The Pragmatic Innovator

Part 1: Data Caps: Good for the Consumer or Good for the Operator?

AT&T and Verizon are doing it. And it is only a matter of time before all wireless operators are imposing some type of usage-based mobile data pricing, or data caps. The iPhone, surge of Android devices and now tablets are demanding an unprecedented amount of wireless bandwidth largely due to video-based apps. And bandwidth is something that operators have a limited amount of.

So data caps are here to stay (even with 4G, we believe) because operators simply cannot keep up with the growing demand of video, which uses a tremendous amount of capacity. Read more about how much capacity streaming video requires.

It has been argued that data caps are good for the operator (less network congestion so they can add more subscribers without building new base stations as quickly) and good for some subscribers as well (especially light users).

But how do you know how much data you use?

We did the math on AT&T’s pricing plan and we determined on average subscribers pay about 5¢ per MB. This is fairly meaningless unless you know how much data you can get per MB.

Streaming Video Clips

Costs for streaming YouTube videos to a smartphone based on watching 15 minutes of video each day, which is what the average person spends on YouTube. YouTube uses approximately 2MB/min to stream a video to a smartphone

Streaming Full Length Movies

Costs for downloading the movie Avatar to various devices using AT&T’s Data Connect Plan. Figures are calculated based on information taken from AT&T’s website.

No doubt subscribers will now have to think twice before viewing that 2 minute YouTube video, not to mention longer-form content that is proving popular on these devices. I’d argue that this is not good for content owners or over-the-top type of video service providers.

We believe operators are faced with two primary options:
1) Forget about allowing subscribers to stream video over 3G

2) Find alternative ways for subscribers to get their video fix

If you’ve read this blog before, you know that Opanga has developed solutions based on a concept called content pre-positioning. Operators can pre-position content into end devices by using surplus capacity found in their networks throughout a 24-hour period.

We believe that pre-positioning technology can complement subscriber data usage limits and pricing plans. Content pre-positioning can enable operators to offer new innovative revenue growth applications that are “outside the cap.”

Stay tuned for some business use cases that will benefit operators and media companies.

Are you surprised at how much a movie would cost on your smartphone? Would you pay it?

CTIA Enterprise & Applications: Observations from the Show Floor

By Dave Gibbons

We recently returned from CTIA Enterprise & Applications in San Francisco.  Based on the meetings and foot traffic, it is abundantly clear that there is a tremendous amount of interest in the concept of content pre-positioning.  Over the next two weeks, we will explore the opportunities presented by content pre-positioning; how it can be incorporated into a successful business model and why it has the potential to alter consumer behavior.

See our interview on bnetTV and what Light Reading has to say about the potential of content pre-positioning.

As always, we encourage you to weigh in with your thoughts and comments.  And if you have a question about content pre-positioning that remains unanswered at the end of the series, please feel free to drop us a line.  We’re very excited about this new concept and the possibilities it presents and we would welcome the opportunity to share our vision with you!

Why Wireless Networks Will Continue to Require Optimization

The Great Storage Debate: How Much Memory Does Video Really Use?

Since content-pre-positioning is new technology, we frequently receive questions about how it works and its possible flaws or shortcomings.  Perhaps one of the most popular questions relates to how much memory a pre-positioned video takes up on a smartphone.  People are sometimes skeptical of pre-positioning because they assume that the pre-positioned content will consume too much memory and overwhelm the smartphone.

The truth is, video consumes a surprisingly small amount of memory.  Consider this:

• Most smartphones today have 16GB of memory.  If you assume that the phone needs 2GB for the OS and other required software,that leaves approximately 14GB for other applications, such as video.
• A good quality video clip that runs a few minutes requires 3MBytes/minute (~400kbps video rate x 60 seconds =  24kbits/minute / 8 bits/byte = 3MBytes/minute)
• 3MBytes only consumes 0.02% of the memory on a 16GB handset

Now what about longer-length video?  What if you want to pre-position a movie, for instance?

• A two hour movie in decent quality requires approximately 360MB (3MB/min * 120min = 360MB). To store 30 movies you need 10.8GB

With that said, it all comes down to how much action is in the movie since the more action, the higher the coded bit rate that is required for it to look good. So, for very high quality you could encode at 768kbps video / 64kbps audio mono 5760 + 480 = ~6MBytes/minute. This also assumes the whole movie is high action, which it often times is not.  Assuming it were, this makes a movie (like Batman, for instance) with lots of action and special effects reach up to 650MB for very high quality.

So even if you are pre-positioning action movies in high-quality, you can still safely store a surprisingly large amount of movies on your smartphone.   Following the logic above, you could fit approximately 20 full-length high-quality action-intense movies on your phone (650GB * 20 = 13GB).

Are you surprised that your smartphone has that much storage available?  What kinds of content do you like to store on your phone?

Dave Gibbons-CEO of Opanga speaks with bnetTV.com at CTIA

CTIA 2010: Startup Pitches Mobile Streaming Alternative