Facing the growth in Internet traffic, especially video, the major telecom operators are now deploying CDNs in their networks. They could potentially upset the entire video distribution ecosystem. However, technical deployments are complex and the commercial challenges are daunting in a market that is already very competitive. This study gives the status of this new market and provides information on the positioning of the various players in the value chain. Key Questions ' What are the operators' initiatives in CDN' ' How will the other players (traditional CDNs, commercial CDNs, content providers) react to operator CDNs' ' What objectives do operators want to achieve with CDNs' ' Can operators be technically and economically competitive' ' Why is the CDN federation essential to this market's development' ' What are the prospects for this market'
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Telco CDN - What potential for operators'
Published on December 2012
Report Summary
Facing the growth in Internet traffic, especially video, the major telecom operators are now deploying CDNs in their networks.
They could potentially upset the entire video distribution ecosystem.
However, technical deployments are complex and the commercial challenges are daunting in a market that is already very
competitive.
This study gives the status of this new market and provides information on the positioning of the various players in the value chain.
Key Questions
' What are the operators' initiatives in CDN'
' How will the other players (traditional CDNs, commercial CDNs, content providers) react to operator CDNs'
' What objectives do operators want to achieve with CDNs'
' Can operators be technically and economically competitive'
' Why is the CDN federation essential to this market's development'
' What are the prospects for this market'
Table of Content
Contents
1. Executive Summary 8
1.1. Arbitrages for telcos about telco CDN on handling growth in video traffic 9
1.2. Confrontation in CDN between operators, traditional CDN and Internet giants 10
1.3. A limited position for telco CDN in the short term, but with significant long-term
potential .. 11
2. Methodology .. 12
3. Major telco CDN principles . 14
3.1. Context 14
3.1.1. Global landscape . 15
3.1.2. Content distribution options on the Internet . 17
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3.2. Traditional CDN . 19
3.2.1. Associated technologies . 19
3.2.2. Markets .. 23
3.3. Telco CDN and transparent caching . 25
3.3.1. Principle of telco CDN . 25
3.3.2. Principle of transparent caching 25
3.3.3. Telco CDN as a new business model for operators' . 26
3.3.4. Many objectives for telco CDN .. 27
4. Player deployments and strategies .. 28
4.1. Operator positioning . 28
4.1.1. AT&T .. 30
4.1.2. BT 31
4.1.3. Comcast 33
4.1.4. Deutsche Telekom 34
4.1.5. KDDI 35
4.1.6. Orange .. 37
4.1.7. SFR 38
4.1.8. Verizon .. 39
4.1.9. Telefonica .. 40
4.1.10. Telecom Italia 42
4.1.11. KPN 43
4.1.12. KT 44
4.1.13. Telstra 45
4.1.14. TDF 46
4.1.15. Bell Canada .. 47
4.1.16. Telecom Argentina .. 48
4.2. Equipment supplier positioning .. 49
4.2.1. Summary 49
4.2.2. Cisco .. 50
4.2.3. Alcatel-Lucent 55
4.2.4. Juniper Networks . 57
4.2.5. Huawei .. 59
4.2.6. Ericsson . 61
4.2.7. Nokia Siemens Networks 63
4.2.8. HP .. 63
4.3. CDN positioning 65
4.3.1. Summary 65
4.3.2. Akamai .. 67
4.3.3. Limelight Networks .. 71
4.3.4. Edgecast 72
4.3.5. JetStream .. 75
4.4. Transit provider positioning . 76
4.4.1. Summary 76
4.4.2. Level3 . 77
4.4.3. Tata 79
4.4.4. Cogent 81
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4.5. Major content provider positioning 82
4.5.1. Summary 82
4.5.2. Google 83
4.5.3. Netflix . 84
4.5.4. Facebook 85
4.6. Positioning of other technical service providers involved .. 86
4.6.1. Summary 86
4.6.2. SkyTide . 86
4.6.3. PeerApp 88
4.6.4. Qwilt 90
4.6.5. Verivue .. 91
4.6.6. BlueCoat 92
5. Strategic Analysis . 93
5.1. Regulatory issues and Net Neutrality 93
5.2. Technical Issues 94
5.2.1. CDN sizing . 94
5.2.2. What content can be cached' 94
5.2.3. DNS redirection issue .. 95
5.2.4. Problems implementing analysis tools . 95
5.2.5. Multiscreen and mobile 96
5.2.6. QoS 97
5.3. Federation of CDN 97
5.3.1. CDN interconnection 97
5.3.2. Broker concept . 99
5.3.3. Load balancing and multi-CDN management 100
5.3.4. Developments for federation 101
5.4. Economic issues 101
5.4.1. Network investment 101
5.4.2. Economic transfers between players . 102
5.4.3. Decisions on setting price . 104
5.5. Relationships between players 106
5.6. Market Potential . 108
Tables
Table 1: CDN industry rates .. 24
Table2: Telco CDN Initiatives 29
Table 3: Acquisitions and partnerships of the major equipment suppliers . 49
Table 4: Equipment supplier positioning .. 49
Table 5: Pricing based on customer location .. 64
Table 6: Positioning of various traditional CDN around telco CDN . 66
Table7: Various positions of major transit providers . 76
Table 8: Various distribution choices for content providers 83
Table 9: Primary transparent caching providers . 86
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Table 10: List of the main CDN brokers .. 99
Table11: Retail and wholesale revenue from video distribution .. 108
Figures
Figure 1: Change in Internet traffic by service category, 2009-2014 15
Figure 2: Worldwide investment in fixed and mobile networks, 2007-2013 . 16
Figure 3: Comparison of the increase in traffic costs and access revenue . 16
Figure 4: Share of Google's traffic using direct peering . 18
Figure 5: CDN concept . 20
Figure 6: Traffic simulation tools . 21
Figure 7: Akamai's mobile architecture for iPhone .. 22
Figure 8: Description of traffic optimisation 22
Figure 9: Worldwide CDN market .. 23
Figure 10: Changes in the share of value added services at Akamai, 2008-2015 24
Figure 11: CDN unit cost decline (compared to the previous year) . 24
Figure 12: Principle of transparent caching: interception and redirection to a cache if the content is "cacheable" 26
Figure 13: Changes in the revenue model for operators with telco CDN .. 27
Figure 14: AT&T's CDN strategy 30
Figure 15: Argument for CDN federation, 2010 . 31
Figure 16: BT's role in the value chain . 31
Figure 17: Various business models offered by BT 32
Figure 18: Description of BT Content Connect with the various classes of service .. 32
Figure 19: Comcast's road map 33
Figure 20: Map of Comcast's CDN .. 33
Figure 21: Map of the Edgecast "network" .. 34
Figure 22: Evaluation of Deutsche Telekom's CDN implementation strategy .. 34
Figure 23 : Creating a network dedicated to QoS 35
Figure 24: CDN interconnection using an OCX platform .. 35
Figure 25: KDDI Infrastructure .. 35
Figure 26: Objective for acquiring CDNetworks . 36
Figure 27: Telco CDN used to converge KDDI's fixed and mobile networks . 36
Figure 28: Orange's CDN presence . 37
Figure 29: SFR's distribution chain .. 38
Figure 30: End to end CDN product . 39
Figure 31: Verizon's CDN coverage in the United States . 39
Figure 32: Telefonica's presence .. 40
Figure 33: Telefonica's distribution network deployment project . 40
Figure 34: Telefonica's telco CDN as close as possible to the customer .. 41
Figure 35: P4P Architecture with ISP intervening .. 42
Figure 36: CDNetworks' global presence . 43
Figure 37: KT's data nodes presence .. 44
Figure 38: KT's CDN deployment . 44
Figure 39: Telstra's CDN solution . 45
Figure 40: Targeted advertising using CDN 46
Figure 41: TDF's offer (Media Services) in the value chain .. 46
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Figure 42: Evolution of CDN business models 47
Figure 43: Bell Canada's CDN network 48
Figure 44: Telecom Argentina's CDN architecture . 48
Figure 45: Structure of equipment suppliers' CDN offers . 50
Figure 46: Cisco's Videoscape solution 51
Figure 47: Cisco's CDS platform 51
Figure 48: Ingestion, caching and distribution . 51
Figure 49: Cisco Mobile Videoscape 52
Figure 50: CDN implementation in BT's network. .. 53
Figure 51: Phase 1 of the CDN operator federation pilot . 54
Figure 52: Phase 2 of the CDN operator federation pilot . 54
Figure 53: Velocix Digital Media Delivery platform Architecture .. 55
Figure 54: Integration of CDN in the existing network 56
Figure 55: Juniper's MediaFlow Controller .. 57
Figure 56: Media Flow Solution position within the network . 58
Figure 57: Media Flow at the network edge 58
Figure 58: Juniper's solution for mobile network 59
Figure 59: Huawei's SmartCDN topology . 60
Figure 60: Location of iCache in the network .. 60
Figure 61: iCache architecture, Huawei-Symantec transparent caching solution 61
Figure 62: Ericsson's Media Delivery Network functionalities .. 62
Figure 63: HP's SpeedVideo CDN global architecture .. 65
Figure 64: Description of Akamai's portfolio of services . 68
Figure 65: Illustration of telco CDN deployment based on Akamai technology 68
Figure 66: List of Akamai's offer for operators 68
Figure 67: Extract of a presentation on CDN federation, May 2012 69
Figure 68: Types of applications targeted by the Ericsson-Akamai partnership 69
Figure 69: Outline of the Ericsson-Akamai partnership . 70
Figure 70: Akamai's view on mobile: extend its presence to the foot of the tower 70
Figure 71: Growth in Limelight Network's revenue and net profit 71
Figure 72: Value added services' share in Limelight revenue .. 71
Figure 73: Limelight Deploy description 72
Figure 74: Edgecast's Network . 73
Figure 75: Edgecast and PeerApp partnership proposition .. 73
Figure 76: Edgecast's Vision .. 74
Figure 77: Telco CDN Federation . 74
Figure 78: JetStream's Streamzilla CDN network .. 75
Figure 79: Description of Level3's services . 77
Figure 80: Description of Level3's "Intelligent Traffic Manager" .. 77
Figure 81: Change in various financial indicators .. 78
Figure 82: Key metrics for the Level3-Global Crossing combination .. 78
Figure 83: Effect of Level3's acquisition of Global Crossing 79
Figure 84: Combined networks of Level3 and Global Crossing .. 79
Figure 85: Tata Communications' product line 80
Figure 86: Detailed description of Tata's CDN offer in India 81
Figure 87: Change in Cogent's revenue 81
Figure 88: Google's quarterly CAPEX spending since 2006 83
Figure 89: Distribution of costs for the various CDN Netflix uses, before (on the left) and after (on
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the right) introducing Open Connect . 84
Figure 90: Netflix's CDN peering points 85
Figure 91: One day's traffic on Facebook in North America . 85
Figure 92: SkyTide role within CDN landscape .. 86
Figure 93: Example of measures taken by SkyTide .. 87
Figure 94: Federated CDN . 88
Figure 95: PeerApp's transparent caching solution. .. 89
Figure 96: Cache improves flow 89
Figure 97: Amount of traffic that can be cached . 90
Figure 98: Qwilt's distribution solution .. 91
Figure 99: Deployment of Verivue's tools . 91
Figure 100: How BlueCoat's transparent caching works . 92
Figure 101: How BlueCoat's CacheFlow transparent caching works 92
Figure 102: Optimisation by consolidating servers 94
Figure 103: Storage based on popularity .. . 95
Figure 104: Ability to cache based on position in the mobile network .. 96
Figure 105: CDN interconnection concept . 97
Figure 106: Cisco's vision for CDN interconnection . 98
Figure 107: Federation of CDN initiations .. 99
Figure 108: Illustration of the performance of various CDN on Deutsche Telekom's network 100
Figure 109: Cascading model revenue flow 103
Figure 110: Illustration of the "pay per cache" model 104
Figure 111: Telco CDN market, 2010-2017 109
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