COVID-19 stress tests telecommunication infrastructure

Jonathan Kriegel, CEO

Telecommunications networks across the globe are creaking under the weight of additional video, gaming and conferencing traffic generated by millions of people suddenly required to work and study at home due to the COVID-19 pandemic. The fifth-generation (5G) mobile infrastructure being rolled-out by a handful of telcos could help address the strain in the future. The closure of retail outlets and the resulting spike in mobile commerce may force mobile network operators (MNOs) and content providers alike to accelerate the execution of their mobile payment strategies.

Earlier this week Vodafone reported up to a 50% rise in Internet use across its networks in some European countries. Much of this spike is caused by the large numbers of suddenly housebound people either accessing work, educational or entertainment content online. Most confined to their homes find themselves playing video games and streaming their favourite films, TV shows and YouTube videos, and chatting to friends on social media and messaging apps. Facebook reportedly has had to double its WhatsApp server capacity to cope with the extra traffic.

US telco Verizon also reported a 75% jump in gaming traffic and a 30% increase in virtual private network (VPN) usage compared to last week. The Federal Communications Commission (FCC) is now making more wireless spectrum available to the country’s MNOs, should they want to offer additional capacity and bandwidth to subscribers. According to a 2019 report by US networking equipment company Sandvine, video accounts for over 60% of data delivered from Internet service providers (ISPs) to consumers, with Netflix accounting for just under 12% of total traffic and Google, primarily driven by YouTube, another 12%.

Netflix has already complied with an EU request to cut the quality of its streaming services in Europe to standard definition (SD), which uses much less data than high definition (HD), for thirty days in a move predicted to reduce its traffic by around 25%. Google-owned YouTube has also announced it will temporarily switch all EU traffic to SD by default, with other on-demand multimedia streaming services such as Amazon Prime Video and Hulu are expected to follow suit.

The French government has asked Disney to delay the launch of Disney+ to ease the strain on the country’s network capacity after the company released the popular children’s film, Frozen 2 in the US three months early. In Austria, telcos have been empowered to take matters into their own hands by blocking certain online services in case of emergencies to make sure that access to government websites and vital services remains unobstructed. And the launch of Disney+ Hotstar in India originally due for launch on 29th March has now been delayed indefinitely, though largely because the commencement of its biggest crowd-puller – the Indian Premier League (IPL) cricket tournament – has been postponed in light of COVID-19.

In Thailand, DTAC reported an 828% rise in data traffic from Zoom and 215% from Skype video conferencing apps between 1st January and 19th March, while stating it was optimising network capacity to keep up with surges in usage. Digi is working with the Malaysian Communications and Multimedia Commission (MCMC) to provide additional network coverage and capacity at hospitals, relief centres, police stations and key government offices, as well as medical practitioners police in the frontline of coping with the Covid-19 crisis. Indian telcos and MNOs too are co-operating with the country’s telecommunications watchdog to make sure that the country’s network infrastructure maintains stable and operational.

While it is difficult to be precise in these times, one thing does seem clear: increased adoption of OTT video subscriptions over the next four years will put even more strain on telecommunications bandwidth and capacity across the entire world. HIS Market predicts that global OTT video subscriptions will pass the 1bn mark in 2021 (up from 620m in 2019) with Ovum forecasting 1.28bn subscriptions by 2024. With no immediate end to COVID-19 restrictions and self-isolation orders enforced, those forecasts could prove underestimations in the short term as more of the world’s population invest money not spent on outdoor leisure on paid TV and video content instead.

One possible solution to the looming problem is already under preparation – fifth-generation (5G) mobile networks which offer faster download speeds expected to reach 50Mbit/s initially and 1Gbit/s further down the line. Improved latency, in particular, should make those mobile networks preferable for online multiplayer game streaming via consoles and cloud-hosted platforms.

5G has been designed to enable better traffic prioritisation that allows operators to exert greater control over application and service performance while enhancing coverage and availability in black spots. It could improve congestion issues just by shifting traffic off fixed broadband networks and onto 5G mobile infrastructure which offers superior bandwidth and latencies to those currently available over fibre-optic broadband infrastructure. IHS Markit has forecast that video streaming will be the killer app for 5G, both for smartphones and fixed wireless access home-networking solutions.

Far from being hampered by the economic turmoil caused by COVID-19 (and particularly disruption to telecommunications equipment supply chains) the pace of 5G development may actually speed up in some countries due to anticipation of additional demand from remote workers, students and government officials currently subject to movement restrictions. In China, for example, the big three network operators China Mobile, China Telecom and China Unicom expect to roll out around 700,000 new 5G base stations, with 100,000 scheduled for July 2020.

In the meantime existing fixed broadband, 4G mobile and telecommunications backbone infrastructure will be stress-tested to its limit as millions more people are confined to their homes due to schools and offices across Europe and the US being closed over the next few weeks and months. In a consumer market characterised by high churn rates, telcos and MNOs that don’t take every step to ensure that video, gaming and music content alongside web conferencing and educational applications are delivered smoothly and efficiently could see existing subscribers and potential customers alike desert them for competitors.

Depending on the OTT video streaming package they signed up to, many users may not actually notice any difference if bandwidth is constrained or image quality diminished. Other than premium or VIP options, most standard or lowest cost video streaming subscriptions only deliver SD content to a single screen simultaneously anyway, and others are restricted to viewing on iOS and Android mobile devices. But a good user experience involves much more than just delivering smooth high resolution, jitter-free video streams. In essence, subscribers have long complained that OTT services are difficult to navigate while payment options can be restrictive for those without credit or debit cards, particularly younger people.

Those concerns exacerbate the need for flexible, convenient billing which encompasses multiple different payment mechanisms – not only cards but also eWallets and direct carrier billing (DCB). A broader shift to mobile payments is likely to be given additional impetus by the closure of telco and MNO retail stores (AT&T and Sprint in the US for example and Telekom Malaysia) compelling subscribers to find new ways of topping-up pre-paid mobile accounts, particularly within cash-dependent economies in Asia and Latin America.

Telcos, MNOs, streaming video service providers and gaming companies alike will inevitably see increased demand for their content in the coming months - partnering with specialists who provide maximum customer reach and convenience by taking the onus for orchestrating and processing mobile payments can help them focus on what matters most – developing engaging content.