Forbes.com

Mobile Operators: How To Keep Up With Customer Demand

In the coming years, winning mobile operators will be those that shift their focus from a system that relies on rigid measures of network performance to one that actively manages customer experience.

By Jeff Melton, Andrew Rodd and John Reister

Published on August 30, 2017
min read


This article originally appeared on Forbes.com. Mobile network operators are struggling to keep up with the growing demands of their customers. People are live-streaming videos, playing multiplayer games and engaging in other activities that can overwhelm the network, making all services slow and unreliable. This is an untenable situation. Operators that fail to deliver a consistently superior customer-received usage experience (CRUX) are vulnerable to negative customer reviews and increased churn. Mobile operators are not just fighting for customers; they’re fighting for their futures. They’re struggling to generate sufficient cash flow to make the necessary capacity investments that will provide customers with the level of service they demand. And when they’re unable to make these desperately needed improvements, they often cut their rates to keep customers from defecting to rivals, triggering destructive price wars. Operators that figure out how to deliver a superior CRUX can break out of the cycle and increase both their market share and their pricing power. Winning companies will be those that shift their focus from a system that relies on rigid, engineering-oriented measures of network performance to one that actively manages customer experience. In a new customer-driven environment, telcos that succeed will be able to sense how their customers are using the network, decide how much bandwidth is required to generate a good usage experience for each activity and then act on that information in real time. Today, however, most operators are running to stay in place. While they spend on capacity expansion, they are often frustrated when they don’t see direct benefits in terms of gains in market share or increases in average revenue per user. Traditional network performance metrics worked well when operators controlled entire customer episodes, as they did with voice calling and text messages. But today’s mobile customers engage in an ever-broadening array of usage episodes that rely on a growing ecosystem of applications, content providers, operating systems and devices. The problem is that operators have trouble seeing what their customers are doing. Most operators suffer from limited visibility at the edge, where user applications first interact with the network. Content providers encrypt more than 80% of traffic on average, according to measurements by Vasona Networks, which means the mobile operator cannot readily identify the kind of content flowing through the access network. For broadband delivery, most operators rely on two measures to trigger mobile access network investment: average throughput (bitrate) per user, and radio resource utilization during busy hours in each cell. If the average user bitrate falls too low or utilization is too high, engineers assume a particular cell is delivering poor user experiences, and they add capacity to that cell. The trouble is generic thresholds don’t differentiate between customer activities that are bitrate-intensive, such as watching a video, and those that are bitrate-light, such as using social media apps. A cell can have high traffic volume and still meet customer demand even when conventional metrics would indicate that it is overcrowded and in need of an upgrade. To achieve the best possible user experience for a given expenditure, forward-looking operators are using a new approach called quality on investment (QOI). Companies that have adopted QOI have shown they can achieve as much as a 30% improvement in customer usage experiences for the same level of investment by changing 20% of planned projects, according to research by Bain & Company. Among the tools available to help operators sense what their customers are doing are edge-based traffic management applications. These apps, which run on cloud-based platforms, classify usage episodes by type—such as video, browsing, social media or background traffic—while the content is moving through the mobile access network. The content is never decrypted, but the technology can identify and assess the episode type. This provides operators with a means to “deaverage” the network according to what customers want to do and then set performance target thresholds tailored to episode types. Once the operator can sense what customers are doing, it can decide how to allocate resources and take immediate action to address the issue. Edge-based traffic management solutions are delivering real benefits today, including reductions in video stalls and delays during busy hours. A tier-one operator using a multi-access mobile edge computing (MEC) platform from Vasona Networks in a major city with 3,000 cell sites and 4 million user lines reported that video buffering fell by 25% and session bitrates increased by 15% during periods of network congestion. Once mobile operators successfully move from a focus on generic network performance to an approach that allows them to sense what users are doing in real time, they will be able to dynamically manage traffic and maximize CRUX. In short, they’ll be able to invest in the experiences that customers value most, generating both satisfied customers and improved returns. Jeff Melton and Andrew Rodd are partners with Bain & Company in the Melbourne office. John Reister is vice president of marketing and product management at Vasona Networks, based in San Jose, California.

This article originally appeared on Forbes.com.

Mobile network operators are struggling to keep up with the growing demands of their customers. People are live-streaming videos, playing multiplayer games and engaging in other activities that can overwhelm the network, making all services slow and unreliable. This is an untenable situation. Operators that fail to deliver a consistently superior customer-received usage experience (CRUX) are vulnerable to negative customer reviews and increased churn.

Mobile operators are not just fighting for customers; they’re fighting for their futures. They’re struggling to generate sufficient cash flow to make the necessary capacity investments that will provide customers with the level of service they demand. And when they’re unable to make these desperately needed improvements, they often cut their rates to keep customers from defecting to rivals, triggering destructive price wars.

Operators that figure out how to deliver a superior CRUX can break out of the cycle and increase both their market share and their pricing power. Winning companies will be those that shift their focus from a system that relies on rigid, engineering-oriented measures of network performance to one that actively manages customer experience. In a new customer-driven environment, telcos that succeed will be able to sense how their customers are using the network, decide how much bandwidth is required to generate a good usage experience for each activity and then act on that information in real time.

Today, however, most operators are running to stay in place. While they spend on capacity expansion, they are often frustrated when they don’t see direct benefits in terms of gains in market share or increases in average revenue per user.

Traditional network performance metrics worked well when operators controlled entire customer episodes, as they did with voice calling and text messages. But today’s mobile customers engage in an ever-broadening array of usage episodes that rely on a growing ecosystem of applications, content providers, operating systems and devices.

The problem is that operators have trouble seeing what their customers are doing. Most operators suffer from limited visibility at the edge, where user applications first interact with the network. Content providers encrypt more than 80% of traffic on average, according to measurements by Vasona Networks, which means the mobile operator cannot readily identify the kind of content flowing through the access network.

For broadband delivery, most operators rely on two measures to trigger mobile access network investment: average throughput (bitrate) per user, and radio resource utilization during busy hours in each cell. If the average user bitrate falls too low or utilization is too high, engineers assume a particular cell is delivering poor user experiences, and they add capacity to that cell.

The trouble is generic thresholds don’t differentiate between customer activities that are bitrate-intensive, such as watching a video, and those that are bitrate-light, such as using social media apps. A cell can have high traffic volume and still meet customer demand even when conventional metrics would indicate that it is overcrowded and in need of an upgrade.

To achieve the best possible user experience for a given expenditure, forward-looking operators are using a new approach called quality on investment (QOI). Companies that have adopted QOI have shown they can achieve as much as a 30% improvement in customer usage experiences for the same level of investment by changing 20% of planned projects, according to research by Bain & Company.

Among the tools available to help operators sense what their customers are doing are edge-based traffic management applications. These apps, which run on cloud-based platforms, classify usage episodes by type—such as video, browsing, social media or background traffic—while the content is moving through the mobile access network.

The content is never decrypted, but the technology can identify and assess the episode type. This provides operators with a means to “deaverage” the network according to what customers want to do and then set performance target thresholds tailored to episode types. Once the operator can sense what customers are doing, it can decide how to allocate resources and take immediate action to address the issue.

Edge-based traffic management solutions are delivering real benefits today, including reductions in video stalls and delays during busy hours. A tier-one operator using a multi-access mobile edge computing (MEC) platform from Vasona Networks in a major city with 3,000 cell sites and 4 million user lines reported that video buffering fell by 25% and session bitrates increased by 15% during periods of network congestion.

Once mobile operators successfully move from a focus on generic network performance to an approach that allows them to sense what users are doing in real time, they will be able to dynamically manage traffic and maximize CRUX. In short, they’ll be able to invest in the experiences that customers value most, generating both satisfied customers and improved returns.

Jeff Melton and Andrew Rodd are partners with Bain & Company in the Melbourne office. John Reister is vice president of marketing and product management at Vasona Networks, based in San Jose, California.