Now giga Internet service available from all the Korean big 3 operators
NETMANIAS TECH-BLOG
Who wins? - OTT Cache vs. Operator Cache
April 11, 2013 | By Dr. Harrison J. Son (tech@netmanias.com)
Online viewer:
  
  
  
 

Sandvine has recently reported that, in the second half of 2012, Netflix and YouTube accounted for 48% (33% and 15% respectively) of the total Internet traffic in North America, making telecom operators' IP network look like a video transport network rather the Internet.  With an ever-increasing number of users and higher-resolution videos, the traffic of these two (and hence the delivery costs thereof) are consistently increasing. Telecom operators and OTTs have had different strategies to minimize these costs. Here, we will discuss the strategies used by OTTs (Over-The-Top: Internet video streaming service providers) first.

 

CDN Strategy by Google

 

Google delivers YouTube traffics world-wide through its own CDN comprising 13 (only those officially confirmed by Google) datacenters located in the USA, Europe and Asia. With these limited number of datacenters, Google had a hard time handling the fast-growing YouTube traffic. Besides, users in a country without a Google datacenter has had buffering problems frequently while using YouTube.

 

In an effort to address such problems, Google has provided telecom operators with Google Global Cache (GGC), its own edge server, for free since around 2008. Google has installed GGC servers (H/W and S/W) in the telecom operators' IDCs and has taken care of their operation as well (through remote management). The telecom operators have in return provided Google with rack spaces, power and GE ports for free.

 

 

The telecom operators liked it because they could bring down the transit costs thanks to the drastically decreased YouTube traffic that came from external networks, and also because they didn't have to deal with customers' complaints about their relatively slower YouTube traffic any more.

 

Also, Google liked it because it could provide YouTube users with improved QoE and higher-resolution video services without burden of IDC fees. Since such strategy by Google was beneficial to both of them (Google itself and telecom operators), neither of them needed to pay. GGCs have already been used by most telecom operators in North America and Europe, and by SK, LG U+ and KINX in Korea in February 2012.   

 

Google, with the fascinating content that YouTube has, has successfully expanded its CDN throughout the world, even into the networks of telecom operators, without paying a single penny.

 

 

CDN Strategy by Netflix

 

Netflix, with over 30 million paid subscribers generating 33% of the Internet traffic in North America, applies the same strategy as Google's as to be seen below. To serve its customers, Netflix uses fee-based CDN services provided by Akamai, Limlight and Level3. Obviously, Netflix hasn't been happy with the CDN service fees it has been paying to CDN providers. But, what was worse is that it has to pay even more to provide higher-resolution video services (full HD level) in order to be able to attract more subscribers.

 

And Netflix noticed Google, once in a similar situation, had managed to have its GGCs deployed in telecom operators' network somehow. That's when Netflix, also well-equipped with all the coolest content, decided to apply the same strategy. And as a result, Netflix Cache was first introduced in June 2012.

 

 

Just like GGC, Netflix Cache was developed, offered for telecom operators' uses at no charge, and operated by Netflix, an OTT. Again, the telecom operators have supplied rack spaces, power and GE ports in their IDCs to Netflix at no charge.  

 

Currently, Netflix Cache has been deployed inside the network of telecom operators like Cablevision, Google Fiber and Clearwire in the USA, Telus in Canada, BT and Virgin Media in the UK, TDC in Denmark, and Telmex and GVT in Central America (countries where Netflix service is available). Especially in Europe, all the Netflix traffic is now delivered to Netflix users through Netflix Cache, not through global CDNs.

 

 

Neflix started full HD services (1920x1080, 5~7 Mbps) and 3D video services (12 mbps) in January 2013. Netflix subscribers now can enjoy high resolution services at no extra charge. But, here the tricky thing is that these high resolution services are only available to subscribers of the telecom operators who have Netflix Cache placed in their network. Such restrictions are intended specifically to promote telecom operators' deployment of Netflix Cache, thereby bringing down CDN costs and providing high-resolution services without paying IDC fees to telecom operators.  

 

When this service came up, Time Warner Cable protested that the full HD and 3D services should also be available to the subscribers of telecom operators how have not deployed a Netflix Cache. What has long been an issue was the network neutrality of telecom operators. But now, an issue of the neutrality of content that OTTs should not discriminate among telecom operators in providing their contents has been raised.

Now it's not telecom operators, but OTTs who hold all the cards.

Anyway, it turned out Netflix could have more CDNs deployed across the networks of telecom operators in the world without any cost just like Google did. YouTube and Netflix, the two top OTTs, have found a way to have their Cache getting inside the network of telecom operators throughout the world by taking advantage of their powerful content and huge user base. The market of telecom operator CDN and transparent Cache was once formed to reduce network costs through caching OTTs' traffic in the network of telecom operators and generate new profit sources. However, the market is now at risk of being significantly reduced.   

 

Telecom operators' CDNs and Transparent Cache are developed by domestic or foreign vendors and provided to telecom operators. So, the vendors may make some profits out of it. The telecom operators may also build CDN in their network and collect CDN service fees from OTTs. However, if YouTube and Netflix have their own Cache inside the network of telecom operators, no one except for OTTs can earn a penny.  

 

Thank you for visiting Netmanias! Please leave your comment if you have a question or suggestion.
If you want to print the post, please log in and press "Download PDF file" in the upper right corner of the page.

 

Thank you for visiting Netmanias! Please leave your comment if you have a question or suggestion.
Password confirmation
Please enter your registered comment password.
Password 
Download PDF file
Share This
Statistics
Date
04/11/2013
Pages
6
Views
4,262
Downloads
68
Comments
0
LTE Subscribers Growth in Korea