In my first article in this series I talked about how the mobile broadband revolution – relying on high-speed mobile data access using smartphones that can process all kinds of media – has been tremendously successful for mobile application developers and application stores. But I also raised the question: How do operators capitalize on this and grow their revenues?
Is it enough for them just to continue to increase mobile data access speeds? The simple answer is no. Mobile operators cannot just stand on the sidelines while new entrant companies develop over-the-top business models while the operators make the network investments.
Over-the-top, or OTT, services as they are commonly referred to, characterize subscriber-based streaming audio or video services that utilize mobile subscriber data plans. This model has created some innovative video services at the expense of putting a strain on mobile operator networks. In fact, the success of OTT video services has forced mobile operators to move from unlimited data plans to tiered usage plans. But while unlimited data plans were still widely available, OTT video caught on in a big way.
So what’s next? Well the OTT video genie is out of the bottle. And while there have been issues regarding quality of service since these are best-effort services, there is a strong demand. What’s next is higher speed mobile networks and greater HD video usage. HD video makes any video experience much better as we all know, whether it’s P2P HD videoconferencing or viewing paid for content. Current OTT video services and products have taken great strides to provide optimal video resolution for consumers by compression and optimization of the bit streams that contain the video content. New video optimization technologies such as scalable video coding promise standardization and bit streamlining to reduce HD video network bandwidth requirements.
The interaction between OTT video services and the mobile network is the ultimate answer to how both constituents share more equitably in the revenue stream for these services. As mobile networks evolve to an end-to-end IP architecture in a 4G environment that supports quality of service for all services regardless of media type, underlying IP network elements will emerge that can be accessed by OTT services to help guarantee delivery and QoS. Functions to throttle network bandwidth efficiently, to make decisions on what are the best video formats to use on the fly, enable media processing, initiate and control voice/video sessions, and convert video formats for different endpoint usage will be made available to OTT service developers within their applications.
This will not happen easily or overnight since mobile operators, like fixed line carriers, have been accused of creating walled gardens around their networks with little or no control over network resources. This in part has been due to the fact that the TDM-based networks used were inherently inflexible. After all, bandwidth was limited and QoS was paramount so it was not like vendors providing TDM-based products were about to open up their service architectures to third parties. But enabling OTT services in an IP services architecture is a totally different animal. OTT vendors need the knobs and controls to derive the best QoE for their services, no matter what the network conditions are.
So the walled gardens will come down as IP service architectures prevail. And mobile operators will need to embrace the OTT world and provide value to them that the operators can in turn monetize. Offering class of service guarantees to OTT services can help them to achieve the level of service their subscribers are looking for. So today, industry watchers have labeled OTT video services as a service provider foe. The flip from foe to friend has to happen for innovative OTT services and service providers to peacefully co-exist. Over-the-top services will ultimately evolve to be through-the-top, opening up a new world of mobile video services.
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Edited by Stefania Viscusi