Video: A 4G app in a 3G world?

(This story is part of Connected Planet’s Mobile Data Paradox microsite – an ongoing collection of features, blogs and opinions on the key question facing mobile operators today: how do you make a business of 4G and mobile data?

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Video is often cited as the ultimate app for 4G — the principle application to tap into WiMax and long-term evolution’s enormous stores of capacity and fast connection speeds. But operators seem to have no qualms about launching robust streaming video and video communications services over their 3G networks today.

A spate of new smartphones and tablets from the latest Motorola (NYSE:MOT) and HTC Droids to the Samsung Galaxy Tab and the Apple (NASDAQ:AAPL) iPhone 4 and iPad all come rife with video playback and capture capabilities, which could easily wallop an unsuspecting 3G network in the wrong place at the wrong time.

Admittedly some operators and app providers are restricting some of those video capabilities to Wi-Fi — Apple’s Facetime video chat app, for instance — but more often than not operators are letting these apps go hog wild on their 3G networks: Verizon Wireless (NYSE:VZ, NYSE:VOD) and the NFL are streaming all four quarters of two weekly games to Android phones. AT&T (NYSE:T) is allowing customers to access full-length feature films on the iPad through the Netflix app, though its new usage-based data plans provide a substantial curb. Alternate peer-to-peer services like Fring are turning smartphones into video phones. Where video is restricted to Wi-Fi seems more a function of the app provider exerting quality control than a desire to spare network resources.

A recent analysis by Allot Communications (NASDAQ:ALLT) of its customers' global data traffic found that video streaming is the fastest-growing application on today’s mobile network, already accounting for 29% of all mobile data traffic — one single source, YouTube, was responsible for a full 10% of traffic. As the industry moves beyond YouTube to the more robust video apps, those numbers will only grow. According to Cisco Systems’ (NASDAQ:CSCO) Visual Networking Index numbers, video will account for 66% of all mobile data traffic by 2014.

Those huge traffic numbers could present an opportunity for operators looking to monetize new forms of traffic, but in general, operators aren’t charging big premiums for these services. Verizon Wireless does impose a $10-a-month video-on-demand fee on top of its data plan subscription but then gives customers free reign to consume video to their hearts’ content. With the exception of AT&T, most operators are still offering unlimited smartphone data plans, meaning they’re not cashing in on the gobs of new megabytes traversing their networks unless they’re collecting revenues from the content providers. So why are operators purposely opening the flood gates?

Managing the mobile video stream

Collson Hillier, executive director of multimedia products for VZW, said there’s a clear distinction between video and mobile video optimized for the 3G network. VZW takes pains to ensure that the all-video content traversing its 3G network falls into the latter category, he said, utilizing content delivery networks to push video to the edge of its networks; resizing, compressing and encoding video for the different media players and form factors on its devices; and adapting the stream rate in real time to the conditions of the network to avoid congestion. VZW isn’t just throwing HD-quality video onto the network and letting the handset toss out the bits it doesn’t need, Hillier said.

“Wireless spectrum has and will always continue to be the narrowest point on the network,” he said. “But if you optimize the device and the network, you’re still able to deliver a high-bit video experience.”

Verizon certainly isn’t stingy with those bit rates. A typical video-capable device will get a 190 kb/s stream, while the higher-end devices, like the Droids, will get a 300 kb/s stream. If a customer moves to Wi-Fi, Verizon will open the pipe to support 500 kb/s video, which takes the delivery burden off of the 3G network but also raises consumer expectations for what is possible over their phones.

Verizon has seen tremendous adoption of mobile video services since Verizon began supporting NFL Mobile and other high-end streaming apps, Hillier said, though he couldn’t offer up specific numbers on minutes watched or overall traffic impact. VZW’s EV-DO network has withstood the challenge admirably, though, avoiding problems AT&T faced after the launch of the iPhone. Verizon hasn’t been plagued by congestion problems, and the quality of experience for all of its customers hasn’t declined even with video traffic taking up a much larger portion of the airwaves, Hillier said, but he acknowledged that as more customers adopt video services and existing customers consume more of it, the network will feel the effects.