SLAs and QoS guarantees spell money for operators, but can they deliver?

When are we going to see high-level service level agreements (SLAs) and Quality of Service (QoS) guarantees as they relate to mobile broadband and business applications?

To date, there are few, if any, commitments that go beyond dropped data sessions and network availability, such as guaranteed speed and quality. But attitudes could be changing as operators find more difficulty in monetizing their mobile data networks. Flat-rate pricing plans are driving up traffic but the corresponding revenues aren't matching up to the cost. Offering premium services with varying levels of QoS attached is appealing to make up for that cost. At least that is what a host of experts in the industry say. We just haven't heard that mantra publicly from the operators themselves yet.

It makes sense that it should be coming. I recently moderated a FierceMarkets webinar about mobile data caps and how operators can effectively manage the deluge of data traffic they are experiencing (you can access it here). Larry Socher, global lead within Accenture's communications & high tech operating group, talked about how many consumer services such as mobile video and advertising won't translate into big revenues.

"Where is the willingness to pay going to come from?" he asked. Operators need services that generate the type of revenue that is going to offset broadband costs. It will be the enterprise that is willing to pay as businesses look to mobile networks to provide a whole new set of business applications, including back-end applications such as Oracle, and greater productivity for employees. But the enterprise is only willing to pay if operators are willing to provide the right experience to business users. In short,  mobile operators must offer SLAs and QoS guarantees or businesses won't rely on these networks or pay a premium.

Light Reading recently did a study that concluded that the ability to offer differential QoS is a network resource that can easily be monetized. Applications such as priority message delivery, no jitter for mission-critical applications, faster load times and guaranteed network uptime are the types of network capabilities the enterprise customer segment is willing to pay more for.

So why has there been seemingly little progress? Mainly, mobile operators don't have a lot of excess capacity since spectrum is a finite resource. The more users that are loaded on a network, the slower the data speeds become. Many vendors are coming out with policy control software that can control network resources based on time of day or how mission critical an app is, for instance.

But it seems to me that the focus on SLAs and QoS might not come until the next generation of mobile broadband technology, namely Long Term Evolution (LTE) technology. Offering aggressive SLAs and QoS on 3G networks that have a heavy focus on the consumer market are scary propositions for 3G operators, especially when voice services are still the primary revenue driver for operators. There is a trade-off in terms of capacity.

Next-generation IP-based networks will have significantly more capacity and flexibility over current 3G networks because they will be constructed to support broadband from the start. Already, Verizon Wireless, which has aggressive plans to roll out LTE in 30 markets next year, recognizes the need to offer more than just broadband access. It is looking at ways to leverage its Fios fixed broadband network with LTE and enable tiered offerings.

Many LTE vendors are playing up the QoS advantage inherent in the technology, and operators need to find a way to monetize these expensive pipes, especially when there is a ceiling as to how much the general consumer is willing to pay.

Still, it wouldn't behoove the enterprise to start demanding better guarantees from their 3G operators today so they are in a better position to get what they want tomorrow. - Lynnette