the network. However, despite predictions on the realistic impact of the 4G network, it’s evident its popularity ultimately will make it successful with consumers. Then there is the other side to the successful 4G equation: consumer expectations.
The release of new 4G phones or tablets signals a flurry of new features and gizmos that make early adopters run to their favorite retail establishments. Problems that historically have arisen from the marriage of device functionality and network slowdown only continue to send a message to consumers that 4G could be the “white knight” of the networks.
Beyond quality of service and speed expectations, subscribers have mixed reactions when it comes to pricing plans. Currently, many 4G pricing plans are set up on a tiered system. However, tiered pricing on the 3G networks has not been received well by consumers so far, and the possibility of additional pricing bundles or tiers is not resonating with users yet.
In addition, service providers are starting to roll out 4G services in select cities — meaning that widespread adoption of the network will be a slower progression. Recently, it’s been publicized that some subscribers have complained about being charged fees associated with LTE without being in an area with such services. This type of early hiccup highlights an ever-present issue service providers will be forced to confront: the status of the brand and the resulting impact on revenue.
Moreover, as networks and services continue to converge, consumers will begin to see broadband and cable splitting services with wireless — potentially pushing pricing plans higher and into more evolved tiers. The changes to services, networks, functionality and usability may come with a host of frustrations for consumers. Service and content providers are going to need to evolve and to become more agile in an effort to offer consumers new or tailored services to quell dissatisfaction that could arise with the transition to 4G.
Streaming and downloaded video files typically are one of the larger services consumers can access on the network. The files naturally take up more bandwidth and, especially during peak traffic periods, can cause slowdowns. According to Cisco, more than 52 percent of all network traffic will be made up of mobile-video usage by the end of 2011, rising to two-thirds of all data traffic by 2015. With the transition to 4G, operators have invested more upfront in the infrastructure and back-end technologies in an attempt to avoid similar issues confronted on 3G.
QoS issues dominate the complaints subscribers have related to mobile video. LTE networks are expected to go a long way to addressing this, but these expectations are based on present demand remaining somewhat static as bandwidth increases. Just as a project magically swells to require exactly as much time as is available, demand for access will grow to consume available bandwidth. Given the opportunity, users can (and will) consume as much data as is available.
Thus, the transition to a new network may only add fuel to the flames of users’ current appetite for data — and only temporarily solve congestion or QoS issues. Beyond the availability of infrastructure, operators are offering additional innovations like data offloading to address this issue and to help ensure LTE performs.
The combination of these tools already is helping service providers optimize the 4G network while providing new ways to establish or enhance revenue opportunities. As the bar for 4G services and functionality has been set high, service providers will create a software cocktail by blending just the right formula of these tools to help differentiate services in the ultra-competitive market.
This combination could include a mix of network-congestion software placed on the back end of a network to anticipate and alert operators to bottlenecks. This software already is being utilized on the 3G network, and it’s safe to say that it comes standard on the 4G network. In addition, policy and charging systems sit on the network to track subscriber usage while enforcing controls. Policy and charging are the heart of the ecosystem and the driving force behind the creation of new pricing plans, services, offerings or enhancements.
Similar to predictive network-congestion tools, mobile offloading is a frequently used tool for diverting traffic during peak periods or in overly congested areas. Transitioning users to Wi-Fi is not a new practice, but the evolution to 4G will add 3G into the network options for offloading. Femtocell and personal hotspot use also have gained popularity among subscribers, leading to additional offloading options at a localized level.
According to Juniper Research, 63 percent of data traffic will be offloaded to Wi-Fi or femtocells by 2015 — representing the importance this technology will play as LTE evolves. Along with off-loading, mobile-video optimization will go from an optional process to a necessity, as 4G may signal a growing demand for streaming video. Add a growing base of “TV Everywhere” subscribers, and the need is imminent for video-optimization software among service providers.
The mixture of network support software and the evolution to 4G may lead to innovative pricing models for consumers. Application- and usage-based billing options are being considered because these new plans would offer consumers the chance to purchase only the services needed or used. In addition, these new pricing models would present opportunities for service providers to more closely partner with content providers — especially as plans could be formed to offer bundled usage of specific applications or promotional views of video content.
The development of these new plans provides a chance for new services and promotions to be offered in an attempt to meet consumer demand while creating new revenue streams and long-lasting partnerships. Service and content providers will continue to consider creative features or promotions for consumers, brought on by the evolution to 4G.
Overall, this is a unique period for operators, content providers and consumers alike. Device introduction and new functionalities are setting the standard for requirements on the networks. The introduction of innovative services and products will define a new quality of service for consumers, despite the bumps and setbacks that could arise.
On a smaller scale, mobile-video viewing issues may die down as new pricing models present users with a variety of service and functionality options not yet seen in the market. From a higher level, it’s safe to assume the way wireless, broadband, cable and content organizations interact with the network is changing, and a wave of convergence is coming. A new culture of interdependence and interconnectivity will emerge — changing the landscape as we know it.
Chris Hoover is vice president/Product Management at Openet. Contact him at firstname.lastname@example.org.