With the media and legal spotlight being shined on this traffic category in recent days, a number of competing sites have either decided to shut themselves down, or dramatically alter the way files are uploaded or downloaded from their servers.

One such service to make such a drastic change was FileSonic, who has halted any new uploads, and is only allowing users to download their personal files.

The graph above compares several of the leading storage and back-up services in North America and how their traffic fared both before and after Megaupload was shut down. 

What is interesting is that before FileSonic stopped allowing downloads at approximately 18:00h (UTC-5) on January 22^nd, it was the clear front-runner application, generating significantly more traffic on this network than any of its competitors (prior to the Megaupload shutdown, the two appeared roughly equal).

We will be keeping a keen eye on further changes to these storage and back-up services, and will be sure to provide an update if anything significant develops.  For more information on Sandvine’s Internet traffic trends, visit our Global Internet Phenomena Report.

In a controversial, incredibly strange, yet kind of catchy video released last year, Megaupload claimed to have 1 billion users, accounting for 4% of Internet traffic.

Our Global Internet Phenomena Report, which has followed the growth of the service in recent years, confirms that Megaupload was the most popular Storage and Back-Up Service in almost every region.

The table below shows the combined usage of Megaupload and MegaVideo on fixed access networks in several regions from our Fall 2011 study:

What will happen now that Megaupload has been taken down? The most likely scenario is that users will switch to other Storage and Back-Up Services and video sites, causing new category leaders to emerge.  Currently the second most popular Storage and Back-up Service varies by region, but some of the top contenders to replace Megaupload are Rapidshare, zShare, Hotfile, and MediaFire.

As always, we will observe and report on the continued evolution of Internet traffic in future Global Internet Phenomena reports.

I’ll refer to congestion occurring closest to the subscriber as the “weak link”.  Not surprisingly, the most effective (in terms of relieving the congestion) and most fair (to subscribers) way to manage this congestion is by implementing corrective policies that are localized at the site of the congestion itself. In fact, this precise approach is what the FCC defines as “narrowly tailored”.  Referring to Figure 1 below, if congestion occurs at the weak link (see A*) location and affects only users 1-5, then correcting that instance of congestion is ideal because Internet user traffic in other network locations such as locations B and C need not be touched.

Sandvine manages link congestion by examining, identifying, and prioritizing time-sensitive gaming, VoIP and streaming applications, over non time-sensitive applications such as emailing and browsing, or, alternatively, prioritising the users who are causing the least congestion vs. those who are causing the most in a short time interval.  You and I don’t notice if we get an email 2 or 3 seconds later, but we will be upset if our voice calls are garbled and we can’t understand each other. 

Managing congestion to the edge of the network, as close to the affected subscribers as possible, is a competitive differentiator for Sandvine because our competitors only help ISPs manage aggregate traffic patterns.  This aggregate approach is based on the flawed assumption that the macroscopic view (Figure 2) of Internet traffic activity is true for points A, B and C of the networks.  At Sandvine, we manage traffic to the edge of the network (Figure 3) and monitor points A, B and C individually.  This yields a more efficient network: higher utilisation, happier consumers, vs. the alternative approach of reducing capacity artificially (throttling).

This approach means that our congestion management techniques are precisely targeted and extremely effective – users in uncongested parts of the network are not impacted, and users in the congested regions are impacted as minimally and fairly as is technically possible.  The result is the preservation of quality of experience for the masses: maximum quality of experience for the maximum number of subscribers for the maximum amount of time

While it seems obvious that congestion management techniques should only apply where and when there is congestion, competitive approaches do not subscribe to this consideration.  “Capacity Control” techniques that are marketed as congestion management solutions simply drop packets.  For instance, a capacity control solution deployed near the top of the pyramid in Figure 3, might simply drop 20% of all packets of a certain type (e.g. limit bulk traffic to 20Mbps on a 100Mbps link).  On average, this approach delivers the benefit of reducing traffic on congested links by 20% at the cost of impacting every subscriber on the network by dropping 20% of the traffic on all the other links, whether or not they were congested in the first place.  This is approach is neither fair (since it impacts everyone) nor reasonable (since it impacts areas that aren’t congested). A link which had 150% of demand will not be uncongested in this model: it will now be @ 130%. Similarly, a link which was previously @ 80% of demand vs. capacity will now be @ 60%: a net loss of efficiency.

Compounding the confusion surrounding congestion management is the argument that another way to avoid congestion is through the use of usage management principles, like hard or soft monthly quotas (caps).  In this scenario, when a subscriber exceeds the monthly quota, the carrier might impose overage charges in the belief that the subscriber will then self-monitor and reduce data consumption.  The theory goes that if a carrier imposes monthly quotas on all subscribers, then the cumulative power of self-management will limit instances of congestion.  A related method is to lower the speed of users after some volume is achieved in a month. These principles are often disguised as ‘fair use policies’ (mimicking Sandvine’s Fairshare traffic management in name only).

Unfortunately, this approach is undone by the reality that instantaneous contributors to congestion are no more likely to be the network’s monthly heavier users (those who are exceeding their caps) than they are to be the other 99% of subscribers, so congestion remains.  Additionally, a monthly quota across the entire network is not narrowly-tailored to the links that are congested at the times they are congested. Why should a user be slowed down on a link which isn’t busy? The quota applies 24x7x365 on all links equally.

Usage management and traffic management each have their time and place. If your objective is to differentiate the value of service plans in order to maximise your revenue (a commercial objective), use usage management and volume limits. If your objective is a technical one, that of alleviating the effect of congestion on some links at some times in your network, use traffic management. Your users will thank you in both cases.

The research we conduct for the study gives a great snapshot of what is currently happening on broadband networks, but we thought it might be fun to take some of that insight and mix it with what we have been hearing from network operators, to make some predictions for 2012.

So without further ado, here are Sandvine’s five broad(band) projections for 2012:

Data pooling plans will become popular

One of the biggest obstacles preventing subscribers from purchasing their first smartphone, are the additional costs associated with a data plan.  In a household with a couple teenagers, it might not be out of the ordinary to have four active mobile phone lines.  If everyone in those plans had a full data plan as they are traditionally billed, the data charge alone for that household could easily be in excess of $100 a month. 

In order to make data plans more accessible, we expect to see more mobile carriers begin to offer subscribers pools of data in 2012, much like they do with voice minutes.  This will allow families with multiple smartphones, or individuals with both a smartphone and tablet, the ability to use their devices in a more affordable way.

95% of tablet traffic will be on fixed access networks

In our Fall 2011 Global Internet Phenomena Report we revealed that more Real-Time Entertainment traffic in the U.S. now goes to devices other than a PC, with the growth in tablet ownership playing a large factor in that shift. 

While many tablets have built-in mobile network connectivity, we think the majority of tablet owners are using them as laptop replacements within their home.  Amazon’s recently launched Kindle Fires seems to support this thesis, as they chose to launch as a Wi-Fi only device.

While there certainly will be a number subscribers who will choose to subscribe to a mobile data plan for their tablet (especially if they have a pooled data plan option) the amount of traffic those users will generate will be a fraction of what users consuming Real-Time Entertainment on a fixed-access network will use.

The potential bill shock wave will continue

With more and more fixed and mobile providers putting an end to unlimited data plans, and moving towards usage-based billing models, many more users could experience bill shock when getting their monthly invoice.

Almost, everyone has heard a story about someone who used their smartphone’s data while roaming on an international and rung up a bill in the hundred or even thousands of dollars.

As roaming rates are typically higher, subscribers still need to keep a keen eye on their usage, and network operators must ensure they follow best practices for implementing usage-based billing.

Revenue replacement apps will take a bigger bite out of operator revenue

In our Fall 2011 Global Internet Phenomena Report we discovered that in the Asia-Pacific region up to 8% of subscribers were using WhatsApp, a smartphone app that lets people use their data plan instead of SMS messages to each other.

This year also saw reports of SMS growth beginning to level off, which we believe is in part due to the growth in popularity of these data messaging services such as WhatsApp, BlackBerry Messenger, or Apple’s iMessage.

In 2012, as more users get their first smartphones, the usage rates of this category of apps is likely to see massive growth.  For mobile network operators, this means potential significant lost SMS revenue, an impact some have already begun to notice.

Live video will explode

Real-Time Entertainment is regularly one of the largest drivers of traffic on both fixed and mobile networks in many regions across the globe.  In 2012 we will see Communications Service Providers (CSPs) and content providers expand from offering primarily pre-recorded content to offer significantly more live video options to subscribers.

As further proof of the inevitable explosion of live video, one only needs to look at the recent agreement between Bell and Rogers, the two largest CSPs in Canada to jointly purchase controlling interest in MLSE, the corporation that own several pro sports teams including the Toronto Maple Leafs and Toronto Raptors.

When the CEO of Bell was asked about the reason for the purchase with their main competitor, George Cope said “It will deliver the best content to every screen…We believe that increasingly live content is going to be more and more important in the technology world and there is no better live content than professional sports.”

With almost all professional sports leagues, and many news agencies such as CNN and Bloomberg offering live streams of their content in 2011, 2012 is only going to bring more channels to your smartphone, tablet, connected TV, or game console and network operators will need to prepared to provide a high quality of experience as traffic optimization options such as caching are limited for live video.  

Based on these predictions, it looks like 2012 will no doubt be an exciting year for the broadband industry.  We look forward to keeping you posted on the latest trends in the New Year.

Examining data from Sandvine’s Netflix Rising report released in the Spring, the Xbox 360 accounts for almost 25% of Netflix’s total traffic on fixed access networks.  This figure demonstrates that subscribers are more than willing to use their Xbox 360 as an entertainment hub and the list of video providers made available to them on that device is set to grow substantially.

Beginning today, Microsoft will be rolling out a software update that will offer Xbox 360 owners (at least, those who pay $60 a year to be Xbox Live Gold members) access to a wide range of both on-demand and live video content on their TV .

IPTV is not a new feature on the Xbox, as Microsoft had some limited partnerships with select communications service providers and channels such as ESPN. With this software update however,  Microsoft is making an even bigger push by forming partnerships with some  Internet and media heavy-hitters such as Verizon, HBO, BBC, Rogers, and YouTube, just to name a few. 

Access to certain content will differ based on country and Internet provider due to licensing restrictions, but Microsoft is certainly trying to have the Xbox 360 be the one-stop shop for all of your home entertainment needs, and the only device you need connected to your TV.

With over 57 million Xbox 360s sold worldwide to date, how many of them are on your network? The number of owners and the number of soon-to-be-available live streaming options will present unique challenges to network operators.  Live video demands a high Quality of Experience (QoE), and traffic optimization options such as caching are limited for live video.  Operators will need to ensure their networks are engineered for quality because, while the Xbox may be among the first devices to offer a wide range of live streaming video, it is unlikely to be the last.

We will be keeping a close eye on how users adopt this new service, and will aim to bring some insightful data on subscriber usage the near future.

Sandvine’s network policy control solutions focus on protecting and improving the quality of experience on the Internet. Our award-winning network equipment and software helps DSL, FTTx, cable, fixed wireless and mobile operators better understand network traffic, manage network congestion, create new services and revenues, mitigate traffic that is malicious or undesirable to subscribers, deliver QoS-prioritized multimedia services and increase subscriber satisfaction.

Our Global Internet Phenomena Report is an example of the type of data that our network equipment enables ISPs to collect.  Many of our customers and many in the industry, find these insights valuable, as they allow for proactive capacity planning of Internet networks, enabling fair use connectivity and a high quality experience for the end subscriber. Download it and read for yourself. Feel free to contact us directly with any comments or concerns, we would be more than happy to discuss.

We’ve long been fans of transparency and are public industry advocates for government proposals that seek open and equitable Internet access.  It’s all there for you to read.  No need to bring a bucket.

Kicking off the week was the Capacity Management Symposium, during which speakers from Sandvine, Cisco, ARRIS, SeaChange, and Motorola presented their perspectives on how data’s Compound Annual Growth Rate growth rate of 50% is impacting the capacity planning of cable networks.  During my session, I introduced findings from our recently released Global Internet Phenomena Report which contrasted the usage patterns and regulations in North American and Asian augmentation markets with those of emerging markets, such as Africa.  Tools for measurement of Quality of Experience (QoE) are all the more vital in these times of explosive broadband video growth.

Continuing the theme of capacity management, Sandvine was recognized with Broadband Technology Report’s 4 Diamonds at the BTR Award dinner, for its Traffic Management Dashboard.  We were in good company with 22 other vendors, including high scorer CommScope with its new Wideband Edge QAM product.  The Traffic Management Dashboard (screenshot below) is a feature of Sandvine’s Network Analytics product that lets cable operators examine network performance, identify capacity requirements, manage congestion, and view the impacts of implemented policies on the network.  Visitors to the Sandvine booth were able to see a live demonstration of the power of this dashboard, as well as the latest Real-Time Entertainment dashboard that quantifies QoE scores per content provider, per CDN, device or other factors. 

Given that Sandvine solutions are deployed in seven of the top 10 US Cable companies (by subscriber count), we welcomed those US Cable customers at our booth, some of which were the first customers that helped get Sandvine off the ground ten years ago.  The show also had international presence, with cable MSO visitors from Asia, Europe, and Central America looking to learn about network policy techniques for traffic and service optimization.  It’s always a pleasure to listen first hand to the challenges that operators face and to be present them with an array of solutions that can best fit their needs.  It’s not all business at Cable-Tec though; there was plenty of occasion to socialize at the breakfast and lunch sessions and the Expo evening at the Aquarium.

On the thought leadership front, Sandvine’s Global Internet Phenomena program, reporting on Global Internet usage trends since 2002, is widely regarded as the pre-eminent source of information about fixed and mobile consumer Internet trends. For instance, we have revealed that more than half of all Real-Time Entertainment traffic in the United States is being driven by consumer devices like game consoles and smart TVs, and that the Playstation 3 alone accounts for more than a quarter of Netflix traffic (see the Netflix Rising spotlight).

Back in the early days, we were called heretics for announcing that P2P traffic was the dominant form of traffic on the Internet when everyone otherwise believed it to be email and Web surfing.  Sandvine is used to a bit of controversy and we take it all in stride.  Why?  Because we build on our real-world experiences to design products that bring the highest value to our customers, and we’ll continue to out-innovate our competition.

Now, we are seeing more and more similar Internet traffic trends reports each year.  We view it as a validation of our leadership efforts when our competitors follow us.  Case in point, 18 months after Sandvine launched Network Analytics, part of our suite of network business intelligence solutions, one of our competitors released an analytics product. Interestingly, by design or ignorance, the press release announcing the competitive product was filled with implicit terminology references to Sandvine’s own product: 

“(Product X) is the first solution to enable network operators to conduct sophisticated analyses on their network traffic for capacity planning, marketing analysis and service planning.”  I didn’t have to think long before recalling Sandvine’s own “Capacity Planning Calculator” (part of our Traffic Management Dashboard), “Service Planning Calculator” (part of our Usage Management Dashboard) and “Marketing Summary” (part of our Usage Management Dashboard) screens. In fact, our Network Analytics have already been purchased by more than ten customers world-wide.  

The resemblance of the competitive solution to Sandvine’s feature set is eerily coincidental:

The competitor’s press release stumbles again when it says: “Competitive solutions are targeted toward creation of generic dashboard charts or canned reports.” If true, that would give their product a competitive advantage.  I’m thankful that, once again, they’re mistaken.  There are several separate “Dynamic Analysis” dashboards within Sandvine’s Network Analytics product, and I’m satisfied in knowing that our customers are using the screens to dive into their data, on-demand, in completely non-generic and non-canned ways.  This was reinforced recently by a judge who awarded our Traffic Management Dashboard a prestigious 4 Diamonds in the Broadband Technology Report’s Diamond Technology Reviews: “Sandvine has provided a very powerful path for the operator to really see what is happening in the network, anticipate capacity issues & bottlenecks more accurately which allows more accurate timing of capital investment.”

As a communications service provider in an increasingly competitive market, ask yourself this question, “Would I rather have an innovative product now, or a copycat in 18 months’ time?” Or, in other words, “Would I rather entrust the success of my business to a leader, or to a follower?”

Service providers who deploy Sandvine’s Network Policy Control platforms benefit from access to cutting edge traffic optimization, service creation, operations management, and business intelligence solutions months, even years, before competitors who elect to take a different approach.  Resulting in immediate savings and revenue increases.  And those solutions, such as the industry’s “Best Implementation of Tiered Data Pricing”, are best-in-class.

Similarly, Informa Telecoms & Media stated:  “the broadband experience in Africa is to become increasingly nomadic with the number of broadband connections over cellular networks exceeding 250 million by the end of 2015.”  Their new “Mobilizing Public Services in Africa” white paper, Informa ranks South Africa just ahead of Kenya and Egypt.

Sandvine also had some interesting statistics to share at the show, specifically regarding our research on Internet usage in Africa.  More information can be found in our Global Internet Phenomena Spotlight: Africa, Fixed Access, Fall 2011, but some of our findings revealed trends that are typical of emerging markets:

• Averaged over 24 hours, P2P Filesharing is the dominant upstream application category, accounting for 49.4% of bytes. 
• Real-Time Entertainment is already a significant portion of daily downstream traffic at 23.2%.
• Web Browsing is the largest downstream category, and accounts for 33.5% of daily downstream traffic. 
• Skype alone represents more than 15% of upstream bytes during the evening.

While most of the buzz focused on progress in the region, there was also some discussion regarding the absence of Internet services in parts of the continent. According to the GSMA, “huge untapped potential remains. 36% of Africans within the 25 largest African mobile markets currently have no access to mobile services.”

As the burgeoning African Internet marketplace matures, network traffic management solutions will become important to implement to ensure users gain fair access to the Internet.  In addition, service creation solutions are also important for service providers who want to compete by offering attractive tiered and pre-paid pricing plans, appealing to both budget-conscious users interested in securing cost-certainty and to heavy bandwidth users.  Sandvine looks forward to helping service providers bringing Internet connectivity to all regions of Africa.

Sandvine was showcased within the “Ontario Pavilion” at AfricaCom:

BlackBerry users have long praised BlackBerry Messenger (BBM) for its ability to send messages using a data plan to other BlackBerry users, but in recent years as the smartphone marketplace has become more fragmented, messaging apps that allow users to send messages between platforms have really started to gain popularity.  LiveProfile, Kik, PingChat are just a few of the apps available that offer this functionality, but WhatsApp popularity is undeniable – the service is now reporting that their users are sending over 1 billion messages each day.

While subscribers love these apps, network operators are, understandably, less enthusiastic. Apps that enable instant messaging or voice communication via data plans compete directly with the SMS and voice services upon which operators depend for a substantial portion of revenue.

Dutch operator, KPN, started to feel the impact of these revenue replacement apps when they issued a profit warning earlier this year, directly citing revenue-replacement apps BBM and WhatsApp as causes for a 10% decrease in text messaging revenue.

BBM’s popularity in many countries is due in part to mobile operators offering data plans that zero-rate many popular social networking services, including BBM.  These plans make instant messaging services available to users at a low, fixed price and allow mobile providers to gain additional revenue from customers who might not otherwise purchase a data plan at all. 

To combat the lost revenue from these messaging apps, operators will need to continue to explore innovate ways to package their services. By including this new breed of messaging services in low cost data bundles as they do with BBM they may be able to maintain a sustainable business and do so in a manner that embraces subscriber preferences.