With FIFA’s World Cup underway this month, we are seeing dramatic upswings in streaming video and video on demand traffic over operators’ networks – something we examine in our upcoming 2023 Global Internet Phenomena Report. About this same time last year, Amazon Prime began simultaneously streaming six midweek Premier League football matches, which created about 25.5 terabits of data per second. It became an eye-opening example of how quickly just one platform can flood networks and potentially affect quality of experience (QoE) for everyone else. Though BT’s network handled it, BT Consumer Division CEO Marc Allera likened it to sitting in an air traffic control tower with no control over the air traffic.
This is just one example of why the rules under which European Internet service providers and network operators are regulated must be re-evaluated. They were created before the Internet and applications reached today’s Herculean proportions. Web traffic continues to grow exponentially and content powerhouses like Netflix, YouTube, TikTok, and Amazon are pushing telcos to an inflection point, with growing data volume and performance demands. And this is all before the IoT, metaverse and immersive AR/VR really come into full swing!
Today, online services can structure products and pricing around the performance delivered by the underlying networks, but the providers of those fixed and mobile networks cannot structure products and pricing in a similar way.
While regulation is necessary to avoid monopolies and to ensure QoE is delivered at fair prices, there must be a balance. If network operators and ISPs are to keep up with the trajectory of digitization, they must be able to offer differentiated services and experiences to customers who want more from digital engagement, transactions, and commerce.
McKinsey& Company recently showed that COVID accelerated the digital evolution by about four years, with internet services now crucial to not only individuals, but to economies and governments worldwide. To keep up, regulators must also allow operators to keep pace with change and to build profitable-growth business models. Currently, per-subscriber revenues are declining, while network infrastructure costs and per-customer traffic climb.
Regulators Can Stop the ‘Race to the Bottom’
The rigidity of current regulatory structures force operators to compete on price alone, commoditizing services and fostering unsustainable business models. Decreasing prices when per-customer service costs are rising is squeezing operator margins.
When the time comes it’s no longer profitable to run operator networks, there will be significant impact on the performance of the internet and the services that rely on it. Operators have to be allowed to evolve their business models to ensure networks continue to keep up with what consumers and businesses want and need. This is why Ofcom and BEREC developments in the last couple months have become all the more important to follow:
- Ofcom, the UK regulator, is considering changes that will make more room for operators to provide differentiated services
- BEREC (the EU regulator) has denied EU Tier1 operators’ requests to charge OTTs for delivery of their content
Each represents two very different views. For example, the Ofcom Consultation is open and evaluating whether to allow:
- Zero-rating of particular services
Operators would be able to offer more compelling services, without affecting volume quotas for most customers. This can be achieved, without increasing costs for most customers, by subsidizing costs through advertising and data allowances for specific services.
- Premium services for heavy and excessive users
Low-latency plans would target users who have an outsized impact on the network and other users that want more personalized performance guarantees for hardcore gaming, HD and UHD video streaming, P2P file sharing, AR/VR/metaverse, and other bandwidth- and speed-intensive applications.
Big data and analytics have evolved to the point that QoE, throughput, latency, loss and jitter can be measured with transparency of metrics to regulators and subscribers, on a per-application basis.
- Traffic Management during certain, specified circumstances
Charging based on QoE dimensions can be accomplished with smart traffic management, which will ensure both regular users and heavy users have a satisfactory QoE, even during times of congestion.
- Charging OTTs for a specified volume of traffic
OTTs should share in the costs of the broadband services that are the lifeblood of their users’ experiences, and of their unprecedented profits. Currently the likes of Alphabet’s Google, Amazon, Netflix, Apple, Microsoft, and Meta are responsible for most of the data traversing fixed and mobile networks. The traffic is disproportionate to the investments they make into the infrastructure telcos must deploy, manage and scale to guarantee QoE for the greatest number of consumers and businesses.
Generally, Ofcom seems to be of the opinion that allowing operators some room to be creative would ultimately benefit the greater whole of subscribers, especially as the complexity and volume grows in streaming video, gaming, social media, messaging, video conferencing, and other bandwidth-heavy applications.
BEREC, on the other hand, says that “Traffic is requested and thus ‘caused’ by ISPs’ customers.” BEREC also believes “The cost of network upgrades that are necessary to handle an increased Internet traffic volume are very low when compared to the total network costs.”
The CAPEX and OPEX costs of additional traffic are massive. The trend lines are clear. Traffic volumes, application complexity, and subscriber expectations are outpacing the speed with which capacity and capabilities can be added. This is starting to affect QoE for all subscribers.
We believe that giving operators and ISPs more room to innovate and differentiate will benefit all subscribers, ensuring better QoE across all devices, all networks, and all applications.
To that end, most operators are now considering how to evolve from a focus on “tonnage" to one of optimal quality of application experience for the most customers, regardless of access type, location, or device. This will require higher degrees of sophistication in the four pillars of App QoE, namely,
Performance Monitoring and Analysis,
Subscriber Service Analysis
Real-Time Subscriber Insights
Gaming QoE Analysis
Heavy User Management
Use Case eBook
Video QoE Analysis
Video Streaming Management
Intent-based Congestion Management
Topics: OTT, Featured, Network Management, Congestion Management, Customer Experience, Streaming Video, monetization, Network Optimization, CX, App QoE, App Quality of Experience, Hyperscalers, Heavy Usage Management