Mobile data consumption is on a steep upswing, thanks to mass adoption of smartphones and the deployment of faster 3G and 4G networks. While North American mobile operators have struggled to keep up with consumer demand for mobile data, they have yet to dedicate to their mobile networks the same investment in content delivery technologies seen in the wireline world.

Some content delivery network (CDN) providers such as Akamai and Limelight have begun offering mobile versions of their CDN services. And start-ups have emerged with a particular focus on mobile CDN, including Transpera, Ortiva Wireless, Movik Networks and, yes, Mobile CDN. Still, some believe that traditional CDN is sufficient to serve mobile users and that the mobile CDN market is unlikely to take root in North America.

“Mobile video delivery is almost nonexistent with the CDNs in the U.S. because there’s almost no demand today,” said Dan Rayburn, principal analyst with Frost & Sullivan, in a recent Webcast. “The American consumer does not interact with their phone the way folks do in Europe or in Asia. Most U.S.-based CDNs are not offering a video-related product today for mobile delivery. Akamai and Limelight offer one. However, it’s a very small portion of their business. It’s something they’re offering for a select few customers, and it’s something they’re betting on in the future, years down the road, there’ll be a large demand for, but today the demand is not there in the U.S., and I don’t see that changing any time soon.”

Some say demand for mobile CDN may also be lower among the CDNs themselves because mobile devices consume far fewer bits than wireline ones and therefore generate less revenue for CDN providers.

But the increasing proliferation of smartphones such as the iPhone and the Droid could significantly grow demand for mobile data including streaming video — particularly in North America, where the iPhone market is most mature.

At the same time, recent advancements in mobile data technology are enabling new levels of quality in the streaming of video to mobile handsets: namely, adaptive bit rate technologies such as those in Adobe’s Flash, Microsoft’s Smooth or Apple’s Quicktime platforms, which break content into two-second chunks and adjust the bit rate at each interval. That frequent adjustment is more important in the mobile world, where devices are always in motion, than it is in wireline CDN.

Also helpful to mobile CDN adoption is the current convergence of a plethora of proprietary streaming protocols to easily accessible HTTP, which can be run from any standard Web server. In conjunction with similar plans for the iPhone’s operating system and a push for standardization of it by the Internet Engineering Task Force, Apple included HTTP streaming in this summer’s release of QuickTime 10, which “enables the user experience to be really, really good — probably for the first time,” said Mark Taylor, vice president of product and strategy for Level 3 Communications.

With native HTTP streaming, “the need for a dedicated mobile CDN goes away,” said John Watson, executive director of market development for AT&T. “Today we’re just using traditional CDN to deliver content for mobile devices.”

Euan McLeod, a veteran of CDN heavyweight Limelight Networks, felt strongly enough about the differences between CDN and mobile CDN that he launched a start-up dedicated to the latter this year called — what else? — Mobile CDN. As CEO, McLeod hopes to get in on the ground floor of the North American mobile CDN scene by insisting that mobile devices — which fall prey to any number of data flow problems between the handset and the base station — require a higher standard of adaptability than Flash or Quicktime. In addition to features that help monetize content with advertising, Mobile CDN’s system adjusts bit rates for each user individually every few seconds, tailoring those adjustments to the specifics of each individual device — for example, encoding content in H.264 for streams to Sony devices below 64 kb/s but encoding with MPEG 4 at higher speeds, because that’s what works best on Sony devices in particular, McLeod said.

But that vast variability among handsets and their requirements will decrease over time, Watson said, at least for mobile users wanting rich data and video. The larger screen sizes and easily adjustable touch-activated views on today’s smartphones require much less custom formatting of content for mobile devices, he said, and the iPhone in particular is reducing the complex variety of smart devices in the market just through its mammoth market penetration.

“It’s a ubiquity thing,” Watson said. “Everyone I know who wants to consume mobile Web content uses an iPhone.”

The evolution of the handset-market toward smartphones will only reduce the need for a specifically mobile approach to CDNs, he added: “As handsets get more sophisticated and iPhone-like, the requirements for specifically mobile CDN versus traditional CDN diminish. Some of the pure-play mobile CDNs start to become less relevant over time, as the content becomes more consistent and richer. When you’ve got to test content for 600 different combinations of handsets and software and everything else, you need specialists to do that. But when you’re basically encoding or building stuff once and making it available, there’s much less requirement for specialization.”

Not surprisingly, McLeod disagreed. To illustrate why traditional wireline CDNs won’t do for the mobile world, he pointed to the official iPhone app for the U.S. Masters golf tournament this past April, whose live video was delivered with help from IBM.

“I cannot think of a better case study for illustrating the benefits of a mobile-specific solution for CDN,” McLeod said. “IBM offered live iPhone streaming when even the iPhone carrier (with a CDN) could not even conceive of this. … I cannot say who did that event for IBM. (I did spend the whole week at Augusta, and I am not a golf fan).”

One reason why applying standard CDN to mobile networks can be challenging is because, in any CDN, the idea is to move content as close to consumers as possible. In wireless networks, the place in the network closest to the user is the tower, but you can’t cache content there because, in most cases, there’s no IP-based point of interception. To access the IP network, you have to go further back upstream, a limitation that some CDN players are privately trying to overcome.

“We’re talking to technology providers and wireless operators about how we might put caches more deeply in their networks,” Level 3’s Taylor said. “Clearly it’s something they’re interested in. There are ways to transparently cache things deeper within the wireless network, but they’re all proprietary. Things need to change and technology needs to develop to make that more widespread. Some small start-ups are starting to think about that. … I signed a [non-disclosure agreement] the last time I spoke to them.”

For AT&T’s Watson, the biggest changes need to occur in wireless backhaul networks.

“I think [the way cell sites are interconnected with IP networks] will change as higher speeds go to the handsets, whether it means some devices being placed at the cell sites with most popular content cached locally or faster, different backhaul networks — I don’t know,” he said.