This article originally appeared in the March issue of INTERNET TELEPHONY magazine.

On any network, wireline or mobile, there are basic calling services, but operators try to upsell users to value-added services. Why? Because while basic calling services are delivered with slim margins in a competitive environment, selling differentiated VAS increases average revenue per user with higher margins.

Voicemail is the No. 1 VAS around the globe, and ring back tones are the second most popular, particularly in Asia. However, India has arguably one of the most diverse mobile audio VAS markets in the world. With most mobile operators focused on infrastructure and basic calling services, the result has been a somewhat separate mobile VAS industry. This development has spawned an influx of unique services that can be used and consumed from basic mobile phones. For example, rural farmers in India can use their mobile phones to access a VAS offering up-to-date farming information, like weather forecasts or crop seed recommendations.

While mobile audio VAS is alive and well, the explosion of mobile video and the switch to IP-based networks in the mobile core are driving an industry-wide shift from audio VAS to video VAS.

Here Comes LTE (News - Alert)

3G mobile networks have given users their first taste of IP broadband connectivity, but even in 3G, the voice path through the radio access network is a circuit. However, with emerging LTE networks, everything (including voice and real-time video) will be delivered in a pure end-to-end IP infrastructure. As a result, LTE mobile broadband will be even faster than 3G, with data speeds comparable to Wi-Fi. LTE mobile networks, with pure IP core infrastructures, will have profound impacts in many ways, including the infrastructure required to manage and deliver VAS.

Mobile Broadband Data Plans

Even with 3G mobile networks, mobile operators are seeing a huge growth in mobile data traffic, particularly mobile video traffic. In fact, mobile video could reach 66 percent of all mobile data traffic by 2015, according to the Cisco (News - Alert) Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2010-2015.

The current investment focus appears to be on delivering the mobile broadband connectivity and infrastructure, which is often sold to mobile consumers as flat rate data plans, limiting ARPU growth beyond adding more subscribers. Meanwhile mobile traffic growth is increasing and outpacing data plan revenue growth. This is, and will continue to be, the primary challenge for mobile operators for the foreseeable future. Adding the LTE network migration to the mix, this trend will only accelerate and the gap will continue to diverge.

Migrating to Video VAS

Operators need to remember where they made high-margin revenues in their 2G audio mobile networks – audio VAS. Forward looking operators need to revisit their entire VAS portfolio and plan to offer the video VAS equivalents. The videoization of mobile VAS is a solution to embrace the bandwidth and capabilities of 3G and LTE networks and monetize those opportunities. Differentiated interactive video VAS will increase ARPU. We are already beginning to see a shift from incremental to monthly mobile broadband (3G and soon LTE) data plan revenues and premium VAS applications are commanding premium high-margin pricing.

Hence, an industry-wide trend is now emerging where operators want to extend the revenues, ARPU improvements and margins from audio VAS by migrating them to video VAS equivalents. For example:

• voicemail to videomail;
• interactive voice response to interactive voice and video response;
• audio ring back tones to video ring back tones;
• audio conferencing to videoconferencing;
• audio streaming to video streaming; and
• audio advertising to video advertising.

Service Delivery Infrastructure

The requirements are clear: Operators need to increase the volume of revenue-generating video services. Plus, they now need to deliver these in an end-to-end IP network environment.

The 3GPP has defined the IP multimedia subsystem as the services architecture within 3G and LTE networks deployments. Within the IMS architecture, the multimedia resource function delivers an increasingly important role in processing and integrating real-time audio and video media streams.

In IMS, call control is orchestrated by the call state control function. The CSCF can hand off the video call to various session initiation protocol application servers in the network, which can host the call logic for various video VAS applications. The MRF would then, under the control of the CSCF or AS, provide the necessary IP media stream processing on behalf of the application. For example, for a video ring back tone application, the MRF would play a video media clip to the calling party’s video-enabled LTE device, while the call is being completed through the network. If the call can’t be completed, then the CSCF could route the call to a video mail application, supporting the ability to record the video message, possibly in an H.264 HD format, for later video playback to the called party.

IMS MRF Equipment

When someone extends the simple use case above to literally thousands of simultaneous video streams requiring personalized video processing, the need for powerful MRF equipment in emerging LTE networks becomes apparent.

The increasing levels of traffic, particularly mobile video traffic, on 4G/LTE networks will drive the need for more real-time transport protocol media processing to support high-capacity video (including HD H.264). By including MRF capabilities, operators can support increasing video capacities, as well as required video transcoding and transrating for the large variety of two-way interactive and one-way video streaming services now in demand.

In addition, the MRF must dynamically adjust the media stream bandwidth in response to traffic congestion. For example, some IP media servers with MRF capabilities support receiving real-time transport control protocol messages from an endpoint. This allows the media server to utilize adaptive multi-rate encoding techniques to adjust the bit rate of media streams during periods of high congestion.

While mobile video is growing fast, the MRF must also support voice over LTE, as mobile voice services will continue to be a significant source of mobile operator income. The MRF plays a critical role in supporting IP audio packet processing for VoLTE, including support for adaptive multi-rate wideband between LTE audio endpoints and transcoding of AMR-WB to other legacy audio codecs.

Compared to circuit-switched technology used in 3G networks, IP-based packet communications on 4G/LTE networks is more susceptible to delay and echo. Operators can implement distributed MRFs to reduce local and regional delays and increase the performance of real-time interactive services.

In 2G audio mobile networks, basic calling eventually became a commodity service commanding minimum margins. Operators of 2G networks increased revenues, ARPU and margins with differentiated audio VAS. 3G and emerging LTE networks are providing increasing mobile data bandwidth to the end user. The result is a huge growth in data traffic – especially mobile video. 3G/LTE operators are focused on delivering LTE mobile broadband infrastructure to their customers. But operators can’t stop at just providing mobile broadband data services, often based on flat rate data plans. Instead, operators should remember their improved margins and ARPU from their audio VAS offerings, and extend this thinking to the videoization of mobile VAS. This is how they can increase ARPU and margins.