For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment
Real-time
entertainment playback (which excludes downloads) ties up 60% of peak period
internet traffic in North America and almost one-third of it comes from
Netflix, according to a report by broadband firm Sandvine.
In its
“Global Internet Phenomena Report 2011”, Sandvine says that some of this video
is viewed on smartphones and tablets but surprisingly, up to 55% is destined
for the television screen, either directly through a Smart TV or via a games
console or set-top box. Desktop and laptop computers account for much of the
remaining 45%, although the report says that even then, users often forward
content to their TV.
In the
US, at least, Sandvine ascribes much of the growth in this phenomenon to
devices such as the Xbox and notes that Microsoft announced a massive expansion
in the list of content providers to be made available on the Xbox 360,
including such heavyweights as Bravo, Comcast, HBO (which airs “Boardwalk
Empire”, pictured), BBC, Telefonica, Rogers on Demand and Televisa.
“Since
Microsoft gains revenue from Xbox Live subscriptions, this impressive video
line-up serves as a powerful differentiator against the other console
manufacturers,” the report says.
Sandvine
is a company at the heart of the internet, with customers that serve hundreds
of millions of subscribers worldwide, so its report provides some of the most
reliable information on broadband usage. The company’s customers gather the
data in bulk with no information about individual subscribers. It does,
however, enable a moment-by-moment profile of actual service providers,
together with an accurate assessment of the varied data needs of users over
time both upstream and downstream.
Thus, we
learn that in a one-month period, on a single major US network, more than
42,000 individual web sites served at least one streaming video. Put another
way, streaming video from sites outside the Top 20 accounts for a significant
proportion of all internet data usage. Apple is not the only fruit of the video
revolution and neither is YouTube.
Unfortunately,
the Sandvine report does not cover countries in Western Europe. The latest
document concentrates on North America, Asia-Pacific and the emerging markets
of Brazil, Africa and Eastern Europe. Much of the US experience, though, is
applicable to the current UK market or is a harbinger of things to come on this
side of the Atlantic.
One such
trend is a direct result of the increased use of over-the-top (OTT) video
services, which has the effect of concentrating intensive broadband usage into
a relatively short evening period. To maintain a consistent quality of
experience (QOE), the operator has to over-engineer the network to cope with
peak demand, which implies that for most of the day the expensive
infrastructure remains under-used.
Even this
understates the problem. Sandvine reports that the widespread adoption of
“rate-adaptive” streaming means that bandwidth use increases to match the
performance of the network. Increase the bandwidth and video streams switch
automatically to higher definition and reduce the QOE for the viewer as the
network becomes overloaded once again. Having paid dearly to ensure the user is
happy, the network operator risks accusations of poor service. No wonder there
is a trend towards usage-based charging.
In a
comment headed “Cloudy with a chance of bill-shock”, Sandvine draws attention
to one aspect of content storage in the cloud that is understood poorly. Once,
users would sync their content over their local network and transfer from
smartphone or camera to laptop or PC. In the brave new world of Apple’s iCloud,
content is shared in the cloud. “Instead of consuming no bandwidth when syncing
100 MB of photos back to a computer, cloud syncing will use 100 MB of data when
uploading data and an additional 100 MB when downloading to each device
connected to the cloud.Cloud services could result in significant additional
bandwidth costs and potential bill-shock for consumers,” the report says.
Almost
20% of all mobile data traffic in North America comes from Facebook, the report
reveals, followed closely by YouTube at 18.2%. Next on the list but some way
behind at 4.7% is the monthly Windows Update from Microsoft. This represents a
real running cost for laptop users who use mobile data instead of WiFi to
update their device.
The
report says, “Almost every smartphone or tablet now sold includes a built-in
department store. Google’s Marketplace and Apple’s iTunes are consistently
among the top traffic generators on mobile and fixed access networks. In
Asia-Pacific, Mobile Marketplaces account for 8.2% of peak mobile network
demand, while in North America the figure is 4.7%.”
For
accurate data on communications in the UK market, the Ofcom Infrastructure
Report published on Nov.1 is a long-awaited definitive source. It covers fixed
and mobile telephony, broadband, digital radio and digital terrestrial
television, from a UK-wide perspective and at the level of county and unitary
authorities.
The
headline figure that most people will have seen is the 17GB monthly data usage
of the average UK household, the equivalent of downloading around 11 films. The
London Internet Exchange (Linx) reports that this figure is seven times greater
than five years ago even when business traffic is included. As in North
America, UK consumer data usage is concentrated in peak hours although the 6pm
to midnight window is wider than the US experience.
What was
not so widely reported is the disparity between operators, which varied in
proportion to data management policy. Virgin Media subscribers downloaded 25GB
per month, around twice the average for a typical operator with a large
proportion of its customers on a capped package. “Give UK customers a gigabyte
and they’ll take two” is the message.
Although
almost every exchange in the UK is now broadband-enabled, some 14% of
residential subscribers are still below the 2Mbps government target for 2015.
Ofcom says, “We expect the number of sub-2Mbps connections to fall over the
coming year as customers upgrade to new technologies and resolve in-home wiring
issues that are affecting the speed of their connection.”
It’s a
surprise that they place all the blame for slow speeds on the consumer with no
reference to dodgy cables and the lack of interest of major operators show in
connecting small communities in rural areas. Clearly, when it comes to
broadband speeds, the customer is always wrong.
Mobile
broadband data usage is clearly on an upward path with 3G connections that
deliver an average of 240MB to users each month. WiFi and UMA connections help
to offload additional data to lower-cost fixed networks, particularly when
users are at home. This is likely to increase as “companion screens” appear in
the living room.
Ofcom
suggests that its first Infrastructure Report should be regarded as a baseline
against which to measure future developments. The Communications Act requires
the body to compare the standard of UK networks and services with those in
other countries. These metrics ultimately will help government to assess
whether it is on target to achieve its ambition to lead Europe in terms of
broadband services by 2015.
The
investment in infrastructure that is required for the UK to move up the ladder
of international broadband competitiveness is a barrier that is not likely to
alter between now and next summer when Ofcom plans to publish its “best in
Europe” scorecard.
According
to data from Akamai’s “State of the Internet” online visualisation, the UK
today languishes in 25th place in the world of broadband connection speeds with
an average of 5Mbps for fixed lines. Ofcom says the average speed of connection
for a 3G dongle is even lower at 2.2Mbps in areas of good coverage and with
29.9% of the geographic UK without a 3G signal from any operator. The UK starts
from a low baseline.
The
23-page Sandvine document highlights one statistic from the bizarre world of
mobile network economics. Operators typically offset low- and negative-margin
services against high-margin services such as SMS, but texting has declined in
the face of Instant Messaging services from Skype, Blackberry, WhatsApp and
many others. When a major revenue segment falls while network costs remain
constant, the price for all services must rise. Apparently, the average revenue
earned from delivering over-the-top bytes is in the order of $10 per gigabyte.
The estimated average revenue from SMS data is $30,000 per gigabyte.
You
should text that to your friends, if you want to avoid an increase in your next
mobile data bill.
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