Sponsored By

CEO Chat With Huawei's Zha Jun

Steve Saunders, Light Reading's founder and CEO, hears from Zha Jun, President of Fixed Network Product Line at Huawei, on why he believes video is the next killer application.

Steve Saunders

March 24, 2016

13 Min Read
CEO Chat With Huawei's Zha Jun

I recently had the opportunity to sit down with Zha Jun, President of Fixed Network Product Line, Huawei, to talk about a topic which is central to the future of the entire communications market: video.

Jun is definitely the right guy to talk to about video, for a couple of related reasons. First, he's in charge of creating and implementing Huawei's video strategy. Second, Huawei's President and Founder, Ren Zhengfei, recently issued an edict to his employees explaining that video was the essential ingredient in maintaining Huawei's current stratospheric performance. I think Zhengfei is dead right to focus on video. A lot of so-called industry mavens like to speculate about what the "next killer application" will be. For me, we know what it is: video.

Figure 1: Huawei's Zha Jun: A sucker for Titanic Huawei's Zha Jun: A sucker for Titanic

Jun shared some fantastic insights about video with me, and it was noticeable that he focused on the business case for video, more than the technology used to support it. Specifically, what Zha wanted to focus on is also what LR is fixated about right now: how the world's incumbent carriers can use video as a weapon in their fight to retain relevance in a world that could increasingly become dominated by OTT operators.

Zha Jun had a lot to say about video, and I've opted to edit out my few questions and interjections so you can enjoy his thoughts in a more stream of consciousness/lecture style, without me interrupting.


— Stephen Saunders, Founder & CEO, Light Reading

Next page: The value of video

The value of video

Zha Jun: Hi Steve, nice to meet you. I am very interested to talk about video with you today. It's a crucial topic for the carriers; we think that video can save them.

The first point I'd like to share with you is about the value of the video for carriers, and how meaningful it is for them. To understand video's strategic importance we need to start by looking back in time, to the nineties. Life was good for the carriers then; they enjoyed a natural monopoly based around voice, which was the main service for consumers, and was tightly coupled to the carriers' networks.

Then the next decade came along, and with the emergence of the Internet, the carriers started to struggle.

New technologies like IP started to create a separation of the network from the services that run over it, allowing not just the carriers to use the network, but also the internet companies, who ran web services on top of the network. So this decade was defined by carriers making the investment in the network, and the web companies getting the benefit of it. And the more the carriers spend on infrastructure the more the Internet companies use it to attack them, and the worse the return becomes for them.

In 2012 we started to hear the first discussions about video in the industry, followed by talk of 4K video in 2014 and 2015. What we are seeing is that video is actually a huge opportunity for the carriers. Why do we say that? First, because video is a business service, just like the voice business. And second, because carriers have a unique advantage in developing the video business.

With video, carriers finally have a way to justify the investment they have made in their broadband networks, and get them the return that they deserve.

Bandwidth: What is it good for?
Huawei has conducted some research into user experience on high-speed networks. It shows that for users who are just browsing web pages or using email, then 4 megabits of data is sufficient, and, in fact, giving them more than that doesn't necessarily produce higher rates of satisfaction.

However, if they are watching video, then 4 megabits is obviously not enough. And for high-definition video, it needs an 8 megabit network to support it -- or even higher. Our analysis shows that the minimum bandwidth for 4K video would be 30 megabits, but if you are in a home environment, with multiple users, then that number would have to go up; you can easily reach 100 megabits. So for HD video, a family would typically need 100 megabits, and for 4K, they need 1,000 megabits.

The economics for carriers here are very compelling. The difference in cost for the carrier between installing a 4 megabit network and a 100 megabit network is actually tiny, but the return for them of running video over that 100 megabit network is much, much greater than over 4 megabits. That's why this whole video business can help the carriers to increase their return on investment and really show them the value of the investment in broadband.

It's important to understand that when we talk about human communications, the different senses that human beings employ aren't weighted equally. We listen; we look; we smell; and we touch. But when we talk about online communications, video is clearly valued disproportionately to the other senses; we have done research that shows that the video quality accounts for 83% of the consumer’s feelings about whether they are having a good service experience or not.

That is why Huawei believes video will be the basic communication service in the future, rather like voice was in the nineties. And when the carriers start operating video businesses, it will allow them to regain some of that dominance, that success, and the control of the industry supply chain.

Next page: Carriers versus OTT

Carriers Versus OTT
I also want to talk about whether carriers have advantages over OTT operators in terms of video services. In order to answer that question we have to first answer the following one: What do consumers want, and who do they think can provide the products they like? Huawei's analysis of the video market shows that consumers are looking for four core attributes in the provider.

The first is the content itself, of course; it has to be attractive, delivering stories that touch the consumers.

Like the film Titanic.

[Laughter from Steve, followed by awkward pause when he realizes the Huawei team are entirely serious]

Well, the second attribute is a good quality experience; the picture has to be clear; brightness has to be good; the motion has to be very smooth, without stalling, without mosaic, and with the right resolution.

The third point would be the price. Consumers naturally would love to pay less for good experience and good content. The fourth attribute is a special point for the video, which is local language capabilities; so, if you're in Spain obviously the Spanish consumers would prefer Spanish programs over Chinese or English programs.

So, you add this all up and the service provider who can meet these requests the best, they are at the advantage and they will win. And it turns out that carriers have advantages [over OTT providers] in all four areas.

Let's talk about experience first. The video of the future will be IP video, and of course the network has an important role to play here in ensuring that metrics like latency are met, because they have a major impact on user experience, especially with 4K video. In fact, 4K video has really raised the bar in terms of the demands on the network needed to support it, and since the network belongs to the carrier, they own it, they can obviously do a better job in delivering the performance necessary for 4K video. The OTT players do not have their own network, so that gives them less room to maneuver, in terms of network performance. This is a big advantage for the carriers.

Let's also talk about how carriers can make money from the consumers. The answer lies in the way they offer bundles of services which offer consumers a cost-effective combination of TV programing and broadband data service. Things like commoditized TV programs, the ones already offered by other players, can be thrown in for free; innovative programing is offered at a premium. The point is that it is extremely advantageous for the carrier to be in charge of the mixture of products and pricing, and it also can actually save money for consumers while also letting them enjoy some unique broadband and programing offerings.

Ensuring that the video content is attractive is also extremely important. What is "attractive" content? I used the example of Titanic; but that's only attractive for one set of customers. Football fans obviously want to watch football, and have an argument with other football fans about it. The point is, variety is an extremely important characteristic for successful TV programing; and the service which has the widest variety of programming will naturally be more attractive to consumers.

What a lot of carriers have not realized yet is that the huge numbers of consumer subscribers on their networks actually gives them a big advantage here. What we've seen is that in countries where the carrier has a small customer base, they end up having to approach the content provider for contents. But in countries where they have a much larger customer base it is the other way around -- the content providers are coming to the carriers. This gives them the opportunity to build a solid revenue stream by developing profit-sharing deals with content providers, allowing them to capitalize on their large broadband subscriber base.

Of course to do this carriers must develop a new mindset -- they have to be open minded, they have to be willing to work with other players, including OTT operators, to achieve a win.

So things are changing. This is a very new. In the first ten years of the current century the carriers had made huge investment to the network, the OTTs consumed a huge proportion of the traffic and didn't pay anything extra for it. At that time the carriers did not have any motivation to embrace OTT video, because there was no return -- no business model. Now we're seeing the start of a carrier-led revenue sharing model for 4K and other video, where the content provider produces really "big content," and the carriers can get a piece of the revenue from that, and it becomes a win-win for all the parties involved.

At Huawei, we believe this carrier-led video model has more potential for carriers than the voice model in the era of voice, and the data model in the internet age. It's a better business case. The fourth point is around content localization. Here, the carriers have an advantage because the vast majority of them are regional operators. These regional carriers are in a better position to meet the needs of the consumers, because they know the network better, but they also have a better understanding of their consumers' content needs, and can deliver that content. Currently OTT players have operations across multiple countries, but they don't customize their content for each local market, country by country. This is a real disadvantage.

Next page: Video in the cloud

Video in the cloud
Cloud is obviously an important trend right now -- and increasingly when an enterprise or individual or home accesses video it will be hosted remotely. In this new world, the PCs and TVs are simply displays, and the content is hosted in the cloud, which is where the brains of the network are, also. It's very important that we address the issue of latency in these cloud networks to keep it as low as possible. It has to be almost as fast as if the video was locally hosted otherwise the experience will be a problem.

This is quite challenging, because there are many layers and nodes in these networks -- home devices access a home network, then a metro network, then a data center -- and all this communication and transmission results in extra latency and packet loss. Further, when different users and enterprises are accessing the same cloud they're actually fighting for the bandwidth resources, which can cause something of a traffic jam.

Huawei is working on a variety of solutions that will help alleviate these problems, starting with how to build a faster network with limited resources.

We all understand that fiber access is really fast, but the initial investment is really high, and that cost comes from not only the equipment but also the expense involved in digging up the roads -- which costs a fortune. And there are other issues. In London and various cities in Germany, for instance, it's actually against the law to dig up the roads. In those places fiber isn't even an option. That's why we have come up with G.fast, a technology which makes it possible to re-use existing DSL telephone lines to carry video at the same gigabit speed as fiber. It's a fantastic solution because we don't need to apply for extra licenses and we don't have to put fiber in place. We are also able to use DOCSIS 3.1 to do the same thing on coax cable networks.

So now you can deploy fiber, or DSL, or coax, and they will all support gigabit speeds. We call this the Gigaband age, and Huawei has developed a number of solutions and recommendations to allow DSL and coax to carry video in this world.

One of these is basically a concept to promote simplification of the network. The whole idea is to reduce the number of nodes, and thus reduce latency and improve user experience.

But at some point we can no longer reduce the number of nodes. That's why we have come up with a patented high-throughput router solution which further reduces latency and the packet loss by optimizing the TCP transmission protocol.

We have also created an operational and maintenance solution which provides much better visibility into faults on the network, allowing carriers to track down the root cause of problems reported by network users, even after the network has recovered from the incident. That removes a big pain point for operators.

Last and not the least is our methodology for evaluating the video experience. As an industry, we know how to evaluate voice quality, but video is much harder, much more complex. So Huawei has developed a system, and we've proposed it to the industry as a standard. It assumes there are three key factors which define a good video experience: quality, view, interaction. All three have to be good to ultimately deliver a good video experience. So we use three metrics to evaluate the quality of the video service: resolution, color gamut, and frames per second. View is evaluated by the number of times that the user experiences stalling and mosaics. And interaction looks at metrics such as start-up time when we open up a video online. When you combine all of these, these are the factors that Huawei believes we should use to evaluate the quality of the video experience.

The final reel
Clearly, Huawei is a network infrastructure provider, and we don't produce content ourselves. But our goal is to help the carriers to succeed by facilitating the creation of a profitable, healthy, sustainable video ecosystem. And we will push the carriers to do that. Huawei provides an open, integrated and compatible content platform for the carriers. We can manage that platform for them, or they can do it themselves. And this is a content aggregation platform and the likes of Netflix and YouTube are also valuable partners, and they can put their content on such a platform because it's open and compatible.

About the Author(s)

Steve Saunders

Founder, Light Reading

Steve Saunders is the Founder of Light Reading.

He was previously the Managing Director of UBM DeusM, an integrated marketing services division of UBM, which has successfully launched 45 online communities in less than three years.

DeusM communities are based on Saunders' vision for a structured system of community publishing, one which creates unprecedented engagement among highly qualified business users. Based on the success of the first dozen UBM DeusM communities, the UBM Tech division in 2013 made the decision to move its online business to the UBM DeusM community platform – including 20 year old flagship brands such as Information Week and EE Times.

Saunders' next mission for UBM is the development of UBM's Integrated Community Business Model (ICBM), a publishing system designed to take advantage of, and build upon, UBM's competitive strengths as a leading provider of live events around the globe. The model is designed to extend the ability of UBM's events to generate revenue 365 days of the year by contextually integrating content from community and event sites, and directories, to drive bigger audiences to all three platforms, and thereby create additional value for customers. In turn, these amplified audiences will allow business leaders to grow both revenues and profits through higher directory fees and online sponsorship. The ICBM concept is currently being discussed with a broad group of business leaders across UBM, and is earmarked to be piloted in the second half of 2013 and early 2014.

UBM DeusM is Saunders' fifth successful start-up. In 2008, he founded Internet Evolution (www.internetevolution.com), a ground-breaking, award-winning, global online community dedicated to investigating the future of the Internet, now in its fifth year.

Prior to Internet Evolution, Saunders was the founder and CEO of Light Reading (www.lightreading.com), Heavy Reading (www.heavyreading.com

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like