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