By Manish Singh

Mobile operators are increasingly at the mercy of device manufacturers and what the industry still insists on calling over-the-top (OTT) services. A recent report from Telco 2.0 argues that the rising competition for traditional mobile services from those new players is going to radically reduce operator revenue in the coming years.

Though this was a European study, the fears exist throughout the operator community around the world. And the figures strike me as being on the sensationalist side of things, but there’s no doubt that this is a trend that needs addressing and reversing.

Yet a new challenge for operators has emerged in recent weeks that brings this threat into sharp focus. With the launch of iOS6, Apple’s peer-to-peer video calling service – FaceTime – is available on 3G and 4G cellular networks.

iOS6 is already on more than 100 million devices, a fair proportion of which will have access to cellular networks. That’s a lot of mobile users that could start FaceTime sessions on an operator’s network. And this is very early days.

If the number of iOS6-enabled devices out there continues to increase as projected, and FaceTime grows in popularity, we could finally see mobile video calling take off. As a mobile service it has failed to establish itself so far, but the influence of Apple and the inevitable increase in marketing of similar services from competitors could see the service take off and become a mainstream proposition.

What does that mean for mobile operators?

Worst case scenario, it means an increase in data traffic on their network, with little corresponding revenue, and a decline in usage of their own traditional telephony services.

Those on the infrastructure side of the mobile industry have been have been working to augment network capacity and speed to meet this threat, but is enough being done? And which are the areas of the network that will be under the greatest pressure?

Perhaps a more important question, which components of the network will allow operators to not only manage the increased traffic, but also to grow revenues, either directly from OTT services, or by capturing the associated trend?

The following network elements will be crucial to operators’ continued success in this new environment when the services on their network are rarely their own:

Small cells: By providing massive increases in capacity, small cells are by default a key tool in managing the data crunch. Additionally, small cells are increasingly multi-mode with support for 3G, LTE and WiFi in a single device. This presents a great tool for operator-managed service partitioning. With this capability, operators could actively choose to move FaceTime traffic to WiFi, 3G or LTE based on congestion issues, ensuring the optimum user experience for all on the network.

Serving Gateway: Acting as the anchor point for the core network makes the SGW the workhorse of the LTE network. Being the anchor point means the SGW must be capable of managing mobility as a FaceTime user moves through the network. This is a very different scenario to a user downloading emails and a significant amount of capacity is required.

Packet Gateway: The packet gateway provides connectivity between the device and the external network where the video server resides, but that is not it’s only job.  The PGW can perform a number of additional tasks including policy enforcement, packet filtering, billing and potentially lawful intercept.  As a result, these platforms must be capable of doing some heavy lifting with a lot of packets.

DPI Platforms: LTE, due to its increase in available bandwidth, will carry a wider range and volume of services (such as data, voice and video) than any previous architecture. In order to be more effective, LTE will require DPI-based network probes capable of providing real time data for the PCEF. The DPI platforms, due to the significant increase in data traffic, must be capable of detecting more information, and at faster speeds, than ever before.

ePDG: One way to help off-load the macro-RAN network from high bandwidth applications such as FaceTime is the utilization of Wi-Fi and small cell networks. However, some deployment scenarios of Wi-Fi and small cells use untrusted access between the subscriber and the core network. In these types of untrusted scenarios, the ePDG becomes of significant importance to the operator it must handle high-bandwidth traffic and provide vital security for the user.

IMS Media Resource Function: They say the best defence is often a good offence. That is why mobile operators are accelerating their deployment of VoLTE and RCS services to generate their own service revenues over their LTE broadband infrastructure, to compete with OTT communication services like Facetime, but with improved interoperability. VoLTE and RCS video chat, video share, and multimedia conferencing services are all based on IP Multimedia Subsystem (IMS), and platforms that deliver the audio and video media processing power to make all these VAS services  scalable. Eventually, a Media Resource Function will also play a role in providing video interworking gateway services between FaceTime and non-FaceTime video endpoints, to achieve ubiquitous real-time multimedia communications.

The challenge for operators is most definitely two-fold. Simply managing the increased volume of third party traffic on the network will not be sufficient to halt the revenue declines that the Telco 2.0 research highlights.

Operators must keep traffic costs down to retain margin on data volumes. But they must also use the same infrastructure to maximize revenues. This means offering outstanding quality of service to subscribers that drives data usage and, in turn, revenues from tiered tariffs.

It also means using that QoS to encourage adoption of new services. Services enabled by platforms that can deliver the sort of premium voice and video experiences that subscribers are willing to pay for.

In a survey that we conducted in 2011, service delivery and innovation was a major concern of operators. They must overcome this concern. Without the approach to manage capacity and increasing service innovation and delivery, operators face declining revenues, declining margins, and increased marginalisation in a mobile industry dominated by consumer brands of devices, apps and services.

Manish Singh, Radisys