On November 10 T-Mobile went against the industry norm of trying to corral mobile video. In contrast to the industry norm T-Mobile fully embraced mobile video with its Binge On offering, allowing unlimited video streaming of selected (and very popular) sites without it counting against the users' monthly data allowance. Sure Binge On doesn't deliver video in HD ( it is 480p) and it doesn't yet include some top video streaming sites, such as YouTube, but T-Mobile is still proactively taking on the biggest source of LTE data growth – video by encouraging the use of video. In contrast most operators tend to discourage the use of streaming video through the enforcement of data caps. T-Mobile is basically telling its subscribers here is our network – bring it on. It reminds me of growing up near the beach during hurricane season. Authorities would always tell everybody to move inland, but inevitably there would be a handful of surfers risking it all surfing straight out into the oncoming storm.
T-Mobile says it will be able to manage the traffic load through a proprietary adaptive bit rate optimization solution developed in-house and the co-operation of ecosystem content providers to reduce the data load of the videos they send to T-Mobile's network. I will say this is a bold move on T-Mobile's part. Like those surfers rushing into the hurricane, T-Mobile could be in for the ride of its life, or wind up drowning in a nasty undertow.
Video is the killer LTE application. It is the number one application driving the growth of data traffic. When Ovum looked at smartphone LTE data traffic we found that in 2014 video was the source of 60% of traffic globally and forecasts it will grow to be 74% of traffic in 2020. And, between those two years, Ovum expects total LTE traffic will grow by over a factor of 19. For T-Mobile video as a percent of traffic has already well surpassed 60%. The mobile operator's CTO Neville Ray stated during the 4G Americas Analyst Forum chairman's keynote: "70% of all traffic on T-Mobile's network is video." Clearly LTE and video go hand-in-hand. Also it is clear that video is important to the end-user's experience.
Ovum has been conducting consumer surveys across seven different disperse countries regarding their experience with, and the importance of mobile video. 74% of the survey respondents said the ability to watch videos on their smartphone is important and impacts their service provider satisfaction. The survey also asked consumers what factors impacted their satisfaction when it came to streaming video. In the UK, the first country where we had completed the survey, the three most important factors were all network based, as illustrated in the graph below. The full survey results from all seven countries had similar responses, with network performance having the biggest impact on satisfaction.
Factors that are important when it comes to watching streaming video on a smartphone
So as you can see, T-Mobile is taking a big risk with the hopes of a bigger reward. On the one hand, it has opened its network up to unlimited consumption of video - the biggest source of data traffic growth. After years of hearing industry wide about the nearly unsurmountable challenge of dealing with mobile broadband traffic growth this seems crazy. At the same time, if T-Mobile wants to grow its market share by giving consumers exactly what they want, then the move is incredibly sane.
T-Mobile, however, better hope its proprietary systems are up to the challenge. If its network fails to handle the increase in video traffic the mobile operator will damage its reputation, rated #1 for satisfaction in a recent Consumer Reports survey, and it will certainly lose market share. I can only assume part of T-Mobile's proprietary solution includes some rather robust customer experience management solutions that includes the use of tools to measure video performance. Staying on top of how video consumption is impacting its network and gathering insights into the user experience will be important for T-Mobile to make sure Binge On turns out to be a success.
Daryl Schoolar is Principal Analyst of Wireless Infrastructure for Ovum. Daryl's research includes not only what infrastructure vendors are developing in those areas, but how mobile operators are deploying and using those wireless networking solutions. Contact him at [email protected] and follow him at @DHSchoolar.