The Industry Sharpens its CDN Strategies
It has been clear for a few years that the industry recognizes that CDNs are a necessary fact of life. "I'd say cable operators are seeing the value of a CDN in their network more so than anybody else," said Tom Fuerst, the senior director of IP video marketing for Alcatel-Lucent (NYSE:ALU), which owns CDN vendor Velocix. "A lot of that has to do with the fact that they must deliver at scale to tens of millions of customers."
CDNs are a bit frustrating, however, because the precise definitions - both technically and from the business standpoint - tend to be unique in each case. Like many telecommunications providers, the link between programming sources and the cable systems or regional infrastructure is provided by commercial CDN providers such as Akamai, Limelight Networks and Level 3. These CDNs are independent of operators' networks and, thus, referred to as "off-net" CDNs.
The action is on the operators' own CDNs, which are referred to as "on-net." One of the most interesting questions is the relationship between off- and on-net CDNs. In some scenarios, the two networks are separated, and the content is transferred through a peering point. This is roughly analogous to the way in which telephone traffic is traded between long distance carriers and the local exchange carrier. In other scenarios, the transition between the off- and on-net CDN takes place on the operators' network. There, a basic "transparent" cache is used for the transfer, said Marty Roberts, the senior vice president of sales and marketing for thePlatform.
The on-net CDNs are becoming indispensable assets as programming formats and devices proliferate. Duncan Potter, Edgeware's chief marketing officer and vice president of operations, pointed to the need for end-user quality of experience (QoE) as the main driver. In the past, cable operators faced a world in which the off-net CDNs dumped content at their doorstep. From there, it was carried through the cable network in a best-effort manner. That was OK for short-form programming and snippets such as clips found on YouTube.
It is OK no longer. Now longer video carrying higher expectations is the norm. This content is both owned by cable - such as Comcast's Xfinity - and over-the-top (OTT) video that operators are making money carrying to customers. Caches - and the on-net CDNs that link them - are a necessary element. "You have to be able to guarantee QoE," Potter said. "It requires operators to put technology in the network to do caching for video. All of a sudden, Akamai and Limelight and others delivering content to the edge of the network is not the only game in town."
There is no question that on-net CDNs are a big part of the industry's present and will be a bigger part of its future. The market still is in the definition phase, at least to some extent. For instance, the main goal of some CDNs is to save money for the operator. Others are geared toward monetization through the introduction of services, said Dan Rayburn, a principal analyst at Frost & Sullivan and the executive vice president of StreamingMedia.com.
The answer to the question of what the on-net CDN will be used for is one of the major influences in how it will be engineered. Rayburn said there are two CDN models: In a licensed model, operators acquire the elements of the network and run it themselves. In a managed CDN, the vendor or another third party runs the CDN for the service provider.
Rayburn said to this point the cable industry has leaned toward the latter approach. "They do not have enough experience to take the software [from the vendor] and do it on their own," he said. "They are doing a managed approach in which over time it takes over the CDN." He added that it is not a one-size-fits-all scenario. On-net CDNs - especially those created by big MSOs - comprise elements from many vendors. The point is, however, that operators generally bring in expertise to run them.
Rayburn suggests that the cable industry is being proactive on CDNs. "There is no question," he said. "At the CDN Summit two years ago, the major MSO executives were saying, 'Here is what we are building.' In May , they were there and said, 'Here is what we've done; here is the traffic.' It's clear they build it and still are adding functionality."
Carl Weinschenk is the Senior Editor of Broadband Technology Report. Reach him at email@example.com.