The State of Mobile Video 2018

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Europe is the most highly penetrated mobile region in the world, with little room for subscriber growth. According to the GSMA, about 84 percent of Europe’s population subscribes to mobile services, a number forecast to grow, albeit sluggishly, to 86 percent by 2020.

Slowing subscriber growth is, though, being offset by rapid migration to 4G networks. 4G is expected to account for more than 60 percent of the total subs base by 2020 amid growing demand for data and as 4G network coverage increases. Indeed, the number of 4G connections overtook 3G connections in Europe for the first time in 2016. European mobile operator revenue is expected to top €146 billion by the end of 2020, according to the GSMA. By then, mobile technologies and services are expected to generate around €674 billion, or 3.9 percent of Europe’s GDP, as the region experiences strong growth in productivity brought about by continued adoption of M2M (machine-to-machine) technology and the increased digitisation of industry and services.

Globally, mobile data traffic is set to grow tenfold between 2016 and 2022, according to the “Ericsson Mobility Report” of November 2017, with video growing to 75 percent of the mobile data load in that time.

5G Trials Advance, but Success Is Not Guaranteed

A few dozen of the 800 operators around the world are actively involved in trials of the fifth generation of cellular networks. Great hope is being put in 5G as a transformative technology for everything from changing vehicles into driverless entertainment hubs to enabling remote surgery and building the fourth industrial revolution on the Internet of Things.

In Europe, Vodafone installed 10 Massive MIMO (multiple input and multiple output) base stations in Madrid and will install 60 base stations in Milan in 2018, covering 80 percent of the city by the end of the year, then the same number again in 2019. The operator is already working with hospitals, police, and railways to explore how drones or remote cameras could improve their services.

In Germany, Deutsche Telekom made a public 5G connection in Berlin and reported download speeds of 2Gbps at a latency of just 3 milliseconds (ms). That compares with an average latency of 50–60 ms for some of the best current souped-up 4G networks. Its demo included a live transmission of UHD and an augmented reality (AR) application.

Select London businesses and residents benefitted from a 5G trial, too. Arqiva tested the performance of Samsung base stations and reported downlink speeds of around 1Gbps. This level of performance would allow for the simultaneous streaming of more than 25 UHD 4K TV channels, according to Arqiva. It said the trial was of particular interest for parties looking to a future of ubiquitous UHD.

Arqiva shelved $2 billion plans to float on the stock exchange last November. It operates the UK’s broadcast TV network and most of the country’s radio transmitters—together with renting 8,000 sites on which mobile operators EE, Three, O2, and Vodafone install their own signalling equipment. The company, which the Financial Times calculates made a net loss of £900 million over the last 3 years, is betting that 5G will power huge growth in demand for mobile video streaming and eventually replace DTT in the home.

EE is backing this too. The mobile arm of UHD sports broadcaster BT is looking for media and entertainment applications that would suit the power of 5G, such as live virtual reality streams and multi-angle, viewer-selectable switching of live sports. It claimed speeds of 2.8Gbps using a 100 MHz slice of 3.5 GHz spectrum in its 2017 lab tests, using a 5G baseband unit from Huawei and another Massive MIMO antenna.

With the first commercial 5G networks in Europe due to be switched on by 2020, the GSMA forecasts that there will be 214 million 5G connections in Europe by 2025.

Nonetheless, alarms continue to ring about the lack of a business case and incentives to invest. The CEO of BT Group, Gavin Patterson (right), told Huawei’s Global Mobile Broadband Forum in November: “If you look from 3G to 4G, the case was underpinned by going from what was a pretty poor internet experience to one which was really opening up the potential of the internet to mobile. And we haven’t found that for 5G.,” Patterson said. He acknowledged that the performance would be better, “but ultimately, as carriers we’ve got to make a significant investment and put the capex down...”

At the same event, Vodafone Group CTO Johan Wibergh (below right) stressed, “The increased efficiency ... from Massive MIMO and radio ... means 5G is as much as ten times more cost-efficient than 4G,” adding that he doesn’t understand why industry members are not talking about that more.

Deploying 5G faster networks is costly—estimated by Deloitte at around £50 billion ($63.1 billion) for rollout in the EU. The analyst says availability of higher speeds “will likely reveal uses we cannot currently imagine with multiple ‘killer apps’.” In the US, 4G is estimated to have accounted for some $150 billion in economic growth and more than 750,000 jobs.

In any case, Europe and the US are likely to be leapfrogged by Asia. The GSMA forecast that 5G connections in China will reach 428 million by 2025, or 39 percent of the 1.1 billion global 5G connections expected by that point.

Part of the reason for this is the large-scale public showcases of 5G built around successive Asian Olympic games, helping Asian telcos convince financial teams to invest. This starts in South Korea in February with a great opportunity for operator KT to show off 5G, moves to Tokyo in summer 2020, and then to Beijing in 2022 for the next Winter Olympics.

Megamerger On the Cards

2017 saw Vodafone further its ambitious plans to combine its European mobile networks with ultra-fast broadband and offer bundles of wireless and fixed-line services, including TV. It plans to pump €2 billion into routing fibre-optic lines to 13.7 million homes and businesses in Germany—its biggest market—by the end of 2021.

The mobile network operator previously invested in fixed-line broadband networks with Portugal Telecom and Orange in Spain and now has its eye on the UK.

Partnered with network builder CityFibre, it aims to connect 5 million UK homes and businesses. That would represent a fifth of the local market and a considerable improvement on its current position of around 245,000 broadband subscribers on copper lines rented from dominant UK broadband infrastructure provider Openreach. CityFibre’s new fibre-optic lines will offer speeds of up to 1Gbps, more than 10 times faster than on the Openreach network.

Vodafone could also extend its reach in partnership with Openreach, a BT subsidiary from which BT was forced to separate by UK regulator Ofcom in November. Either way, a major investment in full fibre by Vodafone would signal “a radical shift” in Britain’s telecoms industry according to The Telegraph.

Notably, a reinvigorated Vodafone would present Liberty Global-owned Virgin Media with a serious rival. To complicate matters, Liberty and Vodafone continue to manoeuvre for a $175 billion (£131 billion) megamerger which would see the two combine fixed-line and mobile assets across Europe.

Liberty’s potential sale of UPC Switzerland and UPC Austria is seen as prelude to a wider deal. In 2016, the companies presented a proof as to how a bigger combination would work when Liberty-owned Ziggo joint-ventured with Vodafone in the Netherlands.

Premium Content Streams on Mobile, but TV Remains Dominant

According to Cisco, video accounts for well over half of all mobile traffic. That figure is set to rise as network speeds upgrade (4G to 5G), handset reception technology develops, and the volume of premium content available on devices increases. Indeed, Ooyala reports that content greater than 20 minutes in length now represents the majority of time spent watching video across all screen sizes, at 63 percent. Quality of video is up, too. Almost 40 percent of mobile video traffic globally is now HD quality, found traffic management specialist Openwave Mobility. According to the study, HD was just 5.7 percent of mobile video traffic 4 years ago, and is expected to surpass the 50 percent threshold by the end of 2018.

Ooyala advised content providers to tailor their strategy around mobile. Significant deals showed old media tying the knot with social media and developing bespoke short-form content.

In 2016, Viacom and Turner, for example, partnered with Snapchat parent company Snap Inc. to create original content for Snapchat’s Discover section. In Viacom’s case, the agreement also grants Viacom the right to sell Snapchat’s US-owned ad inventory. Discovery’s partnership with Snap will see some user-generated and behind-the-scenes content from the Winter Olympics in South Korea published to Snapchat users across Europe.

However, this activity, which places mobile first, needs setting in the context of Nielsen’s October 2017 revelation that 89 percent of video streaming takes place on TVs and not on a smartphone, PC, or tablet.

“Most people prefer to watch TV on the big screen with better sound and a true lean-back experience,” noted Andrew Ferrone (right), vice president of pay TV, Roku. “The big screen matters to millennials too. Streaming provides consumers with choice and control, a consumer benefit that appeals to many.”

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