Access CDN: the survey

Access network providers and content owners are increasingly looking to build their own CDN infrastructure. Ahead of IBC, DTVE surveyed key CDN industry players about their views on the future direction of the market. 

What changes have occurred in the CDN market for video services in the past year?

James Taylor, director of cloud services in EMEA, Level 3

Over the past year, we have seen more customers move to a multi-platform approach for their video services. This trend is driving CDNs to adopt a range of consolidating technologies to reformat content so that it’s compatible with different devices, such as smartphones and tablets. Another major change has been the usage of 3D video content. When 3D video launched, hardware manufactures promoted the technology with considerable passion, however this has quickly dissipated with the advent of HEVC & UHD solutions for 4K and 8K video. Mass video compression of 3D content will not materialise in production for the next 12 – 18 months, but it is where a lot of the forward-looking effort is being spent.

Paul Larbey, president, video business unit, Alcatel-Lucent

What we’ve seen, and where we specialise is in providing CDN technology to service providers who have their own pay TV offerings and are basically looking to optimise the delivery of that TV to connected devices, be it tablets, games consoles or connected TVs. I think one of the main changes we’ve seen is the move away from basically optimising delivery, which is historically the focus of all caching technologies, to using CDN technologies, not only to provide optimal delivery, but also to add some management back into the delivery of that video in a managed IP network. So although you use the internet protocols, there’s no reason that it shouldn’t be delivered in a very managed and controlled way. Basically [you are] enhancing the CDN to add more video awareness and allow you to put the operator in, effectively to regain control of the management of that IP traffic.

Jacques Le Mancq, CEO, Broadpeak

Over the past year, we have seen more video service providers building their own CDN infrastructures in order to control their overall quality of service, but also to cut some of their CDN costs. This is particularly the case for cable and telecom companies who own their network infrastructures. Building on their success, some cable and telecom operators have opened their CDN infrastructures by selling CDN services to over the top (OTT) players who are looking for a premium quality delivery service.

Peter Coppola, VP, market development, Limelight Networks

Consumers are looking for rich content and online video encompasses that – yet consumers are constantly on the move requiring that video needs to play on multiple devices, quickly and in high-quality. CDN providers have needed to accelerate their delivery of content since slow-loading videos can be detrimental to a business. Consumers and businesses alike have high expectations on video delivery and performance. Over the past year, companies have recognised how critical video is in engaging audiences and even converting prospects to customers, as found from a recent survey conducted by TechValidate of Limelight Networks’ customers during the month of July. The majority of respondents find performance and reliability as extremely important when choosing a solution, which has been affecting the CDN market as CDN providers are constantly working to improve these factors. Consumers’ use of video-on-demand and live streaming of online video wherever they may be is growing and will continue to dominate the marketplace as performance is enhanced.

Duncan Potter, chief marketing officer, SeaWell Networks

We have seen a growing trend, led by organisations such as Comcast and Telefónica, to base their own CDNs on open source technology – typically Apache Traffic Server or Varnish – as they recognise that there is significantly more to do when delivering ABR video. This has opened up the opportunity for organisations, such as Seawell, to provide an intelligent delivery layer on top of the cache-based delivery infrastructure that provides additional services, such as dynamic repackaging, ad/alternate content insertion and QoE management.

Jerry Miller, VP of service operations, QuickPlay Media

The market for CDN services has seen increased commoditisation as new participants continue to enter the space, resulting in a number of changes. As CDN prices continue to drop, there is less emphasis on pricing and features such as HTTP streaming overshadow proprietary protocols, shifting the overall focus to quality of service and reliability.  Higher bit-rate video services now require high-throughput connections over diverse channels (including wired, mobile and WiFi) from users to CDN services as well as automated failover for high-availability origin and cache functions, making it imperative that the CDN consistently supports high bit-rates over the entire data flow.

Jon Haley, vice-president, business development, Edgeware

Netflix’s move to create their own CDN to improve quality and reduce cost – our observation is that their success with this has prompted many cable and telco service providers to seriously revise their ambitions for their own multiscreen TV and video services and to focus on delivery quality as a major potential differentiator. We have seen the launch of comprehensive pay TV offerings from some major operators looking to combat these OTT services by combining live, network DVR and VoD. We have also seen an increased interest from OTT service providers looking to build their own CDNs.

James Segil, president, EdgeCast

Core CDNs are adding more value-added services to increase the value beyond traditional caching/streaming. Streaming is moving toward video delivery over HTTP and away from FMS/WMS, with more content providers (Netflix, Google etc.) building their own CDNs. More traditional Cloud Service providers are also now adding CDN to their product portfolio to help video delivery, as CDNs and telcos continue to evolve the business models of working together.

What bandwidth challenges face content providers in delivering web services?

Jon Haley, Edgeware

The lack of determinism.  Delivering reasonable quality during average viewing numbers is possible, especially from a CDN designed to deliver a specific service such as pure live or pure VOD. However, when everyone presses pause or wants to re-start live programs, the majority of CDNs start relying on the fact they only promise ‘best efforts’. This is not only because of downstream congestion in the ISP’s core and aggregation networks, but also due to the fact that recording and delivering on-demand uses new storage and processor resources on the CDN that are unlikely to be dimensioned to the same level as those needed for live. Best efforts are good enough for free or very low-cost services, but not for true pay TV subscribers. We are seeing a strong trend from content providers looking to overcome this congestion by reaching agreement with ISPs to extend CDNs into their networks, and we also see a strong requirement for optimised CDN equipment to be able to guarantee delivery, regardless of the mix of services and the size of the audience.

James Segil, EdgeCast

Smartphone adoption rates are at all time highs, and the networks accessing those video files can be in very challenging, hard to reach markets. Take India as an example. Providing the consumer with the appropriate file, catered to the wireless device asking for that file, in a timely manner, in these distant markets is always going to be a challenge for content owners. CDNs are being asked to solve that problem for content owners and often times the issue is very complex and tied to issues such as lack of infrastructure, peering and network interconnectivity, government regulations, etc. All of these issues combined can provide a less than optimal user experience.

James Taylor, Level 3

Online video is experiencing an exponential growth curve that is driving larger and larger investments in internet infrastructure as a whole. Where this investment is split over multiple third parties, regional bottlenecks can quickly form. At the same time, online is becoming a staple requirement to many content owners’ businesses, if not the primary point of contact, and replicating a TV-like experience is becoming a mandatory expectation for many content owners. However, with so many variables across different stakeholders it can be challenging to meet. Ultimately, content owners need to pick the right partner by region that gives them the consistency in each market to span multiple networks. In many cases it’s prudent to adopt a multi-vendor strategy using quality as the means of selection.

Paul Larbey, Alcatel-Lucent

I think one of the challenges you have is that the protocols you use were developed running over the internet, i.e. a sort of a best-effort channel, so as a result, a lot of the clients are very greedy. You can quite often get a situation where somebody watching a soap opera on an iPad could potentially get a higher bit-rate in the home than somebody watching sport on a 50-inch TV, and clearly that doesn’t make sense. I think that one of the key bandwidth challenges service providers start to face is making sure that they optimise their available network bandwidth on that managed IP network for the delivery of internet video, and use that in the most optimal way given what the different subscribers are watching and on what device they’re watching it.

Jacques Le Mancq, Broadpeak

While video is bandwidth-hungry by nature, the impact of video traffic differs based on the nature of the video service. Live TV viewing on tablets and smartphones is putting a lot of stress on carrier networks as it features significant traffic peaks when the audience watches popular live events or breaking news. At Broadpeak, we believe that live TV-made-available OTT is the big challenge for carriers when it comes to planning network capacity. It becomes the problem of content providers who need to pay for the related CDN services and who suffer from service outages when the network cannot handle the live traffic peaks.

Peter Coppola, Limelight Networks

Content providers need the ability to deliver their content to users wherever they might be, on whichever device they are using.  Users are viewing online video and other content while on the move from their mobile devices – this mobility requires content providers to deliver rich, dynamic content that is personalised and tailored to their device, their location and even their browsing habits. Limelight Networks has a Dynamic Site Acceleration (DSA) service that addresses the need to accelerate the delivery of rich content, which can be accessed through our Web Content Management offering, Limelight Orchestrate Content Management.  Other challenges that are being examined by the industry relate to the issues with the HTTP protocol.  At more than a decade old, HTTP protocol was just not designed for use through a mobile network. Limited bandwidth on the mobile network and different display and processing capabilities of mobile devices limit the functionalities and overall experience an end-user will have when viewing rich content. With a limited bandwidth on mobile devices, this can affect a majority of content viewers as more customers are viewing rich media from their phones, laptops, and other mobile devices while on the move.

Is there a business case for access providers building their own CDN infrastructure? 

Peter Coppola, Limelight Networks

Over 100 network providers have built CDNs for internal use cases like IPTV, but public-facing CDNs are complicated and network operators’ footprint make it difficult for them to be the sole service provider to enterprises. The challenge access network providers would find when building their own CDN infrastructure is having to serve content from multiple, geographical locations. CDNs have servers dispersed in numerous locations, allowing for users to have their content routed through a relatively nearby physical center, which offers less latency.  Additionally, the technology that CDNs have that enables the acceleration of delivery of content is critical to ensuring the CDN is beneficial to the company. CDNs usually incorporate an acceleration service into their content management platforms, as does Limelight, since the speed of the delivery is crucial to business performance. New models around CDNs partnering with network operators are likely to emerge, such as CDN federations and transparent caching interconnect.

Jerry Miller, QuickPlay Media

Yes. While the CDN market was traditionally dominated by a handful of service companies, the market has become increasingly commoditised with the emergence of new CDN service providers.  Operators are now willing to invest into the business with additional infrastructure and manage their own services, since CDN is a commodity for services like video and video eats up most of the peering into the operator and last-mile traffic – this becomes more a concern for constrained operators like mobile. CDN is still not easy to implement, which is why there have been so many failed attempts in the marketplace, but with the right partner/system integrator, it is definitely worth considering.  The challenge is a private CDN needs a global partner to convert from being a cost saver to a revenue generator, and I believe there are still few viable and reliable partners to do this, with a strong emphasis on “viable and reliable”.

Duncan Potter, SeaWell Networks

There is clearly a business case. However, at this stage, the business cases have mostly been based on the cache optimisation potential. However, to some extent that has been defeated by the proliferation of ABR protocols being delivered causing caches to become less efficient. Solutions such as repackaging at the edge of the network and targeted ad insertion being implemented as an overlay for the cache-based delivery infrastructure bring a far higher level of efficiency and backhaul cost reduction while opening the way for targeted add insertion. This re-asserts a far more positive business case and essentially does not compete with the traditional CDNs.  This different way of thinking, with key services at the edge of the network based on sophisticated session management and cloud based centralized services, is a key aspect of network architectures for telcos.  Organisations that think purely centrally with “dumb pipe” delivery infrastructures are incurring huge costs within their backhaul and access networks that will prevent scaling.

James Segil, EdgeCast

It really depends on how you define CDN. If defining CDN means building a video delivery platform to optimise video delivery across the access network, or maybe building an OTT platform to bring video-on-demand services into that access providers product portfolio, than it might make sense. The challenge you have here is ensuring that the CDN you build is capable of providing the content owners – HBO, Disney, Hulu, etc. – a CDN that can meet all of their very strict and complex CDN delivery needs.  Without that, these telecom operators are never going to gain adoption of that CDN service they have built because companies like EdgeCast, Akamai, etc., are already providing these services to all the largest content owners with a highly complex, globally-distributed network that no cable/telecom operator is capable of building themselves.

Paul Larbey, Alcatel-Lucent

The answer is absolutely yes, and our focus is 100% on selling software equipment and services to service providers who want to do exactly that. If you’re talking about service providers who want to basically use it as a technology to offer their own pay TV, rather than outsource that to somebody in the internet, I think that’s absolutely where the business case is and that’s where the focus is, because the future of pay TV delivery is over an IP pipe. That IP pipe is within that access network and I don’t think service providers are willing to outsource such a fundamentally important part of their video delivery infrastructure.

Jon Haley, Edgeware

Yes, but primarily for delivery of their own TV and video services. The business models for providing operator CDN services to OTT content providers are still being established, but most operators have come to the conclusion that it does not make much sense to use pure-play CDNs for their multiscreen services – i.e. to route content out of their network only to receive it back again when requested by their own broadband subs. The major push by players such as Akamai, Level3 and Netflix to establish caching in the operator networks indicates its importance to achieving broadcast quality, so we expect to see the balance of power shifting back to these middle and last mile network owners.

Jacques Le Mancq, Broadpeak

There is a large opportunity for cable and telecom operators to capture an important part of the CDN market, but to do this they need to focus on what makes them different in the content delivery chain. At Broadpeak, we believe that networks have an edge related to the boxes they put in every home. Broadband gateways and set-top boxes represent a highly distributed delivery infrastructure. By leveraging this infrastructure and making it a part of the content delivery network, cable and telecom operators can offer a far superior service in terms of quality – at a fraction of the CDN market price.

How far do network providers and global CDN providers complement each other?

Duncan Potter, SeaWell Networks

The rise of ‘operator CDNs’ that focus purely on bypassing the local content providers, pits access network providers directly against the global CDN providers. By rethinking their own ‘CDN’ strategy to focus on targeted ad/alternate content insertion and differentiated services at an individual household or subscriber level, access network providers can reduce the direct competition and focus on what they do best – serve subscribers with differentiated and valuable services.

Jerry Miller, QuickPlay Media

A global CDN provider has what a network provider cannot get easily today: global reach and network agnosticism.  A network provider has the lines and can ensure Quality of Service (QoS). These two form the perfect complement, if they can work together.  The challenge is that with the CDN federation still a pipe dream, these two entities must determine a way to work that allows the network provider to share in the revenue while enabling the global CDN to benefit from the QoS, preferably without either of them becoming exclusive to the other.

Peter Coppola, Limelight Networks

CDNs are in the business of the online world, ensuring that rich, valuable content is being delivered to the end user in high quality and at a high speed. Though many consumers still tend to turn to traditional access network providers to view their favourite content, such as TV shows or movies, when an access network provider can offer that content in multiple formats, such as online and mobile viewing, their business platform is strengthened. We see an opportunity for global pure play CDNs and network operators to partner around delivery, enabling better service and new business models.

Jacques Le Mancq, Broadpeak

Global CDN service providers are already competing with network service providers today in several markets. Global CDNs have an advantage when it comes to footprint and international traffic. Operators are stronger when it comes to carrying traffic over their infrastructure. The emergence of CDN selection products – such as Broadpeak’s umbrellaCDN – finally makes it possible for cable and telecom operators to beat CDN providers by joining a CDN confederation built around CDN selection rules managed by content providers.

James Taylor, Level 3

An individual access network on its own doesn’t create a compelling proposition for content owners, therefore collaboration is really the only viable way forward. This is particularly true because the cost barrier to enter the CDN marketplace is very high. Scalability is also important, therefore a network must work with a global CDN provider – or vice versa – in order to provide optimum global reach.  Global, scalable networks such as the one from Level 3 Communications will hence continue to grow in importance for the market, a fact that is reflected by customer take-up. CDN providers are orientating their platform development to integrate deeper into access networks to reduce the bit mile cost of rich media in an attempt to find mutually beneficial models. This enables them to scale with the exponential growth in video we expect to see in the coming years.

Jon Haley, Edgeware

Global CDNs own the commercial relationships with today’s content providers, but they need the cooperation of the access network owners to deliver the quality and availability needed for internet services to start to replace traditional broadcast. Today we see growing competition between them for delivery of local content as access network owners grow their CDN sales and marketing capabilities.

James Segil, EdgeCast

EdgeCast believes that network providers are all a very key part of the value chain for CDN services. To some extent, we have partneredwith many telecom operators to better optimise how CDN services are delivered into their respective networks, so in this case that is very complementary. Selling CDN services to content owners and competing with EdgeCast or Akamai is a challenge that we have seen only a few telecom operators succeed in.

How do you expect the CDN market to evolve over the coming 12 months?

Jacques Le Mancq, Broadpeak

We expect the CDN market to grow steadily over the next 12 months. We expect that the share of  network service providers in the video CDN market will grow slightly faster than the global CDN service provider share.

James Taylor, Level 3

The CDN market will continue to evolve much as it has done over the last 12 months. CDN providers will continue to simplify the delivery of video to new devices and formats. As they continue to dynamically re-wrap content and use format agnostic methods of content protection the CDN market will naturally evolve. CDN operators and access network providers will continue to find consistent models for collaboration, as each are equally important in the internet ecosystem. The one area we expect to see change is in vendor consolidation. As capital investment increases and margins reduce, only the very largest CDN operators will find enough scale for a viable business. As a result, many of the smaller providers will either become niche or re-focus on higher margin enterprise business.

Jon Haley, Edgeware

We expect continued growth in the number of cable and telco TV services that are fully extended to multiscreen – i.e. all channels made available with the same catchup rights on all devices. These will require additional subscription or will only be available with premium subscriptions, and the quality of delivery and availability from the CDN will therefore need to be guaranteed. We expect this to continue to drive the majority of deployments of operators’ own CDNs. We also expect to see a continued move away from “home-grown” solutions based on standard hardware and open source towards specialist systems that provide predictable and scalable performance. Finally we expect to see some extension of these operator CDNs to OTT providers as a B2B service, but only on a case-by-case basis and primarily for local content broadcasters.

Duncan Potter, SeaWell Networks

First, the inertia preventing a clear understanding of the business case for targeted ad insertion will fade, adding momentum to this movement. Secondly the access network providers will start insisting on far more sophisticated session management with an intelligent layer of additional services to provide individualised “experiences” to subscribers. Thirdly the commoditisation of underlying infrastructure will continue to drive down basic delivery costs. Finally, the cost of global CDN bandwidth will continue to erode at between 20-30% causing the global CDNs to continue to force the pace with content providers by looking for additional services.  This, in turn, will put even more pressure on access network providers to move faster in their own service deployments.

James Segil, EdgeCast

All segments of the business are expected to continue growing, but we think the emerging economies of the world – Indonesia, Latin America, etc. – are really going to show the most amount of growth. Limited broadband and wireless access has kept some of these regions of the world sheltered from the kind of growth we’ve seen in the developed economies, but that dynamic is going away. We also expect the value added services on top of traditional CDN caching to become more complex and valued, adding to our ability to grow revenue through new product and services beyond core CDN.

Jerry Miller, QuickPlay Media

The market will continue to see operators build and/or partner to enter the CDN space. With a myriad of options available amongst existing pure play CDNs, operators, and CDN vendors, more will succeed than in the past.  This will influence existing CDN services to aggressively partner with operators and switch their models away from commodity type services.  With these newly formed partnerships, specialty services like security – WAF, anti-DDoS – dynamic content acceleration, video processing and higher order analytics will become the area of focus.  As the market continues to consolidate and grow, we can expect to see this trend become more predominant.

Paul Larbey, Alcatel-Lucent

I think we see it growing rapidly. We see it becoming more important for operators who want to use an IP protocol to deliver their next generation video pay-TV offering to connected devices. So the importance is increasing. At the same time, as a result of that, the scale of the deployed on-net CDNs is also increasing and naturally the scale of the deployed on-net CDNs is increasing. Also the functionality they need to be more video-aware and do advanced features such as personalised ad-insertion and content blackout to comply with both regulatory restrictions, as well as to generate additional revenue streams, [is] where we will continue to increase.