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.

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.

Sandvine’s Real-Time Entertainment Dashboard is revolutionary because it provides business intelligence particularly relevant to streaming content (Netflix, YouTube and Spotify), including measurements regarding the quality of the video experience, the viewing duration, and the associated revenue generated by the adoption of over-the-top services. Our Usage Management 4.0 product helps both fixed and mobile service providers create, manage and implement new product offerings.

Both products are receiving plenty of attention because much of the conference is focusing on trends in IP video and innovations in service plans and billing models.  In addition, our Global Internet Phenomena Report: Spring 2011, revealed that Real-Time Entertainment applications consume 49.2% of peak aggregate traffic.

I participated in a panel discussion called “Managing IP Video” with Thierry Souche of France Telecom – Orange, Matthias Linder of Magyar Telekom, and our moderator Rob Gallagher of Informa.  The discussion focused on the particular challenges that integrated and converged operators face when dealing with IP video, what technologies and techniques are coming online to assist providers, how operators can manage IP video without endangering Net-Neutrality and how operators can work more closely with content providers for mutual benefit.

We’ve had many service providers come by our booth to see a live demonstration of the Real-Time Entertainment Dashboard, including several service providers from Argentina and Brazil who are doing their due diligence, now that Netflix has launched recently in South America and is now traversing networks all over the region.

They aren’t the only ones interested in the ever-growing Network Analytics dashboard line-up.  It was our pleasure to host a champagne reception at our booth to celebrate the product’s success and to toast the customers who have embraced it so strongly.  In fact, we recently announced that ten customers have implemented Sandvine’s Network Analytics product for sophisticated network insight and business intelligence. 

Lee Brooks demonstrates Sandvine’s Real Time Entertainment dashboard to booth visitors at Broadband World Forum:

The court case is still ongoing, but in an interesting move last month, TWC announced that they will offer subscribers a free Slingbox to their highest Internet tier known as Wideband.  For those that don’t know, Slingbox is a device that allows you to stream your cable or satellite set-top box remotely to any computer, tablet, or smartphone connected to the Internet.

The potential genius of this promotion is that not only is TWC winning favour with their subscribers by giving them a $300 gift, they are also reminding the content owners that their subscribers have other options available to them and can consume their content on the go, whether it is sanctioned by the content programmers or not.

To date, TWC has not made public the exact number of 50 Mbps Wideband subscribers it has, but that number is clearly growing rapidly.  In Q2 2011, TWC added 25,000 Wideband subscribers, which more than doubled the additions from the previous quarter.  Should this promotion prove popular, TWC could soon see a large number of Slingboxes joining their network.

Since the Wideband service has no monthly quota, subscribers will not have to worry how much they use the service on the upstream or downstream at home.  It is however, a different story for those Wideband subscribers who are looking forward to using the Slingbox over their preferred mobile networks. 

In our research for the last Global Internet Phenomena report, Sandvine found that on mobile networks, Slingbox users averaged speeds of 800kbps, significantly higher than Netflix, which was the second-fastest Real-Time Entertainment application with an average speed of 125kbps. With unlimited download mobile plans quickly becoming a thing of the past, TWC subscribers should keep a keen eye on their data usage in order to avoid being surprised by data overages that the Slingbox could bring.

Whatever happens in the legal situation between TWC and the content programmers, the one thing that is clear is the fact that subscribers don’t want TV restricted to the living room anymore.  As more cable and satellite companies begin to offer live streaming TV over IP options to their customers, average residential bandwidth consumption is only going to increase.  In the coming months and years it is going to be very interesting to see how networks cope with this additional traffic, how Communications Service Providers count that traffic against potential data caps, and how subscribers will balance their media consumption between live and on demand services such as Netflix and Hulu.

These recent actions aren’t the first attempts by carriers to manage the usage of tethering applications.  This past May, US-based carriers demanded that Google restrict access to applications that allow tethering in the Android Marketplace. This restriction brought Google devices in line with Apple and Microsoft, who both don’t allow third-party tethering applications in their official app stores.

Even though BlackBerry, Microsoft, Google, and Apple all include native support for both wired and wireless tethering in their mobile operating systems, third-party tethering applications (often installed through non-official channels) are popular with users because they have allowed subscribers to bypass the restrictions included in most TOS agreements.

The news of this enforced subscriber migration to tethering plans has grabbed some headlines this past month, but the transition shouldn’t have been news to those who were using the TOS-evading apps. Both Verizon and AT&T were very proactive in communicating with subscribers about the fact they would be transitioned to a higher-priced plan.  Letters, page redirects, and text messages were all used to send messages to those identified using these tethering apps as early as March of this year.  From the Communications Service Provider (CSP) perspective, tethering creates massive amounts of data that must be carried on networks, and premium plans have been designed such that the revenue will offset the cost of carrying this traffic to ensure a sustainable business.

Given that tethering app developers charge between $10 and $50 for a software license, and that CSPs stand to gain potential additional revenues from tethering subscriptions, both developers and network operators have significant financial interest in tethering services.  We have very likely only seen the beginning of a cat-and-mouse game between app developers and CSPs, as developers will try to find new ways to have their apps go undetected on CSP’s networks.

The third stakeholder is, of course, the subscriber.  While the vast majority of subscribers respect the terms of their service agreements, others are trying to circumvent these rules, to the detriment of everyone else.  For mobile network operators who want to enforce their terms of service, Sandvine’s network policy control solution provides tethering detection, enabling CSPs to confidently and reliably conclude when a subscriber is tethering, and ensure accurate billing.

The killer application in this partnership is the ease of use.  With this implementation, neither the originating nor the receiving party need to have created a Skype account in order to make a video call, since a button will be installed on every user’s Facebook profile. With Facebook claiming that the average user has over 130 friends, and that half of users access Facebook each day, it is easy to see how this new feature could explode in popularity.

It is not clear whether it was a coincidence that the feature’s launch came just a few weeks after social networking competitor Google+ opened its doors, offering a group video chat option.  While many people have been quick to praise Google+’s differentiating features as a “Facebook killer”, their user base of 20 million, while growing rapidly, is still only a fraction of Facebook’s total users.

So where will this partnership lead to next? At the press conference, both companies hinted at an expanded feature set coming down the road.  There was talk of group video chat, and of potentially offering other services for which Skype currently charges a premium.  The greatest potential, however, will be if, and how, this partnership makes the transition to smartphones and tablets.

While Skype is a popular mobile application, Facebook is among the top five most downloaded applications on every major mobile platform.  Should the two further integrate and partner on mobile applications, then video calling (especially cross-platform) could see tremendous growth on mobile devices.

This partnership, and others like it, will raise some interesting questions for carriers from a charging standpoint.  With unlimited, zero-rated, social networking being a popular data option on many wireless plans, should the newly generated traffic be included as Facebook, or classified as Skype within the real-time communications category, or classified as something different altogether?   Customers who subscribe to social media packages for price certainty might expect that anything launched from Facebook is subject to the same zero-rating treatment.

Operationally, the reality is that a handful of video calls might very well dramatically shift the data usage profile of a typical Facebook user.  Unlimited bolt-on packs are designed to help align average revenue with average usage, and step-function changes to data usage can potentially play havoc with such service plans.  Network operators will have to carefully analyze broad subscriber usage trends to ensure data plans continue to be profitable, while still providing value for subscribers.

The numbers are in, and all told, the combined events brought in more than 56,000 industry visitors, conference speakers, delegates, exhibitors and media.  Total attendance increased slightly year over year, proving that, in a period of frequent tradeshow consolidation, this event has staying power.

I presented during the CommunicAsia Summit, Next Generation Mobile Broadband Track, along with other industry contributors, as part of a session that tackled the over-arching theme of balancing demand with quality of experience (QoE).  Speakers covered issues such as scaling infrastructure to meet the increasing demand for high-speed data; how to effectively manage networks, and the resulting customer experience; the impact of video on 4G networks; and network policy control techniques to provide visibility into usage and enable tiered service plans.

The latter point speaks to my session where I set the stage by describing the current service provider landscape in which the competing challenges of leveraging capital infrastructure investment and finite network capacity, while attracting customers with differentiated services, are faced.

As Internet traffic profiles rapidly evolve and mobile data (like fixed) drive towards real-time ‘enjoy now’ entertainment, and away from traditional “enjoy later” applications, subscriber QoE demands skyrocket and these interactive, high-value communications must be protected.

I discussed network policy control techniques, treating the network of convergent conditions as a statistical process, and advising that implementation of network policy control solutions take place in a step-by-step framework:

• Planning (identifying how subscriber experience and policies will be base-lined and measured)
• Implementing (network policy control)
• Checking (comparing measurements to baselines and tweaking policies)
• Acting to deploy network-wide.

The theme can be summarized as “you can’t control what you can’t measure”.

I hoped to leave the audience with the message that a purpose-built network strategy is achievable as network technologies transition and subscriber behaviours evolve, through the network-wide visibility and astute decision-making made possible with network policy control (application-, device, subscriber-aware).

Another prevalent focus, both off (summit) and on the exhibit floor was cloud computing.  Mobile VAS Strategy, Satellite Communications, and Convergence were more topics highlighted in the conference program.

In addition to forward-looking discussions from the panel session floor, some notable launches were announced from the exhibit floor. The biggest buzz surrounded the Blackberry booth, where the PlayBook tablet in Singapore was unveiled, and the soon-to-be-released Bold Touch 9900 smartphone was announced; Huawei’s launch of the MediaPad, and smartphone launches by Nokia and Sony Ericsson.

The future of CommunicAsia at the swanky, new venue of Marina Bay Sands is bright and we look forward to another strong showing in 2012.

As IPv4 networks continue to make the transition to IPv6, and new networking technologies requiring IPv6 (such as LTE), are rolled out globally, it is important for Internet service providers to ensure their network policy control solution is fully IPv6 capable.  Consequently, this global trial run of IPv6 serves as an important benchmark, and was closely watched in network operations centers around the world.

For Sandvine, this was the perfect opportunity to demonstrate the IPv6 readiness and reporting capabilities of our Policy Traffic Switch (PTS), as a number of Tier-1 MSOs used the PTS to closely monitor network performance during this global trial of IPv6. Using test flight data collected from participating MSOs in North America, we were able to look at both IPv4 and IPv6 traffic before and during the event, in order to measure the impact of IPv6 Day.

Overall we found IPv6 downstream traffic and connections (number of TCP sessions) increased substantially above typical levels, but remained relatively low in comparison to IPv4 (which exceeds native IPv6 traffic by a factor of about 1000).Figure 1 shows the immediate impact of IPv6 Day when measured by native IPv6 traffic from Google, Facebook, Yahoo and YouTube.  The rapid rise in native IPv6 traffic occurs at exactly 8:00pm EDT on June 7, the moment at which IPv6 Day officially began.  Larger spikes followed at various points throughout the day, usually corresponding to the peak evening hours of each timezone.

Figure 1 – Native IPv6 Traffic by Popular Domains on World IPv6 Day
(Source: Network Demographics)

Figure 2 highlights the number of HTTP connections made via IPv6, observed on a participating network.  Notice that the number of 6to4 connections rose from less than 100 at any given time between June 4th and June 7th to more than 1000 connections during IPv6 Day.  When examining IPv6 traffic itself, transition protocols seemed to show more significant gains than native IPv6 – 6to4 protocol usage increased 10 times, 6over4 increased 5 times, while native IPv6 and Teredo usage patterns remained relatively unchanged.

Figure 2 – Total IPv6 HTTP Connections June 4-8
(Source: Network Demographics)

In terms of the quality delivered to end subscribers, when measured by the access round-trip time, IPv6 performed as well as IPv4.  Overall, this is the metric that is most relevant to users, and underscores the fact that IPv6 Day was a smooth test flight.  Be sure to check back next week when we post the complete Global Internet Phenomena Spotlight with a wider range of insights revealed by World IPv6 Day.