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Preparing for 4G Video Services

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Video services delivered over mobile broadband data networks are both a dream and a nightmare for network builders. Mobile video is in high demand, and consumers are willing to pay for it. However, ...

Video services delivered over mobile broadband data networks are both a dream and a nightmare for network builders. Mobile video is in high demand, and consumers are willing to pay for it. However, poor design and high usage can lead to network congestion, negative user experiences and, ultimately, customer churn. While video is often viewed as a killer application for mobile broadband access, it lacks the requisite linear revenue-to-usage business case that has characterized killer applications such as voice and SMS in the past.

In this webinar, Yankee Group Distinguished Research Fellow Chris Nicoll and Analyst Terry Cudmore investigate the pressing issues of mobile video delivery and provide recommendations to ensure that video becomes a killer application, not a network-killing service.

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Preparing for 4G Video Services Preparing for 4G Video Services Presentation Transcript

  • Preparing for 4G Video Services Terry Cudmore and Chris Nicoll June 2010 © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 1
  • Agenda 1 Challenges of 4G? 2 Pressing Issues 3 Video Impact on the Network 4 Data Traffic Increases 5 Impact of Smartphones 6 Recommendations © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 2
  • Poll: What is 4G? What is your opinion? • I have never heard of 4G • I have heard of 4G, but I don’t understand it • I have heard of 4G, and I understand what it means • I am anxiously awaiting 4G products • I am already using 4G © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 3
  • 4G Awareness Poll Results Are you aware of 4G and do you have a basic understanding of it? (n=1283) I have never heard of the term 4G 27% I have heard of the term 4G but I don't understand 41% it I have heard of the term 4G and I understand what 24% it means I am anxiously awaiting 4G products 6% I am already using 4G 2% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% n=1,283 © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 4
  • What is ‘4G’? • The Radio • LTE • WiMAX • HSPA+ • Core Infrastructure • 3GPP (IMS, EPC) • Fiber backhaul • Devices and Services • Handsets • Telco cellular and wireless • Business Models • Sharing/outsourcing • Pricing • Content partnerships © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 5
  • Challenges of 4G? • Users are a fragmented group • Demographics are changing • User habits vary enormously • Western Europe, Asia-Pacific and North America will make up over 75 percent of mobile data traffic in five years, but the Middle East and Africa will see the highest growth in that time, with a 133 percent CAGR • Device penetration has direct and enormous impact on mobile video use • No learning curve • Existing data sources available © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 6
  • Pressing Issues • 3G/4G network video support • E-mail • Text • Web • ‘Mobile’ IP • What is mobile IP? • Network congestion • Backhaul • Core • Device congestion • Smartphones • Dongles • Devices • M2M © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 7
  • Pressing Issues • Device availability • Smartphones and other advanced devices are available to customers right now • Users can go from using no data to 1 GB per month • Networks receive little to no ramp- up time • Video as a differentiator • Unprepared servers can result in a poor user experience • Networks that don’t deliver quality mobile video experiences to their consumers run a serious risk of churn • The problems are not just in the network—but that is what the user blames © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 8
  • Poll: Mobile Video Usage How often do you use mobile video? • At least once a day • At least once a week • At least once a month • Less than once a month © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 9
  • Mobile Video is Gaining Traction How much time do you spend watching video on …? 100% 4% 90% 5% 15% 7% 80% 13% 8% 14% 70% 26% 13% Percentage 60% 34% 17% 12% of 50% 14% respondents 40% 24% 13% 74% 37% 16% 8% 10% 30% 20% 18% 4% 20% 41% 18% 6% 9% 31% 5% 10% 20% 16% 16% 14% 8% 12% 5% 0% TV (live TV (VoD) TV PC/laptop Video Handheld Digital Mobile Retail set- TV) (n=371) (programs (n=1244) game game audio phone top box (n=1231) recorded console console player or (n=994) (n=764) on DVR) (n=800) (n=473) MP3 (n=606) (n=593) At least once a day At least once a week At least once a month Less than once a month Base: People with device Source: Yankee Group, U.S. Consumer Survey, Q1 2010 © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 10
  • Does Video REALLY Overwhelm the Network? It does, but the effect tends to be localized and only a few cells are congested at any given time • Average cell capacity during the busy hour: 35% • Only 7% of cells are above 90% capacity in the busy hour © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 11
  • Mobile Video Will Be 66% of Mobile Data Traffic by 2014 108% CAGR 2009–2014 4% 5% 8% 17% 66% Source: Cisco Visual Networking Index (VNI) Global Mobile Data Forecast, 2009–2014 © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 12
  • Mobile Video Growth Is 3 Times Mobile Phone Growth • Yankee Group forecasts mobile phone registered lines will surpass 5 billion in 2011 • Total phone line growth, as well as higher adoption rates of devices like smartphones, will result in increased levels of mobile video users • Mobile video users are forecasted to register over 3 times more annual growth than mobile phone lines from 2011-2014 Total Mobile Phone Registered Lines-Global Mobile Video/TV Users-Global 7,000,000 500,000 450,000 6,000,000 400,000 5,000,000 350,000 Thousands Thousands 4,000,000 300,000 250,000 3,000,000 200,000 2,000,000 150,000 100,000 1,000,000 50,000 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 13
  • Networks Must Adapt to Growing Data Levels • Yankee Group projects that mobile network traffic will grow by a factor of 28 between 2008 and 2012 • Meanwhile, revenue will only grow 15 percent in that same period • No CSP can pay for a 2,800 percent boom in demand with a 15 percent revenue increase without changing the way it does business © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 14
  • Poll: Smartphone Usage What is your attitude towards smartphones? • I have one and use it often • I have one and rarely use it • I don’t have one, but I plan on purchasing one as my next phone • I don’t have one, and I don’t plan on purchasing one anytime soon © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 15
  • Smartphone Ownership Will Explode How likely is it that your next personal mobile phone will be a smartphone with a data plan? 100% 5% 1% 8% 7% 5% 6% 9% 12% 90% 7% 18% 10% 9% 13% 27% 15% 16% 80% 16% 30% 21% 23% 17% 70% 24% 26% 60% 33% 28% Percentage 21% 34% of 50% 27% 25% 25% respondents 28% 40% 29% 18% 20% 20% 30% 20% 41% 37% 37% 3% 34% 28% 25% 25% 10% 22% 16% 0% 13-15 16-17 18-19 20-24 25-34 35-44 45-54 55-64 65+ (n=74) (n=73) (n=46) (n=44) (n=104) (n=209) (n=239) (n=190) (n=117) Very likely Likely Unsure Not likely Very unlikely Base: People who own a mobile phone Source: Yankee Group, U.S. Consumer Survey, Q1 2010 © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 16
  • Global Mobile Phone Internet Usage Forecast • 51% of U.S. survey respondents say they are likely/very likely to purchase a smartphone with a data plan as their • In 2010, feature phones in use in next personal mobile phone. the U.S. will outnumber smartphones by close to 200 • We forecast there will be over 500 million. That difference will fall to million smartphones in use worldwide in less than 40 million by 2014. 2010, and that number will increase 137% by 2014. Global feature phone use will only increase 8% from 2010 to 2014. © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 17
  • Evolution of Devices is Driven by Video New smartphone capabilities will enhance mobile video viewing and make it a more enjoyable experience. These include: • Larger screens with high resolution • Video cameras for shooting video and YouTube apps for publishing it (Cisco Flip) • Support for video calling on iPhone 4 • Support for streaming HD-quality video • Network-specific apps such as Sprint TV on HTC EVO 4G © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 18
  • Recommendations • Get it together • Think holistically • Get your position • Model the business • Leverage core assets • Price, price, price! © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 19
  • Disparate Billing/CRM Systems Increase Costs © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 20
  • CSPs Should Adopt Holistic Success Criteria © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 21
  • CSPs Need Clear Positioning in a Crowded Mobile Broadband (Access) Market © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 22
  • CSPs MUST Develop New Business Models Leverage core assets to create new revenue sources © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 23
  • CSPs Must Bridge the App Gap To Partner Effectively with Third Parties © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 24
  • CSPs Should Keep Searching for the Holy Grail: New Pricing For New Market Realities In addition to adopting new pricing models, CSPs must optimize and effectively manage their exploding mobile Internet traffic, particularly video and other rich media © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 25
  • Summary • 4G video is a true turning point for the industry • IP is a game-changer for architecture, apps, services and devices • The ecosystem, not the network, drives the total value • Devices are the user experience portal • Brands and application ecosystems (APIs, developer communities) • Mobile, nomadic and fixed • Business models must expand • Devices, apps and services • Data (internal) becomes an asset • The office must get smart • OSS/BSS • Subscriber data, analytics and billing The video experience demands a total support system © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 26
  • Questions and Answers Check out these reports to learn more • Redefining 4G • 4G Déjà Vu • Unifying Billing and CRM • VCs Bet on Mobile Video and TV Technologies for 3G Networks © Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 27
  • Read analyst blogs at blogs.yankeegroup.com Thank You Watch analyst videos at youtube.com/yankeegroup Follow us on Twitter: Terry Cudmore, Analyst @YankeeGroup tcudmore@yankeegroup.com Chris Nicoll, Distinguished Fan Yankee Group Research Fellow at facebook.com cnicoll@yankeegroup.com Upcoming Yankee Group webinar: How Can the Telecom Industry Start Growing Again? Tuesday, July 27, 2010 | 11 a.m. ET Register at www.yankeegroup.com www.yankeegroup.com Inc. All rights reserved. © Copyright 2010. Yankee Group Research, Preparing for 4G Video Services June 29, 2010 Page 28