Author Archive

Mobile Data Overtakes Voice In Revenue

Thursday, June 10th, 2010 by Jon Linden

Only 18 months ago I was sitting with a mobile operator who told me that their main objective was to ensure that data services didn’t cannibalize their voice revenue. The reason was simple – data service generated about 5% of the revenue.

Fast forward to June 2010. The sun is shining and the World Cup in soccer is just about to kick off, but more importantly Softbank Mobile Japan announces that data services for the first time overtook voice services in revenue in Q1! Japan has always paved the way for mobile data services, and NTT DoCoMo are expected to follow suit during the second half of this year.

But Japan is no different (at least not in this specific sense) than any other country in the western world. I see mobile operators here in Sweden spend the majority of their TV advertising on promoting mobile data services. It has become a differentiator and a big enough piece of the pie. We will shadow Japan and probably break the 50% marker in 2011 in many cases. Mobile data is a $50bn+ business this year in the US according to Chetan Sharma Consulting; a significant business where minor changes and adjustments in packaging, pricing, production cost and ARPU has a substantial impact on bottom-line.

Chetan Sharma also said that the US mobile subscription penetration was approximately 94% at the end of Q1 2010, and past 100% if we take out the demographics of 5 yrs and younger. Growth won’t come from winning new voice users, but from making the ones you have more profitable and to steal customers from the competition – e.g. with compelling data offerings. And you’ll have to control production cost since they’ll constantly expect more at the same price.

The conclusion is that mobile operators must take a seriously look at the packaging of their data services. “All you can eat” is not the best for (almost all) your customers, and it’s certainly not the best for your business case – especially as access speeds go up. That’s why we see more and more mobile operators moving away from flat rate data packages, as Cam referred to in his recent blog post. Tiered services are happening – thank God!

Eventually we will have options for people with different needs. But let’s stop for a second and consider what you’re trying to accomplish. Tiered services can either be a customer incentive or a cost insurance – or both. Don’t get too introvert in controlling potential exceptions with caps and limitations. This will add complexity, customer concern (even if they’re not even close to any limit/cap), and you’re up against some serious competition out there. But still, as said, small changes can have a big impact. Offloading peak hours to better utilize your network, attract new customers, or offer added value services that can boost ARPU can boost your profitability and ability to invest even more in your services and customer support.

I hate to say it, but we know from experience that devices (e.g. iPhone launches or subsidiesed phones) actually sell more subscriptions than any packages we produce. But service packages will support the devices and add to the differentiation. Make sure you know who your customer is, where he is, what applications he’s running, and what device he’s using – in order to accommodate his then current and general needs. Make sure your information is reliable since accurate intelligence enables proper business decisions.

So what are my recommendations? I’ve said it before (Do’s and Don’ts in Bandwidth Control) – keep it simple! Your biggest challenge will be to communicate it, implement it, and justify it (“is YouTube video or web?”). Know your customer. Define your target group and offer applicable services. Serving young savvy nerds with the same offering as unsophisticated 65+ Internet users won’t work. Don’t become too technology-driven and introvert in your business model. And avoid too many options since they will cause confusion.

So, do I need to say that we know this space and offer the solution you’re looking for? Well, we are, and we’re darn good at it! I look forward to you reaching out to me to discuss this further, but in the meantime I’ll kick back and enjoy some seriously good World Cup soccer. Sweden didn’t qualify this year, which gives Swedish mobile operators another four years to work out a business model that supports the network being flooded with real-time streaming video. Good luck (no irony intended).

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Economy of Scaling To 10G Networks

Tuesday, April 6th, 2010 by Jon Linden

“PacketLogic is now available with gigabit interfaces!” This is not today’s announcement, but it’s also not ancient history. We launched the second generation of PacketLogic with (almost) gigabit capacity in April 2004. Four years later, in May of 2008, we released our high-end PL10000 family with 10G interfaces and what is still the highest capacity of any DPI system available in the market today.

What I’m saying is that we love breaking speed records. Now we’re doing it again; but in a very different way. The new PacketLogic PL8720 is the first 10 Gbps DPI system that comes in a slick, real estate and power efficient 2RU appliance with the market’s highest port-density per rack unit. Most importantly, it’s cost efficient.

Numbers typically speak louder than words. I happened to read the following earlier today: “Market tracker Dell’Oro Group says 10G, which makes up 25% of the market in terms of revenue, will drive growth in Ethernet switching this year. […] Dell’Oro expects 10G to reach $3.6 billion in revenue for 2010, up from $2.8 billion in 2009.”

This means that not only big carriers deploy 10G these days. Tier 2 and 3 operators, even higher education institutions, deploy 10G. And they will have to in order to cope with a growing traffic volume and to ensure that the Internet remains the innovation engine it is. More speed means more traffic, which means an even bigger need to understand what’s going through your network, and automate detection of potential threats to both users and the performance of the network.

Doing deep packet inspection at a 10 Gbps rate is computing intensive. This is why it historically has been done in chassis-based solutions – products that are and still will satisfy the large operators’ requirements for resilience and upgrade capabilities. The extensive computing intensity is the reason why DPI has been such a big investment that many small to mid size network operators have postponed this decision. Not deploying DPI puts them in an unfavorable competitive situation. We saw this gaping market demand and set out to develop a cost efficient product that’ll upgrade all the way to 10 Gbps – without compromising on functionality.

Are you getting the dignity of this? Do you see why cost efficiency is so important? I’d say this is flat out a game changer! You’ll see. PL8720 will have first-mover advantage in a rapidly evolving market where we put DPI in the hands of a new set of service providers and higher education institutions. They, and their users, will experience the benefits of a full-blown DPI product. Many of these have hesitated to make this investment, though they’re fully aware of the need, because they know they’ll still make further network upgrades and will transition from GE links to 10GE. Now this is not an obstacle anymore.

I just wanted to let you know what we’re doing to change the world of networking. Pretty interesting, huh?!?

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Deloitte Says 2010 Looks Great

Thursday, March 11th, 2010 by Jon Linden

The very nature of predictions is that they can be wrong. But sometimes they’re more substantiated, sometimes the source is more credible, and sometimes you just want them to be true. The former two apply to Deloitte Touche Tohmatsu’s “Telecommunications Predictions” that I read every year. When they predict, for this year, a 100% growth for products that help decongest the mobile bottleneck, then I also confess to wish for them to be true.

While over-all mobile operator spending is expected to grow 7% in 2010, some pockets of technology – where one of the first segments they point out is deep packet inspection (DPI) – can grow more than 10x thanks to a pressing need. In 2009 the last walled gardens were torn down, smart phones became data smart, user interfaces encouraged use of data services, and 3G connections became a true option to fixed broadband (I use it as such at my summer home and when travelling). Data volume has grown and will continue to grow accordingly.

I’ve pointed out in the past that mobile operators are more sensitive to bulky traffic due to higher cost per megabit and fewer available megabits in the access network. Mobile networks become bitpipes, hence it’s more important than ever to know if, what and when the network is being clogged up. The ability to build out network capacity fast enough, and to do it with an intact and feasible business case, drives a great demand for mobile DPI; a demand that will grow this year according to Deloitte’s predictions.

Deloitte says that “at the start of 2010, there should be about 600 million mobile broadband connections between laptops, netbooks, and smartphones” and they predict that “cellular data wireless networks will have gone from underutilization to congestion”. Most mobile operators have designed their networks for some growth, but congestion, also known as over-subscription in this case, is part of the equation. Deloitte predicts an access network issue. My experience is that this is not a big issue since new technologies, like HSPA+, are constantly released. End-users also expect and accept a lower speed when going mobile.

However, the underlying network is typically not dimensioned to support constant increase in access speed or a changing user behavior with longer and more frequent sessions. “Congestion issues sometimes have less to do with providing very high broadband download rates to a few users, instead, they often revolve around providing highly variable two-way bandwidth to many mobile users whose usage requirements change from minute to minute” to once again quote Deloitte. This has an impact on the entire network – from access to backhaul, and all the way up to core and peering.

There will always be overloaded cells due to design, subscriber take-rate, and the dynamic nature of roaming users who occasionally are in the same geographical location. Capacity is a constant game of catching up. DPI is the tool that helps you to plan capacity, identifies issues and resolves them – long-term or until a long-term solution is in place. A DPI deployment pays off almost instantly through better customer satisfaction and timely infrastructure investments. A pretty easy investment decision, right?

Light Reading predicted in 2007 that mobile DPI would be the growth engine for DPI. They expected mobile DPI to catch up with fixed DPI in 2010 and exceed it in 2011. This seems to be a pretty accurate assumption. Especially since we hook on a second locomotive to the mobile DPI train this year – LTE. Thought LTE might resolve access bandwidth constraint, it causes the same challenge for the rest of the network – at an even higher degree.

I suppose all of this is primarily of interest to our investors. Mobile operators are a prioritized market segment for us. No one is actually better positioned than Procera for success in this space. We have the leading technology, we have traction with strong references, and we’ve grown at a healthy pace that beats the competition. To me the above says that we stand a good chance of delivering yet another year of extensive growth, following two remarkable years of 75%+ growth while in a global financial recession. Stay tuned for how this prediction comes true.

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Don’t Invest In DPI Until Net Neutrality Has Been Resolved

Monday, January 25th, 2010 by Jon Linden

Sorry, there should be a question mark at the end of that heading, and the answer is No!  The fact is you need to invest in DPI now. I know I’m biased, but that’s why I possess hands-on knowledge and facts of what our customers do and why.

DPI does not equal P2P throttling and Net Neutrality infringement. P2P control originally presented itself as an opportunity for DPI with a quick ROI on a hair-on-fire issue where P2P filesharing rampaged at an exponential growth rate, which meant exponential cost. But today we’re in the second, or I would even argue the third generation of DPI, and both products, and the use of these products, have evolved and become much more sophisticated.

Today the most common request is visibility. Visibility of what traffic is traversing the network in order to detect changes early in user behavior to avoid surprises on the core business and business models. Today’s rapid increase in streaming video is both a threat and an opportunity to cable MSOs, whose core business is TV distribution.

This is a good illustration of why network traffic intelligence is so important. Today we don’t watch TV as we did before. We don’t watch in real-time since we have TiVo and subscribe to episodes as they are “released”. It’s just a small step to Hulu and the broadcasting companies’ Play services. Early detection of these phenomena gives the operator the ability to offer relevant packages, change pricing, and develop new services without being left far behind.

In all honesty, very few of our customers and prospects even consider limitation of competing over-the-top (OTT) services. Savvy end-users catch what they do, draw attention to it, and the operator is caught with their pants down. You don’t “get away with it”.

But knowledge is power. Based on proper network intelligence you can make proper decisions. For example reach out to emerging services and join them instead of trying to beat them, look at the value add of your paid-for services compared to free OTT services, see the impact on your network of new applications, and project the investments required to accommodate these new services.

You could actually go as far as to say that DPI is required to enable Net Neutrality. Transparency is a cornerstone in Net Neutrality and DPI offers the tools that verify that you are transparent, that you’re not preventing good service levels due to obsolete policies supporting an old reality.

We, Procera, have not seen an impact on our DPI business from Net Neutrality, and I think it’s due to the above. Operators understand this, have understood why DPI is necessary, how it’s used properly, and are able to discard the background noise of an infected discussion while listening to creative and reasonable input.

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DPI + Policy Control = True

Monday, January 11th, 2010 by Jon Linden

The rumor is true, DPI and Policy Control are confirmed to be a couple and have been seen hand-in-hand even in public recently. Feelings are mutual and this is bound to last “until death do us part”.

The 3GPP framework rules! At least in the mobile space and it’s also making headway into fixed. That’s good. DPI has become a critical component in a service provider network, which requires DPI to interact with surrounding systems. On top of this complexity grows with tiered services, volume quotas, sponsored sites, and premium gaming and telecommuter services.

This is where the policy server, or PCRF (Policy Charging and Rules Function), comes in.  DPI is an excellent traffic analyzer and policy enforcer. But since DPI in most cases resides inline and manages large volumes of traffic, it can’t afford  “wasting” cycles on polling information from other systems and correlating a lot of conditions.

This is a perfect assignment for the out-of-band PCRF server. PCRF is a decision point – PDP (Policy Decision Point). Once the decision is made it’s sent out to one or more PEPs (Policy Enforcement Point). DPI is a great PEP, but other equipment in the network might occasionally be better suited to host certain policies. The Gx interface in 3GPP enables standardized integration between DPI and PCRF. But the fact is that most installations still use a SOAP interface and a more or less proprietary API, but Gx is starting to make an entrance.

Since DPI and PCRF is part of the same eco system, resolving the same challenges, it’s quite understandable that there is some confusion as to whether or not DPI competes with PCRF vendors like Camiant, Openet, Bridgewater and Volubill. That’s certainly not the case. It’s rather the opposite where everyone’s working with everyone. I dare say it’s flat out promiscuous. Do I also dare to assume there will be consolidation within and between the two segments? Well, let me put it this way: anything else would surprise me.

We, Procera, see that most of our customers and prospects either made a decision or are making a decision on PCRF as they deploy DPI today. This is great. It opens up even more opportunities and options for how to create new services, how to strengthen the operators’ business case, and how to adjust to accommodate the ever-changing reality.

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2009 In Retrospect;

2010 A Look In The Crystal Ball

Tuesday, December 29th, 2009 by Jon Linden

Every New Year’s Eve, half an hour before midnight, Swedish television airs a traditional black and white TV episode called the ”The countess and the servant”. The table is set for a party of six, but none of the guests are present. The countess sits at the head of the table and the servant acts the role of each of the guests, toasting five times a dish, quickly getting more and more drunk, stumbling over the head of a bear that decorates the floor.

The financial climate has been one big stumble in a bear market in 2009. Operators and telcos have not been suffering as badly as many other industries – mainly due to two steel baths already endured since the turn of the millennium – and have continued to invest, though the decision has transitioned from the CTO’s to the CFO’s office, adding another layer of involvement and delays to the process. The cutthroat nature of the financial climate has put strain on all vendors, but it strengthens the ones who survive since it requires a compelling offer, obvious value, and a sustainable business model. We all come stronger out of this.

The poor servant on New Year’s Eve doesn’t come out stronger after each course that is followed, in a more slurred voice, by the recurring question “Same procedure as last year, miss Sophie?”, and the countess’ “Same procedure as every year, James”. The DPI industry has been anything but the same in 2009. 2009 was the year DPI grew up, became a commodity term, and got invited to play with the big guys. DPI has become an integrated function in any and all operator networks.

And it will become even more integrated, not only with policy control, but also with charging and billing in the coming 12 months. Intelligence is important for any business decision, and DPI is the intelligent layer in an IP network. The more intelligence, the better the decisions. This is why we’ll see “DPI everywhere”. DPI will be a stand-alone function to accommodate the broad expectations of what DPI should be able to do (throttle, filter, prioritize etc.), but the traffic identification capabilities will also be integrated into other network elements.

I think, or I should say “I hope”, we’ll see an upturn in the economy during the second half of 2010. People will start spending more and operators will start investing for the future to gain market share and keep up with the competition. The competitive landscape is still a bit fuzzy as telcos compete with cable MSOs who compete with mobile operators since they all offer at least three overlapping services. This landscape will transform again in 2010 where the need for speed will narrow everyone’s scope to become best in their field. The belief in the future will drive a fast development, which will benefit LTE that will take off even though 3G and its massive investments are still fresh in mind. More available bandwidth will drive services that consume more bandwidth, which is why video will be the fastest growing application in 2010 as well.

I eagerly look forward to 2010, and as Miss Sophie wraps up dinner, I’m confident it’s the beginning of 365 exciting days until she’s back again and we can conclude another year. Happy New Year!

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Happy Holidays!

Tuesday, December 22nd, 2009 by Jon Linden

In the movie The American President, Michael J Fox walks into a room full of eggnog-drinking colleagues and asks, “What’s the occasion?” “It’s Christmas. Didn’t you get the memo?” I hope you got (and read) the memo. The Holidays are here and it’s time for celebration. Personally, I love Christmas and I hope you, just like I, enjoy it with your loved ones. I wouldn’t miss it for the world!

So, let’s get some Holiday spirit! I’ll put on the beard, shout out “ho.ho.ho”, and deliver some Holiday gifts before I shut the lid on my laptop and head home to heat the glühwein.

Gift #1: “From Procera To Julius Genachowsky”
“We admire your guts and wish you glory,
as you and the FCC argue the Net Neutrality story.
Here’s a helmet to protect you from tomatoes and blows,
as both sides put on their hard-hitting shows.
In 2010 we hope for consensus and common sense,
proper guidance would be appreciated your eminence.”

Gift #2: “From Procera To Our Dear DPI Competitors”
“Look in the rearview mirror and you’ll see,
here comes Procera, speeding by raising dust.
A cleaning cloth for your windshield you need,
for you to properly see us swoosh by in a gust.”

Gift #3: The nicest gift we always save for our customers;
“’Accuracy and control redefined’ we say,
small words, great values, that we already provide today.
In a world that constantly changes, you’re asking for facts,
insight, intelligence, quotas and network stats.
We promise you much and we stick to our pledge,
here’s new PacketLogic functionality – once again cutting edge!”

Before I rip off my Santa beard and switch back to my normal tone of voice, I would also like to hand out “a Happy Holidays” to all Procera people around the world. You’re a marvelous group of individuals who take pride in over-delivering – time and time again! I’m so proud of you, and I’m privileged to work with you! Keep up the good work in 2010!

2009 is coming to an end, and I’m confident 2010 will be a great year. Maybe the best ever?!? Time will tell, but right now I’m out of time.

From all of us, to all of you – Happy, Happy Holidays!

Best Regards
Procera Networks

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Mobile Internet – Just A Bit Pipe?

Wednesday, December 2nd, 2009 by Jon Linden

I’ve argued that mobile Internet is “just another Internet access”. This used to be a controversial and provocative statement when talking to mobile operators who defended their premium network investments they made,  in order to deliver pretty fast Internet connectivity.

Imagine my surprise when I recently attended a traffic management conference in London where all mobile operators in chorus surrendered to being just a bit-pipe competing with wireline broadband… What happened?

I assume they’re realizing that they don’t have the recipe for the all-resolving secret sauce, which is why it currently feels a bit hopeless. Walled gardens didn’t work, a price war has driven prices down, customers don’t pay for added-value services, and another network upgrade, this time to the fourth generation, is just around the corner.

The good thing is that this puts the spotlight on the fundamentals – production cost. You consider how you can limit OPEX by minimizing helpdesk calls, you look at how you can maximize the utilization of your network, you want to automate up-sales, and you implement cost thresholds like volume quotas and international roaming control. Oh by the way, these are all things you can do using DPI.

Once we’re past this realization we must get ourselves out of this sorrow and start looking forward. Mobile Internet certainly has added value over wireline. The growth in mobile Internet is probably the best validation of this. But speed, i.e. bandwidth, is not one of them. Maybe it’s time to take the lead on selling non-bandwidth-centric services? How can you leverage mobility? For what customers is mobile Internet the only, or the best, option? How will built-in 3G modems in laptops impact the market and the ability to sell pre-paid services?

This is putting a lot of demand on the business developement and product management people at mobile operators. It’s time to get your moneys worth guys! Every case is certainly unique. Do you provide mobile and fixed line, do you go after specific customer segments, or are you the low price option? This will impact your strategy more than ever.

So I guess I must convert to the other side and argue “Mobile Internet is more than just a bit-pipe”. It doesn’t feel as controversial, but a man’s got to do what a man’s got to do.

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Is Accuracy Really That Important?

Wednesday, December 2nd, 2009 by Jon Linden

Trust me, it is. There are a lot of good reasons why we promote “accuracy and control, redefined” in our logo. Ask any operator with DPI experience, and you’ll hear that accuracy is top of the list. And we can, in all honesty, say that DPI didn’t really deliver on this promise originally. The first generation of DPI identified port-hoping filesharing applications good enough to cap them to avoid disaster.

But times have changed. Today we have very sophisticated tools in our bag and our traffic identification engine looks at several criteria when determining what application each individual connection is. We also leverage characteristics, like interactive, streaming, download and bulky to categorize traffic in an application-agnostic fashion.

Online applications have evolved extensively over the years I’ve been working with DPI. Back in the days when IP and TCP were invented, all traffic was client-server-based. The applications were neither time nor quality sensitive, but everyone was happy with a global and resilient network.

Fast forward to today. P2P technology is used to leverage bandwidth and CPU capacity at the edge of the network for faster connectivity and to decrease the traffic being sent over the core network. P2P technology is used by the streaming music services we run all day at the office, as well as the online HD video on demand service we use at home at night. Both Salesforce.com and our office phones run over IP enabling us to work from home as if we were at the office. But we would also be totally paralized if the Internet connection (as well as the redundant link ;-) ) was down. This is how crucial and integrated the Internet is in our lives today, and this is why traffic volumes grow at a pace that outdoes Moore’s law and that saturates pipes.

Of course, these applications are totally different in nature and have different requirements for how to be treated to function properly. Of course, different users have different expectations in different situations at different times of day. Of course, it would be an issue if you treat HD video as filesharing or World of Warcraft as SIP. This will impact the performance of the network, but also your ability to manage expectations and create viable business cases for how to satisfy different user profiles. Step one in any process is analysis, and unless you trust the intelligence you use for your analysis you won’t dare to make decisions based on these facts.

So, this is one of these cases where good enough isn’t good enough. Trust me when I say that you will want to trust the information you have at hand when you make critical decisions.

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Do’s and Don’ts in Bandwidth Control

Wednesday, December 2nd, 2009 by Jon Linden

Suddenly it all happens at once. We went from zero to two events focused on DPI in one week – Light Reading’s virtual tradeshow Policy Control & Deep Packet Inspection, and Informa’s Broadband Traffic Management event IRL in London early last week. These events are good validation that DPI has grown up to get proper attention.

I was on-site at the event in London – and I apologies for the hotel lobby background noise on my line in the LR panel discussion. But I also had the pleasure to be on a panel in London together with Benny Lim from SingTel and David Hodgers from O2 Ireland, moderated by Mark Newman from Informa. The topic was “Lessons Learnt: The Do’s and Don’ts of Bandwidth Control”.

So what are the lessons learnt on bandwidth control? Let me quickly go through my conclusions and what I told the audience. When looking at do’s and don’ts I see two categories: what works and what ‘s ethical. The latter is more challenging with today’s fast moving social media where bad news travels fast and subscribers vote with their feet.

How do you manage this? Well, don’t expect to “get away with it”. Internet users are savvy and operators in London confirmed that non-transparency came back to bite them. You must be able to defend what you’re doing, and a good test is if you’d accept it yourself. Greed is not an acceptable reason, though a viable business case normally is.

Do’s and don’ts also depend on what you’re trying to achieve. DPI and bandwidth control spans over a broad range of applications, from network protection and congestion control to quality assurance and service differentiation. We tend to be very introvert and technology-driven in this industry, but you must start from business benefits and objectives in order to define intentions and make it understandable to your end-users.

The key to what works is knowing what’s going on. It’s not an option to guess what your customers do and how your network is doing. And conditions change – all the time. What used to be 80% filesharing a year and a half ago is today replaced with 40% streaming video as the largest bandwidth consumer. A policy rule-set that is not up-to-date will cause some strange consequences.

I wish I could provide a blueprint for what works, but every situation is unique. Your product mix, fixed and/or mobile, target groups, price positioning, and on top of this there are geographical differences like what applications are used and what bandwidth control practices are accepted.

This means that the number one thing to do is try. You will have to try it out and assess the outcome in your specific situation and your environment. I know this sound scary, but be adaptive, be quick, and make sure you make qualified decisions based on facts rather than guesstimates and assumptions.

Let me also summarize my don’ts: Don’t lie – be transparent. Don’t insert packets – honor integrity. Don’t get introverted and super techie – understand your business and your customers. And don’t do nothing – this is the most expensive decision of them all…

Let me wrap up with one more suggestion for what you should do: Keep it simple! Complexity kills this cat. If it’s too complicated you won’t be able to communicate to your subscribers, it’ll be impossible to update and change, and you won’t be able to measure if you successfully achieved what you intended to. This is hard to make simple – which is why we, Procera, are here to help ;-)

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