Will CDNs conquer the mobile data market?

As we all know, mobile operators today are looking for new and creative ways to generate revenues. Costly infrastructure and an increasing number of over-the-top players have minimized their profitability and potential for future growth. To address these challenges, operators are seeking additional ways to monetize their assets, in a “Telco 2.0” style, by adapting their infrastructure to new vertical markets. As a result, more and more operators are prioritizing and optimizing premium content delivery, similar to content delivery networks (CDNs).


Traditionally, CDN companies like Akamai, Limelight, and Level3 owned this business by creating a worldwide overlay network that enabled them to offer content providers better quality of experience by delivering web content from locations closer to the edge. This strategy was planned mainly for the fixed network, where the major bottleneck and costs were in the Internet transit, and CDNs successfully minimized this bottleneck and provided value for their content providers. However, fixed operators themselves never really yielded much value from this structure, and were left out of the value chain.


For mobile operators, it’s a different story. Today’s mobile users demand fixed-line like speeds while using HSPA+ and LTE networks. They use their smartphones to watch HQ and HD video, perform financial transactions, and get up-to-date news and music. However, the user experience is still rather disappointing, especially during busy hours.


Mobile operators have a clear opportunity here. Instead of allowing traditional CDNs to dominate this market and take over this potential business, operators can take an active role by becoming mobile CDNs themselves and charging content providers to deliver better QoE, while saving infrastructure costs. In fact, at the CTIA show in May, Verizon Communication’s CTO, Tony Melone, said that Verizon is considering mechanisms that would allow content suppliers to pay for users' access fees.


Is this a realistic option? Maybe. But first operators need to address 3 major obstacles:

1. Net-neutrality limitations currently do not enable operators to discriminate between different content sources.
2. Operators can’t realistically build business relations with all content providers, which lack the global nature of traditional CDNs.
3. Can real quality of experience improvements be achieved over the mobile network? Can QoS be guaranteed over 3G and 4G networks end-to-end? How can operators really improve QoE measurements such as page load and app response time, and reduced number of stalls in video clips?

The third challenge is the most solvable for operators. To address it, operators must first have the ability to measure network quality and performance in real-time. This will give operators what CDNs do not have today – visibility into where data traffic is really congested within the RAN.


In addition, operators must have the ability to apply smart traffic optimization according to their network quality findings. With this dynamic traffic optimization, operators will be able to do more than caching, by both improving QoE and reducing their costs. Therefore, mobile CDNs (operators) that can offer traffic optimization will be able to strengthen their B2B proposition to content providers by providing pre-optimized, cached content that dramatically improves the user experience. 


Better user experience in mobile web content consumption means: more visited pages, higher ads and search conversion rates, more m-commerce transactions, and higher overall user satisfaction.

-- Ilanit Zehut, Director of Business Development

Mobile Operators Should Think More Like Facebook

Facebook Stock Certificate

With the Facebook IPO on the horizon, and its estimated valuation reaching over $100B, this is a good time for mobile operators to rethink their business models. Needless to say, Facebook has never charged its users, asked them for their credit cards, or sent invoices to their homes. Nevertheless, its revenues are expected to hit $5B in 2012, with 85% coming from ads. Facebook is capable of reaching these enormous numbers primarily because businesses, no matter how large they are, are always interested in increasing exposure to their products and services, and are willing to share their revenues in order to do so.


So what does this have to do with mobile operators?

First, and this is obvious, the mobile internet is a sustainable source of revenues for its industry. As Jon Stewart said about the internet, “it’s a keeper.” This is good news for mobile operators struggling to maintain revenues from traditional voice and messaging services in the face of competition and regulation.

Second, for mobile operators to compete in the Internet playing field, they need to get in the game and start thinking more like Internet players, such as Facebook. Rather than sticking to traditional subscription-based business models, they need to get creative. This means not only selling their own content and services directly, but also using their unique position between their users and the internet to offer interesting and relevant content and services from anywhere on the web, using affiliation plans and revenue-sharing.

To do this, operators need to find the real-estate to effectively present these recommendations and promotions to their users – either on the monthly bill, their portal, or, for maximum visibility, within the browser itself. Our monetization solution provides operators with this valuable real-estate - our web toolbar - and the supporting ecosystem to start generating and sharing revenues today. 


-- Chen Didi-Barnea, Product Marketing Manager