The rapidly evolving mobile industry presents today’s operators with a difficult paradox. While smart-phone ownership and mobile broadband to the laptop have become almost ubiquitous, the average revenue per user rate is flat or, by some estimates, declining. Certainly, the growth of mobile Internet usage represents a significant new revenue stream. But that same potential brings with it a strain on the network that could be prohibitively costly to correct.

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That strain is due in large part to users’ affection for video. With the exponential growth in video content due to the popularity of video sharing sites such as YouTube (which in some networks is responsible for 50% of all video traffic), social networks, and streaming content from leading Internet content providers, the proportion of video in overall mobile broadband traffic has grown significantly to more than 50% and is expected to reach 66% of overall wireless data traffic by 2014, according to the Cisco Visual Networking Index 2009-2014.

A New Revenue Model For Broadband

Wireless carriers must ask themselves how they can capitalize on the growing mobile broadband and mobile Internet traffic to justify their growing investment in network capabilities. Content is floated as one possibility, with operators considering plays against companies like Apple and Google to provide content, Internet, and application services. Others think that operators may create revenues by providing information to third parties, such as location information or user profile information. We are already witnessing the end of the “all-you-can-eat” model where operators offer differentiated plans, pricing, and packages for consumers based on data usage.

Noam Green is the associate vice president of corporate marketing for Mobixell.

Coping with the increasing demand for bandwidth-hungry data applications over their wireless networks is one of the most challenging issues operators must address as they aim to find balance among coverage, quality of service, and profitability. Upgrading wireless networks to 4G-access technologies such as Long-Term Evolution (LTE) could alleviate the problem, but this is a costly and lengthy process, and some say a limited time postponement of the problem. Besides, increasing capacity by itself does not guarantee a long-term solution. Data applications will also increase in terms of complexity and bandwidth consumption, and the user demand for these applications will rise as well.

As wireless networks become more burdened by the increasing demand for data applications such as video, negative effects such as higher latency, buffering, and denial of service are growing more common. This is particularly true for video applications that are sensitive to real-time variations in wireless network speed. Moreover, due to the bandwidth-hungry nature of video applications, a few users requesting videos may more negatively impact the current bandwidth capacity in a wireless network than tens or hundreds of Web-browsing users.

As AT&T Mobility CEO Ralph de la Vega said in his keynote at CTIA Wireless in March 2010, “Applications like video that required no optimization for the wide-open pipes of the wireline Internet are taxing the far more limited resources of the mobile broadband network.”

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