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March 2013

Meeting the OTT Video Challenge: Real-Time, Fine-Grain Bandwidth Monitoring for Cable Operators

Meeting the OTT Video Challenge: Real-Time, Fine-Grain Bandwidth Monitoring for Cable Operators

I wonder how many tons of black ink (and electronic ink) have been spilled writing about how Over-the-Top (OTT) players are killing the mobile business.

Well, if you think mobile operators have got it bad, then consider the plight of the cable operators who are being overwhelmed by the surge in video and audio traffic.

A recent “Global Internet Phenomena” report by DPI vendor Sandvine says that during peak time, 65 percent of all fixed-line data traffic in North America is delivered as audio- or video-streaming services.  And one particular OTT, movie-streamer Netflix, accounts for a little over half of that traffic.  All told, average monthly data usage in North America across wired connections has more than doubled from 23GB in 2011 to 51GB in 2012.

Peak Period Traffic Composition via Mobile Access
in North America

2012 Sandvine Report on Traffic Composition

And it’s not just entertainment: a few weeks ago I repaired my refrigerator watching a step-by-step video from a company who sells appliance parts.  The popularity of OTT applications like that is what’s caught the cable industry by surprise.

But help is here from a new and innovative provider, OpenVault, who monitors high-speed internet traffic from the cloud and makes it easy for Multi Service Operators (MSOs) to make critical decisions to protect quality of service and monetize their available bandwidth.  Mark Trudeau, the company’s CEO, who gives some great perspective on this issue and other key trends in the cable industry, joins us now.

Dan Baker: Mark, what’s your own perspective on the challenges cable operators face?  What does your data tell you?

Mark Trudeau: I think you framed the key issues, Dan.  One thing our data confirms is that the usage spike is happening across the board.  It’s not just the top 1% of users who are using more bandwidth — it’s everybody.

Another key trend we are seeing is a big growth in the number of devices per household.  Households now have multiple iPads, an Xbox, or maybe internet-enabled TVs connected.  All of those new devices are contributing to the spike in bandwidth consumption.

Put succinctly, the cable operators are no longer seeing their revenues directly aligned with their expenditures because of the proliferation of connected devices as well as OTT services.

It is not so much the device types we explore as it is the cumulative effect of the increasing number of devices and increasing number of bytes consumed/generated per device.

As it turns out, unknowingly, MSOs boxed themselves into a corner with these all-you-can-eat rate plans in the race to acquire HSD subscribers.  Due to the unforeseen growth in data consumption you’re starting to see more usage-based billing offerings out there and enforcement of the Terms of Service that accompany them.  In other words, they are going the way of wireless providers — charging the subscriber a fee whenever they go above an allowance or modifying their bandwidth when they reach their limits.

Okay, interesting.  My fast-internet provider is a rural operator called Blue Ridge Cable, and I don‘t believe they offer that quite yet.

Sure, the smaller rural operators generally follow what big guys like Comcast and Cox roll out, so it is only a matter of time for you to personally experience it.  Many of the big MSOs have announced usage-based billing packages, so we are starting to see the smaller operators catching the same train.

Please tell us how your solution works.

Well, our solution collects IPDR transported data generated by DOCSIS-compliant high-speed networks.  That data is pushed to us every 15 minutes allowing us to see at a DOCSIS device level, the amount of upstream and downstream data consumption.  We then enrich that data with other network traffic information and subscribed service contract parameters to tie actual network usage with financial responsibility.  We track that throughout the course of a billing cycle and will know when a subscriber reaches their limit and then our solution will handle that situation based on what the operator wants to do at that point.

Some operators will throttle subscriber bandwidth speeds down to hopefully prevent them from using too much.  Other operators will charge the customer once the subscriber goes over their limit.  So there are various options depending on what the operators want to do from a business perspective, any of which our platform already supports.

Was it a struggle to get the MSOs to agree to do this over the cloud?

No.  We haven‘t really had that problem.  Certainly the larger operators like to host the data themselves and we’re flexible to accommodate that.  But most of the small operators are willing to do this because number one, they don’t have space in their own data centers a lot of times, and frankly many of them love the flexibility of a software as a service model.  So, it doesn‘t require any upfront licensing fee or anything like that, so they pay per subscriber per month.  The SaaS approach really lowers the cost to get into this kind of technology.

I should also add that one of things that has made them more comfortable with SaaS is that we are not collecting personally identifiable information — or anything that could put them at risk in anyway.  In fact, we have many security measures in place to protect them.

What are the peak hours in the U.S. market for the spike in high-speed internet usage?

Actually anywhere from 7 to 10 p.m. is the timeframe when the networks are at peak loads.  And we’ve seen that remarkably consistent across operators.

Now a lot of operators look at the total year-over-year growth of usage consumption on their network, but that misses the point.  They should really be looking at what’s going on during peak hours — how fast the peak usage is growing and which subscribers specifically are contributing to that growth.

That’s the real indicator of when and where they need to increase capacity.  And analytics is key to measuring that.  If I based my capacity plans on experiencing 40% year-over-year growth and the peak time period grew 60%, then I’ve vastly underestimated my capacity needs.

You can imagine what a challenge these dynamics are putting on MSOs.

You’re losing customers who are subscribing to premium services on one side of your business, who are, unfortunately for you, fulfilling their entertainment requirements by driving more data traffic on your HSD network, so you’ve got to figure out a way to grow new revenue streams.

Most of these operators have been experiencing flat revenues on the internet side of the business because their rate plans have been a consistent monthly recurring charge with no other incremental fees; meanwhile their costs to provide this service have been going up.  That is not sustainable and has got to change.

This business of real-time traffic analytics — where’s it likely to go from here?  Can you expand your offering and provide other services to your base?

Well, this highly granular monitoring of bandwidth is still very new for the operators, though they certainly know how to monitor network bandwidth at a high level.

So as our kind of solution becomes more mainstream, the operators are going to need to introduce new revenue generating products or usage-based billing types of things.  Now the only way to offer the right product to the right customer is if you really understand the usage behavior on your network at a granular level.

So we are excited that numerous operators are starting to take advantage of the more granular usage intelligence we are providing.  They will need to create new revenue-generating products — or, for operators who have congestion problems, they will use our data to manage bandwidth during peak time so that can provide a higher service quality to more subscribers during those hours.

For now, I think cable operators have all come to the conclusion that even if they haven‘t announced usage caps quite yet, they eventually will.  And once they make decisions about what they are going to do, that’s when the market will open up to provide real-time rating and bandwidth management solutions.

So policy management has some potential to grow in the future.

There are many different aspects of policy, but as a general answer, “yes”.  For instance, a very important capability is notifying subscribers when they reach certain thresholds of usage, via email for instance.  Now that could lead to the operator doing various policy enforcement activities in the network such as limiting the ability to use too much of the network.

But before we get to that stage, there are other key things that need to be done.

For instance, educating the subscriber on what a gigabyte is and how many they routinely use.  To accomplish that, we put up a subscriber usage meter for our operator customers.  The subscriber can look at month-to-date usage and then some history of usage over the previous two or three months.  Most operators go to that level; some provide daily information.  We aggregate the every-15-minutes data we receive to the hourly level.

Going one step further, when a consumer calls to complain about being charged extra for high usage, there’s a challenge around justifying your bill.  So we provide a portal for the customer care agent that shows the high speed internet usage for a particular subscriber during the previous month.

So if Grandma calls up to complain about a high usage charge on her internet bill, the customer care reps can point to a particular weekend, and suggest that maybe that’s when grandkids were visiting and using a Xbox or something.  So providing more granular information like this allows customer care to better respond.

What’s your feeling about these shared billing data plans such as Verizon Wireless has introduced?  Can you foresee that type of model working in cable someday?

You are comparing personal devices with premise devices.  I do think shared plans make sense for the personalized wireless world.  In the cable market, remember we are talking about a fixed DOCSIS network, and by default the family shares the pipe that comes into the house.  Even still, we do see the concept of accounts with multiple cable modems on them, each subscribed to their own package and it is not a large step to combine the data for those multiple modems to support a shared data concept.

Still, more and more technologies are becoming available that will allow you to control bandwidth at the device level.  So down the road we may see scenarios where an individual household and account holder has a lot of control over which devices are allocated bandwidth.

What are the challenges the cable operators face as they move to more granular tracking and caps on usage?

Well, one really important challenge is accuracy and reliability.  As soon as you  start billing for usage, you’re going to be challenged in terms of the accuracy of your usage levels that you are reporting on and billing on.  So, that becomes a really critical piece of any solution that an operator puts in place because the last thing you need is bad press and a bunch of consumers complaining that they are being over-billed.

Since we view this accuracy issue as critical we had an audit done of our system by NetForecast, an independent auditor, the most well-known and respected auditor that’s out there.  They confirmed the accuracy of our data collection and reporting in a report that’s available for anyone to see.  We view this as a big differentiator versus other vendors and home-grown solutions.

So when we talk to potential customers, we kind of wave the accuracy flag and point out that if you plan to deploy usage limits and usage based billing, make sure to consider the accuracy factor because there’s a significant customer satisfaction, potential brand damage and revenue risk around that.

Copyright 2013 Black Swan Telecom Journal

 
Mark Trudeau

Mark Trudeau

Mark Trudeau brings two decades of senior communications software domain and investment expertise.  He has founded and led numerous technology companies through major growth and success for his customers and investors.  With strong partnering skills and concern for customers, Mark leads operational and strategic decision-making at OpenVault.   Contact Mark via

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