Tuesday, December 6, 2016

Price Certainty is One Major Reason Why Subscription Video Charging on Mobile Networks Has to Change

If “the future of video is mobile, and the future of mobile is video,” as Tom Keathley AT&T SVP, believes, big changes are inevitable, simply because video requires so much more bandwidth than any other media type, and therefore represents substantially more data consumption as well.

One might also argue that “if the future of video is mobile, then the future of video is zero rated.” That would not be unusual, as video entertainment traditionally is zero rated, in the form of broadcast TV, broadcast radio, satellite TV and radio, cable TV and telco TV, not to mention other media formats (print, audio, film).

If mobile subscription or on-demand video services become a mass market, it will be because consumers know the cost. In other instances, price certainty has been a key market enabler.

AOL became the largest dial-up internet access provider because it moved from per-minute usage to a flat fee. Video subscriptions are "flat fee, watch as much as you want" products as well. The big difference is that internet viewing also entails paying for data consumption. That is not such a big issue on fixed networks, but is a major issue for mobile data plans.

Compared to voice, video consumes an order of magnitude (10 times) to two orders of magnitude (two times)more bandwidth. New ultra-definition TV formats (4K and 8K) might consume more than that. Compared to HDTV, 8K video might require 24 times as much bandwidth. And, obviously, using one minute of video bandwidth translates linearly to increased amounts of additional consumed data.

Even if most mobile video is not consumed at 4K or 8K resolution, any appreciable amount of incremental video consumption will have an outsized impact on any customer’s data consumption. And that seems inevitable. By about 2022, video will drive 75 percent of all mobile usage, some predict.  

It is probably an easy prediction that most consumers will not watch as much video, if they have to pay data usage charges, as if there are no usage charges because use of the delivery network is simply bundled into the price of the content subscription.

On the other hand, that is a huge change of thinking on the part of mobile operators, involving “giving away” a valuable and expensive-to-supply resource.



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