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Cloud computing is producing both challenges and growth opportunities for mobile carriers.

With cloud-based applications and data, smart mobile devices and nearly ubiquitous high-speed access, subscribers are able to consume content anywhere at any time. Last year, these subscribers drove global mobile data traffic to over eight times greater than the total global Internet traffic in 2000, according to the Cisco Visual Networking Index 2011-2016.

The on-going study also predicts that between 2011 and 2016, mobile cloud traffic will grow at a compound annual growth rate of 95%. By 2016, cloud applications will drive 71% of the total mobile data traffic and two-thirds of the world's mobile data traffic will be video. Currently, global mobile traffic accounts for 10% of total Internet traffic, according to the 2012 Internet Trends Report by Kleiner Perkins Caufield & Byers (KPCB), a venture capital firm that has invested in a number of cloud startups.

Mobile carriers will have to find ways to manage not only the data overload but also the signaling storm that's brewing in the network.

The signaling storm causes network congestion, service degradation and dropped calls due to the radio frequency (RF) signaling hitting the radio access network (RAN) and the surging Diameter signaling traffic in the core network. The transition from 3G to Long Term Evolution (LTE) will generate even more traffic as devices move between LTE and 3G access networks.

 
Diameter is the primary protocol for communications in the LTE network between policy servers, charging systems and gateways. It also provides important functions in the 3G network.

Another challenge is one that has radically transformed the mobile carriers' competitive landscape and threatens their traditional business model. Over-the-top (OTT), cloud and machine-to-machine (M2M) providers are raking in more than 50% of the annual mobile data applications revenues, according to Chetan Sharma Consulting, a management consulting and strategic advisory firm focused on the mobile and voice communications sector.

Hundreds of millions of users are increasingly accessing platforms and applications from OTT players like Apple mobile apps, Google search, Amazon ebooks, Facebook social networking, and YouTube videos from their mobile devices. Mobile advertising and applications spending totaled an estimated US$12 billion last year, 71% of which came from applications, according to KPCB.   

So, mobile operators are compelled to move up the mobile data value chain and explore new service models by forging value-added business relationships with OTT application providers. 

As subscribers spend more time with OTT content and applications that are decoupled from the underlying infrastructure, traditional mobile operators are providing the resources to run these bandwidth-intensive OTT services without getting much revenue in return. Their role in the application and device revenue chain is diminishing.

"With the Diameter [authentication, authorization, and accounting (AAA) protocol for computer networks], our platform helps operators manage the signaling storm," said Tekelec vice president for Asia Boudewijn Pesch. "The other element is where Diameter, in combination with policy control, offers a great opportunity for the operator to work on the two-sided business model. I see a number of operators talk about the best-effort network and a network where you get a certain quality of service (QoS). Different operators try to do this in a different way."