Tuesday, May 14, 2013

Video Consumption Now Has Strategic ISP Implications


Based simply on the volume of traffic, you might argue that all transport and access providers now are in the business of delivering video entertainment bits to end users, with the greatest proportion of that content using real time streaming.

In part, that drives investment in networks that support higher bandwidths. Just as significantly, real-time video will challenge ISPs on the cost front. Even after capital investment to support higher access bandwidth, IP transit costs will skyrocket.

The dominant facilities-based ISPs largely will avoid those costs, since they can peer with each other.

As once was the case for dial-up access providers, where the advent of broadband essentially destroyed the former dial-up business, a shift to gigabit networks will have strategic implications for smaller and independent ISPs.

Basically, gigabit networks will favor tier one providers at the expense of virtually all wireless providers, much as broadband favored facilities-based providers at the expense of over the top dial-up ISPs.

Mobile service providers will continue to compete, even when “speed challenged,” compared to fixed networks, because the key value still will be mobility, not speed.

Real-time entertainment (streaming video and audio) already is the largest traffic category on every network, in every region, (more than 68 percent of downstream bytes during peak period, compared with 65 percent at the end of 2012), according to Sandvine.

Already, more than 25 percent of all streaming audio and video bytes delivered to mobile devices are delivered to those devices in the home.

In fact, more than 20 percent of all traffic on fixed networks in North America already is generated by a smart phone or tablet.

And Apple devices (iPads, iPhones, iPods, AppleTVs, and Mac computers) account for over 45 percent of all streaming audio and video on fixed access networks in North America, Sandvine  notes.

In North America, mean usage (simple arithmetic average) on fixed networks was 44.7 GB, a 39 percent year-over-year increase from 32.1 GB for the same period of 2012.

In Asia-Pacific, demand likewise is driven by entertainment, which accounts for 51.2 percent of total downstream traffic during peak period. But the Asia-Pacific region unusual because peer-to-peer apps are highly popular.

Additionally, Asia-Pacific is the only region where BitTorrent was the top application during peak period.


The median (half used more, half used less) monthly usage on fixed networks grew 56.5 percent, from 10.3 GB to 18.2 GB.

Netflix accounts for 32.3 percent of downstream traffic during peak period.

YouTube, which in the first half of 2012 accounted for 13.8 percent of downstream traffic, now accounts for over 17.1 percent of traffic. Sandvine believes the increase in YouTube traffic is caused by the continued growth of smart phones and tablets inside the home.

Amazon represents 1.31 percent and HBO Go had 0.34 percent of traffic.

And, as has been the prevailing pattern, in North America, the top one percent of subscribers who make the heaviest use of the network’s upstream resources account for 34.2 percent of total upstream traffic.

The heaviest one percent of downstream users account for 10.1 percent of downstream bytes. The lightest 50 percent of users account for only 6.4 percent of total monthly traffic.

Mobile network usage likewise has grown substantially. Over the past year, mean North American monthly usage increased from 312.8 MB to 390.1 MB, an increase of 25 percent.

Mean monthly usage in Asia-Pacific grew from 659.3 MB to 700.4 MB since the end of 2012. Real-Time Entertainment accounts for half of total downstream traffic during peak period in the Asia-Pacific region.

What is unique to the Asia-Pacific region is that real-time entertainment is
the top upstream category accounting for 28 percent of traffic. The primary driver
behind the popularity of real-time entertainment in Asia-Pacific is the use of the popular peercasting application PPStream (available on PC, tablets, and smartphones) which sends and transmits video simultaneously over the network.

Median North American mobile usage more than doubled from 25.5 MB to 58.7 MB, year over year.

YouTube represents 25 percent of all North American traffic on mobile networks during peak period. And use of Netflix is growing as well.

Netflix’s downstream traffic share in North America almost doubled from 2.2 percent to 4.0 percent, year over year.

In Asia-Pacific, the heaviest one percent of users account for 41.1 percent of upstream traffic, 23.2 percent of downstream traffic and 24.2 percent of aggregate bytes each month. Significant use of PC air cards and tethering likely accounts for the heavier European and Asia-Pacific mobile data consumption, compared to North America.



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