In April Apple Electronics’ iPhone App Store reported downloading its one billionth mobile data application. Even a tough economy has yet to substantially quash consumer appetites for upgrading to increasingly data-centric mobile handsets, says ABI research, which revised upward its predictions for 2009 handset sales after reporting 258 million shipped worldwide in Q1.
Mobile data services also are establishing real monetary value. U.S. data service share of mobile operator average revenue per user grew from 19.3 percent to 25 percent between 2007 and 2008, reaching $34 billion, according to mobile industry consultant Chetan Charma. With competitive share of such substantial new revenues at stake, mobile operators cannot afford to make the transformation to IP networks and adjust to attending business model challenges without a comprehensive technology-based strategy, says Kittur Nagesh, director of service provider marketing for Cisco.
In its own latest “Visual Networking Index” research, this one devoted specifically to mobile, Cisco found that mobile data traffic increased 66 fold in 2008, most of it driven by video applications. More than a basic shift from circuit- to packet-based infrastructure – and more than a shift to higher capacity networks to accommodate bandwidth-intensive applications like video entertainment and productivity applications that incorporate video – the mobile data invasion will require new levels of personalization and network intelligence, as well as speed, Nagesh says.
“4G represents the first time the mobile industry is moving to all-IP network architecture,” he says. “All operators are looking at the app store model, and all the apps are IP, not just voice. We feel it’s transformation, not just evolution. In earlier generations, IP was not reaching the end customer. Now the path is open to media applications, and we feel the business models of the past will change.”
In Cisco’s view, mobile operators and their partners are being forced to revisit not only the pace and nature of non-voice capacity requirements, but also two other key factors: a dramatic change in service mix and the proliferation of mobile-connected devices.
In terms of service mix, device- or network-specific applications, like those offered through the AT%26T-Apple partnership, along with Web services like Flickr, YouTube and social networking “add up to a dramatic change beyond voice,” Nagesh says. “There has to be a new way of looking at how to make money and how to drive incremental video.
“Consumer behavior can’t be mandated,” he adds. “They’re learning from the Internet and applying it to mobile, but Internet models don’t match carrier models. Monetization is no longer, ‘Every call is giving me x cents.’ On the data side, the equation is different. If it is Skype, how can I drive more video? You have a buddy list on Skype. Can’t I make that list available on the handset to make a call, either over 3G or IP? That can be done in a transparent manner through SIP [Session Initiation Protocol].”
Achieving monetization goals by driving adoption of video and other rich broadband services means that “the network needs to be intelligent enough to charge in ways beyond all-you-can-eat,” he says. “We’ve heard of some customers consuming 890 gigabytes a month. If you just download one movie, it’s generally over five gigabytes,” based on consumption tests conducted by Time Warner Cable in Texas. “So for high quality applications, the amount of data is huge. That calls for intelligent policies for fair usage and to reflect partnerships and factors like backhaul capacity. New radio technologies may give operators scale, but intelligence is key to monetization. Operators are revisiting what all this means.”
Capacity and policy demands also are being accelerated by the emergence of larger VGA screen media players, automotive receivers and other new classes of mobile devices, many of which are designed to support the coming rich mixture of service types, including video, viral content sharing and broadband interactivity.
Cisco notes that, in addition to nearly five billion existing handsets and continuing high volume device sales in developing countries like China and India, one must add a raft of devices built for machine-to-machine applications – many of those also destined to support increasingly intelligent applications. Remote monitoring cameras, for example, will support triggers to shift transmissions from low-speed to high definition video streams.
Such machine-to-machine devices, along with various remote meters and kiosks “still need to be authenticated, equaling a significant impact on the control plane,” the seat of intelligence in the network, Nagesh says. “They also need to be integrated to billing. When the remote camera switches to HD, policies executed at the control plane are required to charge in a very personalized way. We expect billions of such devices.”
And here is where Cisco believes it has the goods that operators particularly need, in the form of relatively new Cisco products like the ASR 9000 application-intelligent edge router. “Often with control functions people think of appliances,” Nagesh says, “but that won’t scale, because you can’t put those boxes everywhere.”
For certain levels of required intelligence, such as discovering and connecting to faster wireline connections through Wi-Fi or femtocell access points, intelligence embedded in client devices themselves is highly useful. “With IP you can more easily leverage wireline assets,” he notes. “Pureplay wireless operators really need to think through this. Wireline backhaul is compelling as UMA [Unlicensed Mobile Access] and femto are deployed,” he argues.
However, he adds, “Policy rules and creating scale – where everything doesn’t need to go to a central point – can benefit from network intelligence. A service like single number reach cannot come just from the client. And for many services like high-quality video you need to traffic shape. You may want to do things like cap MMSs for children. These are network capabilities.”
In recent months, mobile operators have certainly begun to address “the first choke point” – the backhaul segment of their networks – by deploying Carrier Ethernet, Pseudowire and other technologies that are “gracefully moving to IP” while also introducing a first phase of heightened network intelligence in the form of traffic shaping, security and billing integration, Nagesh says. “The nice thing is, with any 4G, your investment in the backhaul and IP are protected because they remain the same, and that part of the job is essentially recession proof. They have to upgrade because they will not be able to differentiate themselves or answer customer needs without it.
“But this is not just about customer acquisition or retention,” he adds. “You need to start laying the foundation to monetize the growth segment of traffic. We’ve integrated service- and control-rich functions into the ASR, sitting at the IP edge, to tune the network behavior. Our 7600 router – there are 80,000 deployed worldwide, 10,000 to 15,000 in mobile – offers gateway and other functions, as well as modular addition of services and subscribers.”
Across mobile network architectures, from device to cell site, backhaul, IP edge and IP core, “you see points that have to be addressed because the network was designed for voice. For data, you can’t just add T1s and E1s,” he says. While Carrier Ethernet and Psueudowire in the backhaul segment are expanding how much traffic hits the IP edge, operators also must devise coverage and device strategies with mixes of Wi-Fi, femtocell and fixed and wireless backhaul.
In the near term, Cisco and other arms dealers are supplying 3G mobile broadband operators with data technologies that work in tandem with continuing circuit-based infrastructure. But with operators, including Verizon Wireless, Clearwire and others, promising to introduce LTE and other all-IP 4G infrastructure this year, the real break with circuits is coming into view.
In developing strategies for that new world, Cisco is employing and recommending a focus on three primary guiding issues.
First, operators must guide their development of mobile IP network intelligence with scalability constantly in mind. The most effective next-gen network technologies will provide controls of network functions like rate shaping and billing and will do so at the local or regional network edge, thereby avoiding hard-to-scale architectures built on either too burdened centralized intelligence or too distributed, and thereby costly, device intelligence.
Second is the goal of creating user experiences that are more visual, integrated and ubiquitous. “You’re seeing Webex on the iPhone or Blackberry, with people sharing presentations,” Nagesh says. “On the consumer side, you may be watching CNBC on TV, then take it to your train commute on your mobile phone, then to work on your PC. Seamlessness of experience is somewhat ingrained in user expectations. With IP, you can do this.”
The third guiding issue lies with operators building and selling to both consumers and content partners the personalization capabilities that can be enabled only by network intelligence. “There are many applications that personalize in ways that know who you are, where you are, how much should be buffered and the like. Most of this is intelligence on network,” says Nagesh.
Intelligent network value also may be husbanded to win a share of revenues from over-the-top Web content and applications. “If the consumer goes to Flickr.com, the operator doesn’t even know. So how do you make it smarter so you can still personalize?” he asks. “An operator can go from zip code and show a targeted ad while complying with privacy and, in the process, get a piece of the action from advertising that they’re not getting today. If you’re a fast car connoisseur, delivering an ad for that would be more meaningful to you. We’re working with providers to do this because the network understands real-time behavior than cannot be known from a device or backend server.
“In mobile, with all the applications going to IP,” Nagesh assert, “Cisco is more relevant to mobile service providers than ever.”