T-Mobile execs: Binge On uses proprietary adaptive bitrate optimization technology

LOS ANGELES -- T-Mobile US (NYSE:TMUS) executives here on the sidelines of the carrier's latest Uncarrier announcement explained that the operator's new Binge On service makes use of video optimization strategies that will effectively reduce the weight of video on T-Mobile's network, thus allowing the carrier to offer video streaming to all its Simple Choice customers for no extra cost.

"That's what is really exciting," said Susan Welsh de Grimaldo, an analyst at research firm Strategy Analytics. "They're getting ahead of their video traffic on their unlimited [data plans]."

Welsh de Grimaldo explained that Binge On essentially represents the launch of T-Mobile's video optimization strategy across its network and customer base. The carrier said it will activate the service on Nov. 15 for all customers, including smartphone and tablet users, and that users will be able to opt out of the service. By launching video optimization technology for all of its customers who subscribe to the operator's 3 GB plans and higher, including its unlimited data customers, T-Mobile can reduce the strain of video on its network by using Binge On to make video streams smaller. And by including all streaming video in the service, and by offering it for free, the carrier may sidestep net neutrality concerns by positioning the offering as a network management technology, which is allowed under the FCC's net neutrality guidelines.

Indeed, T-Mobile said that its video optimization technology essentially allows customers to stream three times the amount of data while using the same network resources as before the carrier launched the technology. "The lower resolution [of the video stream under Binge On] mitigates network strain, with management expecting a 10% reduction in network payload associated with the Un-Carrier X initiatives," said analysts with Jefferies in a research note. "Investors should not expect any change to capex spend as a result of these changes."

However, the analysts added that the 24 video services covered under Binge On only account for roughly 15 percent of all video traffic--they said Facebook and Google's YouTube are the biggest providers of video.

T-Mobile CTO Neville Ray said that the carrier's video optimization technology for Binge On sits in the packet gateways in T-Mobile's network. He said Binge On represents the culmination of "work over a number of years. And much of it is unique to us."

He said T-Mobile's packet gateways essentially identify incoming video streams and then optimize those streams to display video at 480p, which T-Mobile described as "DVD-quality." Ray declined to name the vendors that T-Mobile uses for Binge On.

Separately, Grant Castle, T-Mobile's vice president of engineering, explained that "there's a lot of waste" in most current video streaming services. He said that, in developing Binge On, T-Mobile approached various streaming video providers like Netflix and Sling TV and discovered that the companies were sending large, data-heavy video streams to T-Mobile's customers because they assumed that was what the carrier wanted, so that it could make more money from customers who would have to pay for that data. Castle said that the streaming vendors told T-Mobile executives that "we thought we were doing you a favor" by sending large video streams.

Castle said that, with Binge On, T-Mobile receives video streams from providers like Hulu in its network, optimizes that stream largely using adaptive bitrate coding, and then delivers it to the customers covered by Binge On. He said T-Mobile doesn't use transcoding technology because he said that technology doesn't scale -- he said transcoding large numbers of video streams requires a significant amount of server and computing power.

Castle said that most video streaming arrives on T-Mobile's network using either HTTP or HTTPS, but he said Binge On can handle a range of different streaming technologies.

Interestingly, Castle said that T-Mobile attempted to include Google's YouTube service in its initial launch of Binge On. "We've had conversations with them," he said. "The ball is in their court."

Castle explained that YouTube streams video using a variety of technologies and techniques, and T-Mobile's Binge On service only works when it is able to properly identify a stream so that it can modify it. Therefore, he said, Google's YouTube needs to work with T-Mobile in order to properly tag its video streams so that T-Mobile can optimize those streams for its customers.

Importantly, T-Mobile's Binge On service only works when the stream is running over the operator's mobile network. In situations where customers are using Wi-Fi, T-Mobile won't optimize the stream.

Although T-Mobile said the service wouldn't affect its network performance, some analysts voiced concern. "In our view, if customer usage soars, the benefits in terms of customer adds and lower churn could be offset if the network does not live up to expectations," Wells Fargo analyst Jennifer Fritzsche said in a research note. 

And what of net neutrality, which was enacted by the FCC largely to ensure that all Internet traffic is treated equally? T-Mobile CEO John Legere said that "We fundamentally believe in a free and open Internet." He said that Binge On is "highly net neutrality friendly" because it is open to all video providers and does not require them to pay T-Mobile to participate in Binge On. He also noted that users are able to switch off streams that are optimized by Binge On if they wish to.

However, Matt Wood, policy director with public-interest group Free Press, disagreed with Legere's statements on net neutrality. "T-Mobile wants to suggest it's saving customers by exempting video from its data caps. But we have to remember that T-Mobile imposed these caps in the first place. It's a cheap sales trick: First you fabricate a problem for customers; then you make that problem go away and act like you've done them a huge favor," he said in a statement issued shortly after T-Mobile's announcement. "Exemptions for selected streaming-video services prove there's no legitimate reason to impose data caps. Data is data. There's nothing about a gigabyte of Netflix content that makes it more or less of a drain on the carrier's network than a gigabyte of some other data."

Added Wood: "The real question is why T-Mobile would discriminate in favor of its customers who watch a lot of video, and against those who don't -- especially when we've heard excuses so many times about the supposed strain that video puts on networks."

"Overall, this is a powerful announcement," concluded Mark Lowenstein, analyst and Managing Director of Mobile Ecosystem and a FierceWireless contributor. "I believe the other operators will have to follow suit with some additional data offers or promotions. And video is going to start becoming another battleground. Who has the 'best network' for video; what quality is acceptable on different form factors; and what sorts of pricing, business model, and technology innovations are possible in an industry that has, until now, essentially discouraged video usage over the cellular network?"

For more:
- see these two T-Mobile releases

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