Wednesday, February 3, 2010

The DPI Story – Part III – The Business Case for Bandwidth Management

In my previous post I described how broadband bandwidth management solutions started, and how DPI became their core technology, mainly due to the extensive use of P2P file sharing applications by millions of broadband subscribers.

The main reason for ISPs and carriers to use bandwidth management was, and still is, to maximize the return on their infrastructure investments. While it is very clear that limiting the use of bandwidth hungry applications delays the need to invest in expanding the network infrastructure, there are additional business reasons to use bandwidth management, leading to the sophisticated solutions offered and used today.
  • Accommodate more subscribers on a given infrastructure – especially in some environments where bandwidth resources are physically limited (like wireless/cellular networks)
  • Increase subscribers' loyalty, by better meeting their QoE expectations. Bandwidth management may help with that by prioritizing applications that are sensitive to network delays – VoIP, video streaming (avoiding the “buffering” phenomena) or even web browsing
  • Reduce help-desk costs, resulting from the increased subscribers' satisfaction
  • Prioritize certain services and applications that generate additional revenues to the provider – such as a VoIP or Video conferencing service paid by the minute or content distribution agreements. In other words, the business idea here is to increase the ARPU (Average Revenue per User)
  • De-prioritize other applications, competing with the provider's own services. In many cases, this relates to OTT (Over The Top) applications.
As can be seen by this list, some of the benefits of bandwidth management are very reasonable and actually overcome some flaws in the design of the TCP/IP architecture. It does make sense that real-time applications will have priority over file transfers. However, as we go down the list we can see that carriers may use bandwidth management to discriminate competitive services. The debate around these issues is known (as least in the US) as Network Neutrality – and deserves its own post.

To generalize the above, we can see that bandwidth management control can operate in a number of planes (or dimensions):

PlaneUseBusiness Case

Reduce the use of bandwidth hungry applications (reduce congestion) Delay infrastructure investment
Prioritize sensitive application (control QoE)Increase subscriber loyalty
Service (i.e. the provider of the application) Prioritize “preferred” services, such as the provider’s VoIP serviceIncrease ARPU
De-prioritize competitive servicesIncrease ARPU
SubscriberOffer personal service plans (tiered services), such as “platinum” or “gamer” serviceIncrease ARPU

Bandwidth management solution will also allow combining the above planes.

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