Sandvine Expects ISPs to Introduce New Service Tiers Based on Network Usage
Sandvine expects ISPs to introduce new service tiers based on data gleaned from its network management tools, executives said during its Q3 earnings call Thursday. The new tools, which Sandvine calls the real-time entertainment dashboard and introduced in September, allow ISPs to monitor the over-the-top (OTT) services their subscribers are using and track how much revenue those services are generating on their networks. “Insights into how much revenue is being generated by these over-the-top applications alerts operators to new business opportunities and opens the door to novel marketing strategies,” CEO Dave Caputo said. The service tracks the types of codecs OTT entertainment services are using, the quality of the video and audio being provided to the user, the location of the user, the type of device used to consume the service and the revenue associated with the service, Sandvine said.
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Such analytics about how subscribers are using the Internet and spending money online are already beginning to influence carrier decisions in Latin America, Caputo said. “They're becoming very interested in lower cost, more focused on value-added services,” such as adding a “Facebook tier” or “social networking tier,” Caputo said. “That will become a very common way mobile data will get consumed,” he said.
In the U.S., uncertainty about the economy doesn’t seem to be affecting ISPs’ willingness to spend money on Sandvine’s services, Caputo said. “They're absolutely mindful of their capital spending … but I can’t say we've seen specific Sandvine projects cancelled with that excuse,” he said. And as the year comes to a close, carriers may find themselves with some excess capacity in their budgets, which could lead to accelerated spending on some pending Sandvine projects, he said.
Though Sandvine’s business has grown beyond its early reliance on North American cable operators, cable operators remain good customers and they're poised to continue spending on Sandvine’s network management and monitoring gear, Caputo said. “In fact, I see more opportunity in front of us than we've had historically with almost every single service provider,” he said. However, among the 12 new customers from around the world the company added in Q3, none was a cable operator. Eight were wireless operators and four DSL providers, the company said. That’s primarily because globally, cable has the smallest share of Internet access and most of its cable customers are in North America, Caputo said.
Sandvine’s Q3 sales of $25.6 million were 10 percent higher than a year earlier, the company said. Its profit fell 73 percent from a year earlier to $522,000 on higher research and development and administrative costs. The bulk of its revenue now comes from DSL operators around the world. They represented 48 percent of the company’s Q3 revenue. Sales to wireless operators represented 32 percent and cable operators 18 percent, it said.