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GDS International - Next - Generation - Telecommunications - Summit - Latin - America - 3
 

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PeerApp Impact of OTT and Operator CDN White Paper Dec 2011

PeerApp Impact of OTT and Operator CDN White Paper Dec 2011

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    GDS International - Next - Generation - Telecommunications - Summit - Latin - America - 3 GDS International - Next - Generation - Telecommunications - Summit - Latin - America - 3 Document Transcript

    • PEERAPP INDUSTRY PERSPECTIVE:The Impact of OTT Video Services and theOperator CDN ResponseSeptember 2011
    • The Impact of OTT Video Services and the Operator CDN ResponseAugust 2011In this paper, PeerApp reviews the growing inclusion of an application on their consumerglobal phenomenon of OTT video services such devices. Using Netflix as the primary example,as Netflix, and the tools and strategies that are the application is available on gaminghelping operators contend with the huge demand platforms (Xbox, Wii, PlayStation), mediafor this content. Possible strategies range from servers (Roku, Apple TV, Google TV), Blu-raynear-term implementation bandwidth and players, and Internet-connected televisions.quality management of technologies such as The service provider also releases their owntransparent caching, to the deployment of application for use on PC’s, tablet devicesoperator Content Delivery Networks to develop a (iPad), and smartphones. GigaOM reports thatlong-term revenue stream. the Netflix application is available on over 450 consumer devices and the Xbox and PlayStation account for over 55% of theThe OTT Explosion downloads from the service. The subscriber downloads the application to their device orThe availability of high speed bandwidth to the accesses a pre-loaded application from thehome, ease of content distribution through manufacturer and logs into their account.global content delivery networks (CDNs), and Inside their account, they have access to therapidly decreasing Internet transit costs have entire content library, preferences andcreated an environment in which new services selections. The subscriber can rank moviescan be deployed with minimal infrastructure, they wish to watch in the future, put upcomingovernight. The explosion of the Netflix service releases on their wish list for the day they arein the United States happened in a matter of released, and access rankings, “you might alsomonths and the rapid subscriber growth took like” recommendations and categories. Theevery traditional service provider by surprise. integration of the application and web userFollowing a similar business model to the interface provides a “web 2.0” feel to thephone service offered by Vonage, over-the-top application. In contrast to this, traditional VoD(OTT) video companies are completing content interfaces require a set-top box and the use of alicensing agreements with content owners and remote control to access video on demandoffering their service direct to consumers. The content.OTT service provider’s addressable marketincludes the footprint of its entire licensed Once a piece of content is selected, the clientdistribution area – far greater than that of any leverages various types of technology to accessfixed line or wireless operator whose the content. In all scenarios, the client istechnology can only be offered to homes requesting HTTP content from the OTT service.passed or geographic coverage areas. In the case of Netflix, the application uses Microsoft Silverlight as the service toThe Mechanics of the OTT Service Provider communicate from the client to the NetflixThe OTT service provider extends enabling servers over HTTP. Silverlight is an adaptive bittechnology to device manufacturers for theCopyright 2011 PeerApp Ltd. All rights reserved 2
    • rate (ABR) technology. Adaptive bit rate global CDN to global CDN. Each global CDNmeans that the client requests small chunks of must provide worldwide distribution andthe content from the server. The client minimal latency to subscribers. For example,communicates the current network conditions Akamai creates in-country POPs physicallyto the server and can continuously change the close to large operators and offers carriers freequality of the file downloaded based on the peering bandwidth in exchange for hosting rackconnection speed and latency in the network space and power in the operator network.between the subscriber and the source. The Other global CDNs build data centers in largesmall chunks of the files are necessary because population centers and interconnect with localmany of the devices that are downloading operators via peering arrangements. Thecontent do not have a hard drive or sufficient global CDNs are in the business of contentmemory to download an entire movie or delivery for all types of content and an OTTtelevision show in a single file. The small service is just another content owner thatchunks of the file allow the movie to be entrusts them with delivery. It is important to“streamed” from the source without network note that the OTT service provider does notassigned QoE. The ABR technology is key in create relationship with broadband servicethe perceived quality of the subscriber. The provider directly.client is continually requesting the highest U.S. Operator Responsepossible quality it can receive with minimumimpact on the subscriber experience. If more The United States provides one example ofbandwidth can be used and latency is low, the operator responses to OTT service providers.content can often be viewed in 1080p and 5.1 The impact of Netflix has been significant in thesurround sound. The speed of the subscriber’s U.S. due to its rapid market penetration.broadband package and network conditions Analytics from PeerApp’s UBInsight™ solutiondefinitely affect the experience, but the cost of have shown that Netflix is accounting forthe service has been adjusted to compensate almost 40% of peak traffic across broadbandfor the loss of a guaranteed quality. Silverlight service provider networks. Sandvine similarlyis by far the most widely adopted ABR reports that Netflix accounts for over 30% of alltechnology due to the popularity of Netflix. U.S. Internet traffic. The impact of the OTTOther protocols that are gaining momentum service has been felt on every type ofare Apple’s HLS and Adobe’s new streaming broadband network. The response of serviceprotocol. providers has been limited due to the net neutrality exposure that operators face fromTo deliver the content, OTT service providers the U.S. government. U.S. operators arecreate relationships with global CDNs like hesitant to shape any traffic on their broadbandAkamai, Level3, Edgecast and Limelight. connections or take any preference with a typeGlobal CDNs provide service level agreements of content. To date, U.S. operators have done(SLAs) for data delivery based on their little in response with respect to policy or QoS.worldwide POPs and global reach. The OTT Some operators have introduced data caps forservice provider pays the CDN for delivery subscribers, but the range is targeted at the topbased on the number of bits served and 5% of all subscribers (over 150GB/month).maximum bandwidth served per billing period. Netflix is quoted on their blog as writing “30Strategies for the delivery of data vary from hours of Netflix could consume as much as 70Copyright 2011 PeerApp Ltd. All rights reserved 3
    • GBytes, if it was all in HD”. This would mean applications, while meeting subscribers’that watching seven movies a weekend would demand for content and maximizing theget to a cap of 150GB. This usage may appear customer’s quality of experience.extreme, but consider a household with two UltraBand is typically deployed at thekids and four connected devices. It is easy to operator’s IP edge near the CMTS or BRAS,imagine a scenario in which this cap is met. statistically identifying, caching and servingThe active response by large U.S. operators has content that has the greatest impact onbeen to deploy their own IP-based video on operator network and transit resources.demand service for their subscribers. The goal Operators typically benefit from 30% to 40% ofof these services is to take the content library all content being served from the cache insteadcurrently offered through the set-top box of traversing the expensive networkinfrastructure over IP to multiple devices in the infrastructure and Internet transit.subscriber’s home. This phenomenon has been The UltraBand software and hardwarecharacterized as the deployment of the “telco architecture allows a unique combination ofCDN” or “operator CDN”. The operator CDN scalability and performance that can beconcept and motivation will be discussed in deployed in remote network pops as small asdetail later in this paper. An example of this 10Mbps and core network locations overoperator CDN/VoD over IP deployment is 250Gbps. The UltraBand software is the first inComcast’s xfinity service. Comcast has taken the industry to support the caching of Netflix’stheir VoD library and content licensed for adaptive bit rate (ABR) streaming. Until now,distribution on their HFC network and caching systems were not able to support suchconverted the content for distribution to their complex and dynamic content streams as thosesubscribers over IP. The content is primarily presented in ABR technologies. However,viewed by subscribers in their homes on UltraBand’s transparent caching technologyalternate devices such as iPads, Android tablets allows it to cache Netflix’s ABR content, whileor PC’s, and provides access to time shifted preserving Netflix’s (and all applications’) real-content and selective live streams. The service time end-to-end communication control. As ais not currently available on gaming platforms result, UltraBand helps operators deliver Netflixor other devices. to end users from 4-10X faster than typicalU.S. operators have also actively started to transactions, while using 30-40% lessdeploy transparent caching solutions from bandwidth across the operator network.PeerApp in their network to minimize the Canadian Operator Responseimpact of OTT services in a net neutral way.PeerApp’s UltraBand™ transparent cache Canada has also seen the impact of Netflix.allows operators to mitigate the network The service launched and operators began toimpacts of Netflix and other OTT services, take actions immediately. Bell Canada haswhile offering improved quality to their received the most press with their data usagesubscribers. By caching and serving the most caps that have impacted the subscriber usagepopular content on the Internet from services of Netflix. After only a few months oflike Netflix, YouTube, Facebook video, file deployment in Canada, Netflix decreased thesharing, cloud services and software updates, maximum quality of the content available tooperators reduce congestion created by these subscribers. GigaOM columnist JankoCopyright 2011 PeerApp Ltd. All rights reserved 4
    • Roettgers summarized the Usage Based Billing analyze statistics from U.S. deployments(UBB) caps across Canada in a May 26, 2011 around peak consumption and subscriberarticle “Good News for Netflix: Shaw Raises impact. For example, information shared fromBandwidth Caps”. U.S. operators to the UBInsight system has shown the impact at the CMTS level in cable “Starting in June, Shaw’s standard 7.5 Mbps operator networks. At one CMTS location, plan will come with a 125 GB cap (up from 33,000 subscribers downloaded 85TB of 60 GB). Meanwhile, its low-speed 1Mbps content over a two-week period. Netflix “lite” offering will have a 30 GB cap (up subscribers numbered just 4,500, but from 15 GB), and premium customers with downloaded 35% of that total. Interesting a 25Mbps plan will now have a 250GB cap statistics included the fact that 1% of the (up from 100GB). Customers that exceed 33,000 subscribers are continuously the cap will automatically be bumped into downloading Netflix content. the next tier, but revert to their previous subscription package once the month is Latin American operators are upgrading the over. software on their UltraBand transparent “Those caps mimic similar restrictions put caching solutions in preparation for the Netflix in place by U.S. ISPs. Comcast is restricting deployment. For the same 33,000 subscribers its customers to 250 GB per month, and mentioned above, the cache is providing a 40% AT&T recently introduced a 150 GB cap.” network savings for the operator. From the http://gigaom.com/broadband/netflix-shaw- perspective of the cache, 2.6 Gbps of traffic is bandwidth-caps/ coming from the Internet to the cache at theUBB requires accurate accounting for all CMTS, but 3.6 Gbps of traffic is being servedcontent that a user is downloading and has from the cache to the subscribers. The 40%been attacked for inaccuracy in the past. Users savings realized by the cache reduces thehave claimed everything from lack of infrastructure that connects the CMTS to the IPknowledge for downloading content to edge, the IP edge to the network core and thedropped packets in the network to dispute fee transit from the core to the Internet. Theincreases. The caps do not seem to have savings allow operators to continue to offer aimpacted the subscriber growth of Netflix in high quality of experience to subscribers whileCanada. The company announced that it has minimizing the need for network upgrades andgrown past one million subscribers in less than Internet transit expansion.a year since the introduction into the country. Worldwide Response Options to OTT ServiceLatin American Operator Response ProvidersIn Latin America, the full impact of OTT is not Operators worldwide are currently in theyet a reality, but it is coming soon. Netflix has analysis phase for how to handle OTT services.publicly announced the coming deployment of Most countries outside the U.S. and Canadatheir service across 43 countries in Latin have not yet seen the rapid adoption rates of aAmerica and the Caribbean in 2011. Operators Netflix-like service. Services from EZTakes,have currently been investigating their options Amazon’s LOVEFiLM, and Redbox have not yetto the impending service. Discussions with established the impact on a global scale.services providers have focused on the desire toCopyright 2011 PeerApp Ltd. All rights reserved 5
    • Below is a brief summary of some of the possible operator responses being discussed: 1. Do nothing – Operators may choose to treat the impact of OTT services as business as usual. This is the most net neutral approach in a network with an unlimited broadband access plan. The do nothing approach is a zero investment option for the carrier from a policy perspective. The increased demand for bandwidth will impact carrier expansion plans and accelerate the need for core infrastructure upgrades and Internet transit expansion. 2. Introduce byte caps or “usage based billing” – The introduction of byte caps for monthly usage is a decision that involves both technical and public relations consideration. In networks where the current subscriber packages include unlimited downloads, the introduction of a cap can induce churn and decrease customer satisfaction. From a technical perspective, the introduction of a cap may require additional hardware and software that performs the monthly usage monitoring. This requires the deployment of a packet monitoring / dpi solution to effectively count the bytes served to a customer. Typically, these systems will also be required to notify a customer when they are approaching the cap and meeting the cap. The typical action after the cap is reached is an increased fee for the month. 3. Packet shaping – Option 1 – shape all OTT traffic. This is a similar policy to what operators have done with peer-to-peer (P2P) traffic. Operators have chosen to limit the speed and amount of P2P allowed on the network to all subscribers. This requires technology on the routers throughout the network or the deployment of DPI to identify OTT traffic and take action. 4. Packet shaping – Option 2 – only shape traffic for an individual subscriber after a data cap is reached. AT&T’s mobile service is an example of this option. AT&T offers mobile phone users with unlimited data plans to access the network at maximum network speed – unless they fall in the top 5% of all active users. AT&T’s press release states, “Starting October 1, smartphone customers with unlimited data plans may experience reduced speeds once their usage in a billing cycle reaches the level that puts them among the top 5 percent of heaviest data users.” The exact speed is not published, but it is expected to be significantly slower than maximum network speed. This policy enforcement requires a sophisticated billing and notification solution to be deployed across the network along with a policy enforcement technology that is effective on a subscriber-by-subscriber basis. 5. Transparently cache the OTT service. This option is described above and provides both a savings and quality experience impact for the operator. Unlike byte caps or Shaping option 2, it requires no explicit policy communication to the subscriber. 6. Deploy VoD over IP services as a counter-offer to the OTT service. Operators are trying to keep subscribers from signing up from the new OTT service by offering a competing service on their network. This option will be discussed in detail in the next section.Defining the Operator CDN to many people. In one definition, CDN refersMany definitions of CDN are in use in the to the global content delivery networks thatindustry today. The simple acronym for carry traffic from content owners to operatorcontent delivery network implies many things networks around the world. The largest ofCopyright 2011 PeerApp Ltd. All rights reserved 6
    • these include Akamai, Edgecast, Level3 and an infrastructure that allows content to beLimelight. The primary business of these global served both inside and outside the operatorCDNs is to receive content from a content network. The goal is to provide subscribersowner and make that content globally available with access to the data in a time-shifted andto anyone on any network. The delivery of place-shifted way. The first iteration of such acontent includes all aspects of HTTP and service is usually restricted to browser basedwebsite delivery. The primary customer of the access from personal computers, tablets andglobal CDN is the owner of content. The smartphones. Essentially, the operator takesrevenue is derived from the availability and their entire content library (or as much as theyamount of data served by the CDN to have a distribution agreement for) and openssubscribers (among other complex parts of the access to this content via a web interface. Byglobal CDN business model). Global CDNs itself, this does create a content deliveryhave grown from web hosting facilities to network. Content that was previously onlycomplex worldwide networks that purchase available to a set top box is delivered, on theInternet access and facility space around the operator’s network in most scenarios toworld. subscribers who have both broadband and television subscription packages, toOperator CDN is a newly defined term that has subscribers.taken on many meetings across thetelecommunications industry. Many operators This type of CDN is strategic to an operatordeliver content on their networks today, so it that has access to a library of content. Thecould be argued that every operator network is drivers to build this step of a CDN include:a CDN. A cable operator ingests content into  Reduced churn to cord cuttersits network, serves broadcast streams across its  Competitive offering to OTT serviceHFC network and has a large video on demand providerslibrary that is delivered to a set top box. Until  Increased subscriber loyalty via annow, this type of network has not been called a increased service offering at no chargeCDN. Another example would be an IPTV The number of video subscribers has beenservice provider that ingests content and serves fluctuating worldwide. Reuters reported thatit across their infrastructure via IP to a set top the “U.S. pay-TV sector lost 380,000box. These IPTV operators also maintain a subscribers” in Q2 2011. Operators view thevideo on demand library and can even offer enhanced offerings of multi-screen viewing andtheir content to such devices as an Xbox time shifted viewing as a way to stem theseleveraging Microsoft’s Mediaroom technology. losses while offering a competitive product toTelus is an example of an operator who offers Netflix. The operator CDN is being marketedthis type of service. An IPTV service is not as higher quality than a pure OTT service sinceviewed as a CDN today either. the content is delivered to the home on theThe first definition of CDN that is evolving operator’s network.accounts for the distribution of content over an The deployment of this version of an operatoroperator’s network via IP. Operators are CDN is also built with the hopes of meeting twoshifting their VoD library into the IP space and other crucial criteria: 1. Cost containment andmaking the content available outside the set 2. Revenue generation. The cost containmenttop box. In this way, the operator must createCopyright 2011 PeerApp Ltd. All rights reserved 7
    • aspect could be realized if the operator is most difficult step in an operator CDN. In ordersuccessful in keeping subscribers from the OTT for an operator to leverage their deliveryservice by delivering their own content without network regional or global content owners,Internet transit costs. The revenue generation they must be prepared to step fully into thecomes when the operator has the ability to CDN business. The operator CDN is no longer aoffer its VoD CDN as a competitive mechanism for delivery of in-house VoDreplacement to the global CDNs described content with internally facing monitoring andabove. reporting tools. The operator CDN must become a full-featured and competitiveThe cost containment aspects of delivering offering to the global CDN.video can be accomplished with or without anoperator CDN. As described above, one of the An operator CDN that delivers content to a PCmechanisms to reduce the impact of OTT deploys specific streaming and load balancingservices on the network is to deploy features. A global CDN provides a full suite oftransparent caching solutions. In a network protocol and streaming support to a contentwhere no CDN exists, the solution will owner – each of whom has a preferred methodsignificantly reduce the impact of bandwidth of content delivery. For example, the Netflixgrowth, infrastructure expansion and network service is hosted across global CDNs andcongestion. In a network with a CDN, the delivers its content to a broad range of devicetransparent cache acts as a secondary level of types. The operator CDN must be able tocaching for the operator’s managed content. interoperate with all of these clients andOperator CDNs are leveraging the same types provide an SLA for content delivery. Netflixof ABR protocols and delivery methods as OTT leverages Microsoft Silverlight for delivery, butservice providers. Since the content is another content owner may require RTSP,delivered via IP to the subscriber, the cache will Apple’s HLS or Adobe’s streaming protocol. Aidentify the popular content and serve it locally global CDN has the ability to deliver any ofjust as it does with Internet content. In this these and an operator CDN must provide equalway, the transparent cache deployed at the protocol support.edge of the network further enhances the Global CDN reporting and access is gearedquality of the service to the subscriber and toward the content owner. The content ownerminimizes the impact on the operator’s is paying for the service, so the CDN mustnetwork from the edge to the core CDN. provide detailed information about the contentFull Operator CDN that was served, user patterns and quality. The operator CDN for VoD is typically viewed as anThe revenue generation aspect of a CDN internal operator resource. Reporting isdeployment introduces the final definition of focused on an operator’s network group and nothe CDN. The global CDN would typically visibility is given to the content owner. Oncedisagree that there is any other definition for a the CDN is open for revenue generation,CDN other than one that delivers content for equivalent levels of information must berevenue generation. The operator CDN is provided just as for the global CDN. This puts alooked at in phases of deployment to a point new series of requirements on the operatorwhere the network can be used for who is typically in the position of purchasingmonetization. Revenue generation is also the content from the content owner. Now, theCopyright 2011 PeerApp Ltd. All rights reserved 8
    • operator is trying to sell a service to the content make it possible for new types of content to beowner – reversing the relationship. This also served directly to consumers with almost nobrings up a new challenge for the operator – infrastructure investment on the part of thecontent provider sales. The operator who is OTT provider. Operators around the world arelooking to generate revenue from the CDN being forced to plan for a world where themust be willing to compete for content customer expectation continues to demandrelationships with the global CDNs. Global more, faster bandwidth and a lower cost ofCDN providers are trying to serve more and access. Consumer devices are making it easiermore content every day and take market share to access higher quality content at any time infrom one another. The operator CDN brings a any place. Operators are forced to take OTTnew competitor to the global CDN space and services seriously as replacement services andincreases the importance of a strong sales equivalent competition. Consumer behaviororganization to sign content owners up to the and government regulation are factors in theservice. ability to enforce policy around these services and the competitive environment for anFinally, when the operator CDN starts to host individual operator dictates its ability tocontent for revenue, it must deliver that operate under strict UBB models.content globally. Content owners, evenregionally located, need their content delivered The right response depends on the exactanywhere in the world. The operator must situation of an operator. Consistently,make sure the systems they put in place and operators have chosen to take actions thatworldwide interconnect allow global delivery minimize the impact of OTT services withoutwell outside the operator’s footprint. Other impacting the quality of experience tosteps to consider in revenue generation include subscribers. Operators are planning forcontent ingestion, providing industry-standard scenarios to compete head to head with OTTways for content owners to update and send services and beginning to deploy technologycontent and billing, effective accounting, billing that will allow them to monetize content onand notification to content owners. their network. A combination of technologies and services brings the maximum benefit to operators and their subscribers, but anThe Right Operator Response understanding of the OTT environment andOTT service providers are here to stay on a education on competing with global CDNsglobal basis. The proliferation of high speed allows an operator to be ready for a Netflix inaccess and decreasing content delivery costs their country.Copyright 2011 PeerApp Ltd. All rights reserved 9
    • About PeerApp Ltd. PeerApp is the leading infrastructure provider of transparent Internet caching and content delivery platforms, enabling network operators to control rich media content, improve network efficiency, enhance subscribers’ quality of experience, and offer new Internet content services. More than 175 operators in over 60 countries have deployed PeerApp systems. PeerApp was founded in 2004 and is headquartered in Newton, Massachusetts, USA. For more information, visit www.peerapp.com.World Headquarters Europe, ME, Africa Asia, Pacific Americas Japan375 Elliot Street, Suite 150K emea@peerapp.com apac@peerapp.com americas@peerapp.com japan@peerapp.comNewton, MA 02464 USA+1-617-795-0977info@peerapp.comwww.peerapp.com Copyright 2011 PeerApp, Ltd. PeerApp, UltraBand, UBView, UBInsight and their respective logos are trademarks of PeerApp Ltd. All other trademarks, logos and copyrights are the property of their respective owners. The information in this document is believed to be accurate in all aspects at the time of publication and is subject to change without notice. PeerApp Ltd. is not liable for any errors that appear in this document. September 2011-A Copyright 2011 PeerApp Ltd. All rights reserved 10