Broadhop: Monetization of networks more possible than ever

Given how over-the-top streaming video services are booming, it’s easy to see how doom-and-gloom headlines (like this one from Business Week: Will Netflix Kill The Internet?), could make telcos and ISPs fear for how their networks will hold up under the onslaught.

“But this sometimes sensationalistic dialogue about customer reactions to regulatory issues and technologies about which they don’t know enough means that the ‘real point’ is being missed altogether,” said BroadHop's Bill Diotte, president and CEO of policy vendor BroadHop, which this week announced 12 new carrier wins for its policy server suite, which among other capabilities helps operators manage over-the-top traffic. “Rather than look at the negative and defensive uses of technology, operators should be focused on promoting the enhancements to personalization and productivity that technology will enable. Enhancing QoS for the customer can improve ROI for service providers—they can fit nicely together.”

For those like Diotte, who consider OTT innovations to represent an opportunity – rather than a threat – for telecom providers, the key is for carriers to help over-the-top providers create a better service than they could deliver alone. Whether through QoS guarantees or enhancements that ratchet up OTT players’ capabilities, it is ultimately a superior customer experience that will open the door to new partnerships and revenue streams for telcos.

“If operators constantly think about how they can ‘enable,’ ‘enhance’ or ‘personalize’ what OTT players are doing, they can drive better experiences and more revenue splits with non-traditional partners,” added Diotte. “Succeeding in thinking of OTT as a new opportunity rather than a threat is one part, as is keeping customers engaged with compelling offerings (such as configurable, adjustable parental controls over children’s accounts in terms of texting or access to inappropriate content),” said Diotte, who believes operators have a lot to gain, but also a lot to lose if they don’t seriously consider how that incremental opportunity for monetization will increase the level of transaction processing required by an order of magnitude, if not more.

Leveraging those new capabilities will require a balance of the two, which means a transition from “Policy 1.0” to “Policy 2.0.”

“Where ‘Policy 1.0’ revolved around caps and tiers to protect networks and prevent bill shock, ‘Policy 2.0’ will revolve around monetization of networks through user-selected, personalized services that put intelligence in the hands of subscribers,” said BroadHop's Diotte.

Policy 2.0 will necessitate what Diotte calls “intelligent application-centric control planes” that sit among applications, users and networks. “To monetize OTT content, this is no longer about a box, but about extracting intelligence about what users want, and through common interfaces, unifying that information across networks and across the delivery chain,” said Diotte.

Today that is difficult, as most network-centric policy control planes are optimized for data flow, as opposed to transaction processing, which means “scaling up” often causes hardware costs to exceed the revenue generated by policy-enabled services. Because of the one-to-one relationships between the PCRFs and the GGSNs in many of today’s policy solutions, offering truly dynamic, personalized services is unmanageable—if for nothing else than the sheer number of servers needed across operator networks.

“Operators should try to minimize the number of clusters they manage in terms of PCRFS anchored to mobile gateways,” said BroadHop's Diotte, noting that throwing servers at the challenge of managing millions of transactions-per-second causes prices to increase geometrically with transaction loads.

He advises that operators seek solutions that enable small numbers of policy clusters to handle approximately 50,000 to 100,000 transactions per second, as will be the case when individually selected services come online in a mainstream way. “When that happens, only platforms that employ virtualization and scale out—not just up—will be able to handle that,” said Diotte, who believes virtualized platforms will be the key to scaling linearly so that revenues can match, or maybe exceed, the cost of delivering services.