In his comments during the 2015 Wells Fargo Securities Technology, Media & Telecom conference Wednesday, AT&T president and CEO of Business Solutions Ralph de la Vega expressed concerns about the impact of T-Mobile’s new video streaming service, Binge On.
Though Vega said it was a natural step for the Un-carrier to try to get into the mobile video market, he said questions still linger as to how the service will affect the wireless network.
“From our point of view its really not surprising to see T-Mobile, who doesn’t own a video asset, try to find their own niche in mobile video,” Vega said. ” The crux of this issue is what it does to consumption and the capability that it has to cause congestion on wireless networks.”
Vega’s comments echoed an earlier warning from Sprint CFO Tarek Robbiati, who said he expects T-Mobile is in for a “hangover” in the wake of its video data binge.
Recon Analytics founder and analyst Roger Entner said the network impact will largely depend on how much of a traffic increase is generated by the new service.
“The technology T-Mobile is using gives them significant efficiency enhancements, but that doesn’t mean you don’t have limits,” Entner said. “We’re looking at a three to four times improvement in data efficiency but when you make streaming video unlimited there’s a good change it’ll use more than what you’re saving.”
“As long as less than three times the people watch video its fine, but if it goes up by more than three times it’s a zero sum game,” Entner continued. “With every customer getting it, all the people who thought twice before from streaming video now will do it and that will simply congest the network more.”
Strategy Analytics Director of Wireless Operators and Networks Susan Welsh de Grimaldo agreed with Entner’s assessment, but was more optimistic that T-Mobile would be able to avoid excessive congestion, thanks in part to the Wi-Fi capabilities of most smartphones.
“Only eight percent of (T-Mobile’s) cells are congested during a given month, so it’s not at the moment at a high level,” Grimaldo said. “and people who are watching from home or a business on an enabled device will be shifted to Wi-Fi. The question is how will this shift customer behavior?”
Grimaldo, who had the chance to test out the service at yesterday’s Un-carrier event, said T-Mobile’s network optimization strategy will help enhance the service’s video quality despite its low resolution. According to T-Mobile, the videos will be available in 480p.
“It might be a little bit lower resolution, but it’ll be better video quality because that optimization will reduce jitter and stall,” she said.
Grimaldo said T-Mobile’s efforts to stay ahead of the video curve would likely be a boon for the carrier and, combined with the data plan increases, will attract customers and have a positive impact on the company’s fourth quarter results.
Similarly, Robert Oberhofer, vice president of product marketing at telecommunications company ItsOn, said the streaming service will be a draw for customers looking for value.
“T-Mobile’s approach to video – a very data hungry activity – is novel for wireless carriers,” Oberhofer said. “Customers on a budget, particularly those in emerging markets, respond well to being able to purchase mobile access as needed. I wouldn’t be surprised to see more bundled capabilities in the marketplace as carriers want to increase the perceived value for users and build a loyal customer base.”
