The survey found that: 1) Mobile video and speed tiers were seen as the most promising monetization opportunities, while toll-free mobile broadband was seen as the least attractive. 2) Video traffic growth was identified as a significant challenge for network planning over the next two to five years, especially by those in corporate management and technical roles. 3) Most respondents expected to deploy a video optimization solution within the next three years to help manage rising mobile video traffic on their networks.

1. A Heavy Reading
Custom Research Study
Mobile Operator Perspectives:
Monetization,
Optimization & Video
Prepared for Cisco by
Gabriel Brown, Senior Analyst
February 2011

2. Study Background
• Custom survey for Cisco generating exclusive results
• 50 service provider professionals surveyed
• Reponses from broad geography and job roles
• Three areas of primary investigation
• Monetization Use Cases
• Network Technologies & Optimization
• Mobile Video
• Series of 20 in-depth interviews w/ senior technology
and product management executives
2

3. Survey Demographics
What is your primary job function? (n=55) Approximate annual revenues? (n=55)
Engineering & Network planning 35 Less than $50 million 9
R&D & technical strategy 16
$50 million to $200 million 11
Corporate management 15
$200 million to $500 million 15
Sales & marketing 15
$500 million to $1 billion 16
Product & Service Management 13
$1 billion to $5 billion 24
Other 4
Customer support 2 More than $5 billion 25
0 5 10 15 20 25 30 35 40 0 5 10 15 20 25 30
% %
Type of service provider you work for? (n=55) Where is your organization headquartered? (n=55)
Africa U.S.
Other 20%
7% Middle East 5%
11%
Mobile
operator pure-
play Canada
18% 7%
Asia Pac
20%
Incumbent Central/South
Mobile with mobile America/
division of an assets Caribbean
incumbent 60%
Central/ 5%
operator
15% Eastern Western
Europe Europe
19% 13% 3

4. Monetization
4

5. Importance of Monetization Use Cases
How important will the following mobile data services be in generating revenues
for your company over the next two to three years? (n=54)
Ranked "4—Important" & "5—critically important"
Speed Tiers (downlink) 32 44
Family or Group Data Plan 42 24
Hour/Day Pass 39 24
Mobile Video / TV 28 23
Parental & Cultural Controls 22 20
Turbo Boost 31 18
Mobile Advertising 37 15
Freemium Service Models 24 13
Toll-Free Mobile Broadband 27 6
0 10 20 30 40 50 60 70 80
%
4 5 (Very Important)
• Speed Tier s & Group Data Plan are most promising use-cases
• Toll Free Mobile Broadband is least attractive; less well known, complex
5

6. Use Case Penetration Expectations
What proportion of your subscriber base will pay for, or generate indirect revenue from,
the following operator-provided services over the next two to three years? (n=54)
Family or Group Data Plan 15 26
Speed Tiers (downlink) 28 18
Turbo Boost 15 9
Hour/Day Pass 26 6
Mobile Advertising 26 6
Mobile Video / TV 28 5
Freemium Service Models 12 4
Parental & Cultural Controls 9 4
Toll-Free Mobile Broadband 8 1
0 10 20 30 40 50
%
20-30% More than 30%
• ~40 percent of respondents think they can monetize more than
a fifth of subscribers with speed tiers and group data plans
6

7. Revenue Generation Potential
How much additional revenue (in $US) would you expect of the following operator-provided
services to generate per user, per month over the next two to three years? (n=54)
Highest Revenue Per User
Speed Tiers (downlink) 19 15
Family or Group Data Plan 23 13
Mobile Video / TV 21 6
Turbo Boost 13 4
Hour/Day Pass 16 4
Mobile Advertising 8 4
Freemium Service Models 6 2
Parental & Cultural Controls 9
Toll-Free Mobile Broadband 4
0 5 10 15 20 % 25 30 35 40
$5-$10 More than $10
• Mobile Video / TV has good per user revenue potential
• Parental & cultural controls looks difficult to monetize
7

8. Revenue Generation Potential
How much additional revenue (in $US) would you expect of the following operator-provided
services to generate per user, per month over the next two to three years? (n=54)
Lowest Revenue Per User
Speed Tiers (downlink) 8 8
Family or Group Data Plan 8 8
Mobile Video / TV 13 10
Turbo Boost 12 19
Hour/Day Pass 14 22
Mobile Advertising 17 17
Freemium Service Models 18 20
Parental & Cultural Controls 19 28
Toll-Free Mobile Broadband 27 27
0 10 20 30 40 50 60
%
Zero (or trivial) Less than $1
• Toll Free Mobile Broadband has lowest monetization potential
• Parental Controls perhaps more viable as a loyalty mechanism
8

9. Monetizing Third Parties
9

10. Network Capabilities to Support Third Parties
How important are the following mobile data network capabilities to generating revenues
from partnerships with 3rd party application and content providers? (n=50)
Ranked "5 (Critical)"
Bandwidth Management (real-time control of network
55
resources, rate limit bandwidth, etc.)
Traffic Optimization (Improve downlink throughput) 52
Priority Handling (Deliver QoS for specific applications) 49
Cloud services (applications are hosted in your data
18
center)
Zero Rating (data usage not counted against user
10
quota)
Reverse charge back (application provider pays for
4
connectivity)
0 10 20 30 40 50 60
%
• Surprise to see “zero-rating” and “reverse charge back” score so lowly
• Possibility the question was understood to be about general network
capabilities, not 3rd party specific
10

11. Third Party Network APIs
Which telecom network capabilities do you envisage making available to third party
application developers for service innovation through open APIs? (n=50)
• Messaging & Billing APIs
already widely supported
• Call control least likely to be
exposed; arguably already
supported via PSTN
• Is their a role for Policy-related
APIs long-term?
11

12. Network Optimization
12

13. Optimization Technologies (I)
How likely are you to use the following “Internet Offload” & optimization techniques in the
next two to three years? (n=50)
EVALUATING; WILL
DEPLOY DEPLOY IN THE
NO PLANS AT ALREADY IN- WITHIN 12 NEXT THREE
DON’T KNOW PRESENT SERVICE MONTHS YEARS
Managed WiFi Offload 24% 22% 30% 14% 10%
3G Femtocells &
14 12 25% 35% 14%
Picocells
DPI (Throttling of high b/
8% 6% 37% 35% 14%
w applications or users)
Core network offload
using an “Offload 36% 24% 12% 18% 10%
Gateway”
Internet Breakout using
distributed GGSNs or P- 22% 20% 24% 20% 14%
GWs
Optimized routing of
Applications over specific 16% 10% 32% 16% 26%
transport routes
• Confirms DPI as a ‘core’ technology (70 percent deployed in 12 months)
• Internet breakout and core network offload score weakly; Perhaps partly
explained by unfamiliarity with this new technology concept
13

14. Optimization Technologies (II)
How likely are you to use the following “Internet Offload” & optimization techniques in the
next two to three years? (n=50)
• Femtocells edging into
main stream deployment
• Managed WiFi Offload
faces headwinds
• Internet offload gateways
don’t have much appeal
14

15. Mobile Video
15

16. Severity of Video Traffic Growth
How much of a challenge will video traffic growth be to your network planning &
performance? (n=51)
2 YEARS 5 YEARS
N=50
FROM NOW FROM NOW
Extremely
35 31
challenging
A significant
27 24
challenge
Moderately
24 29
challenging
Slightly
6 7
challenging
Not a challenge
6 10
at all
• Identifies video traffic as a significant challenge
• 30 percent identify a severe problem over two- and five-years
• Should we worry about “confirmation bias”? (see over)
16

17. Video Traffic by Job Role
How much of a challenge will video traffic growth be to your network planning &
performance? (n=17)
2 YEARS 5 YEARS
N=17*
FROM NOW FROM NOW
Extremely
13 40
challenging
A significant
44 27
challenge
Moderately
25 27
challenging
Slightly
0 7
challenging
Not a challenge
19 0
at all
*Corporate management, Technical strategy or Engineering & network planning roles
• View of data by job role provides better insight
• Video is viewed as less of a challenge over a two-year view
• Concern increases markedly over five years
17

18. Opportunities to Monetize Mobile Video
What opportunities to do you see to better monetize mobile video? (n=53)
We don’t expect video services to generate significant
11
direct revenues
We will generate some revenue directly from video
services, but it won’t be a lot for the next two to three 34
years
Most revenue we do generate from video will come
21
through partnerships with content providers
Video services will be an important contributor to our
value-added services revenue over the next two to 15
three years
Being able to view video on mobile devices is a major
15
reason why customers subscribe to mobile data plans
0 5 10 15 20 25 30 35 40
%
• 70 percent see video as a revenue-generating application in some form
• Uncertainties about direct monetization or partnership models
• General view is that video is an incremental opportunity at best
18

19. Usage of Video Content
What proportion of your company’s consumer subscriber-base would you expect to
regularly (at least once a month) use the following types of video services two to three
years from now? (n=51)
Over-the-top video (e.g. You Tube or user-generated
27% 35% 11% 19% 8%
content)
Professionally produced over-the-top content (e.g.
48% 36% 10% 4% 2%
Hulu, iPlayer)
Operator provided mobile TV or subscription video
52% 23% 11% 10%4%
services
Video conferencing (e.g. Apple Facetime, Skype
47% 23% 16% 6% 8%
Video)
Shared video clips (e.g. birthday videogram) 48% 29% 10% 11% 2%
Mobile video as part of a 3-screen package 43% 35% 12% 8% 2%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Less than 20% 20-40% 40-60% 60-80% 80-100%
• OTT video is the service operators think most likely to go mass-market
• 27 percent think more than half the subscriber base would use it once a month
19

20. Perception of Vendors’ Mobile Video Capabilities
Please rate the following suppliers in terms of their overall capability to support your
mobile video strategy? (n=36-42)
Ranked “very competitive; among the market leaders”
Cisco 37
Ericsson 28
Alcatel-Lucent 22
Nokia Siemens Networks 17
Huawei 13
Openwave 9
ByteMobile 8
Juniper 8
Mobixel 6
Flash Networks 3
0 5 10 15 20 25 30 35 40
%
• A big result for Cisco in the mobile market
• Opportunities for market share gain in data era
20

21. Managing Video Traffic
Please rate the importance to your company of the following technologies for
managing mobile video traffic (5 being “critically important” and 1 being “not
important at all”) (n=50)
Ranked "4—Important" & "5—critically important"
Policy Control (throttling, and priority handling) 36 55
Adaptive bit rate streaming 50 20
Control plane optimization (e.g. TCP
49 20
optimization)
Video transcoding / optimization (i.e. transform
40 18
video codec to optimize for device)
Internet Offload (e.g. WiFi) 38 13
Edge caching solutions (i.e., Ingest and Store
21 12
transcoded content to prevent re-transcoding)
Transrating ( reduce video bandwidth in real-time
46 10
by removing frames)
0 20 40 60 80 100
%
4 5 (critically important)
• Unambiguous result for policy control at 55 percent “critical”
• Loose definition of policy helps vs. specific alternatives
21

22. Video Optimization
When do you expect to deploy a video optimization solution in your network? (n=52)
Already deployed commercially 12
Will deploy within the year 17
Will deploy in 1-3 years 42
Will deploy in 3-5 years 13
Will deploy in 5+ years 4
No plans to deploy 12
0 5 10 15 20 25 30 35 40 45
%
• Emphatic result with strong endorsement for this technology
• In-depth interviews paint a more cautious picture, however
22

23. Efficiency Gains from Video Optimization
When do you expect to deploy a video optimization solution in your network? (n=52)
Less than 10% 12
Between 10 and 25% 46
Between 25 and 50% 19
More than 50% 2
Don’t know 19
Not interested in video optimization 2
0 5 10 15 20 25 30 35 40 45 50
%
• Clear result inline with other Heavy Reading surveys
• 15 percent video efficiency gain is typically achieved today
• HD content provides more opportunity for efficiency gain
23

24. Thank You!
(brown@heavyreading.com)
24

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