The consumption of mobile telecom services by consumers is no longer proportional to the revenue generated for mobile operators. In many countries, 4G LTE tariff plans have been introduced at the same price points as their 3G tariff plans. According to ABI Research, the global average traffic generated per user per month will expand from 275 megabytes in 3Q 2014 to 1.85 gigabytes in 2019. Video traffic is expected to reach 65% within 5 years.
From being an add-on, supplementary service, the mobile Internet has become an essential service to many users’ lives. End-users are increasing their expectations to be able to access their Facebook page and/or stream their favorite video clips or soap operas from YouTube or Youku whenever they want. Given the dependency on the mobile Internet, mobile operators are starting to realize a poor video and Internet experience could lead end-users to try out other service providers.
Mobile video optimization solution providers such as Opera’s Skyfire, Citrix, and Flash Networks have been responding to mobile operator concerns. At the heart of mobile video optimization is a combination of video caching, trans-rating and trans-coding technologies. It is significant that there has been a flurry of mergers and acquisitions in the mobile video optimization sector. Cisco, Opera Software, Citrix, and Ericsson have all made recent acquisitions to boost their video traffic management portfolios.
Mobile video and data optimization is not just about managing traffic. There are meaningful TCO savings and a potential boost to service revenue for the mobile operator:
- Opportunity for total cost of ownership/virtual capacity savings
- Opportunity for churn reduction
- Opportunity to stimulate end-users to upgrade their tariff plans
To research these opportunities, ABI Research developed an interactive “Mobile Video & Data Traffic Solutions Analyzer” as well as published a report Delivering Mobile Data and Video Optimization over LTE. In the global analysis, using a conservative adoption assessment of 1 out of 3 mobile operators, ABI Research estimates total revenue boost and TCO savings over a 5 year period to be US$28.7 billion. TCO/Virtual Capacity savings could contribute 32%, Churn Reduction 45%, and End-user Tariff Plan Upgrade Revenues, 23%.