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What's all about the last week's Managed CDN
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Netmanias Tech-Blog: What's all about the last week's Managed CDN services agreement between
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Netmanias Tech-Blog: What's all about the last week's Managed CDN services agreement between
KT and Akamai?
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Then, what a...
Netmanias Tech-Blog: What's all about the last week's Managed CDN services agreement between
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Netmanias Tech-Blog: What's all about the last week's Managed CDN services agreement between
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servers inst...
Netmanias Tech-Blog: What's all about the last week's Managed CDN services agreement between
KT and Akamai?
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About NMC Consulting Group (www.netmanias.com)
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What is all about Managed CDN services agreement between KT and Akamai?

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  1. 1. 1 NETMANIAS TECH-BLOG Please visit www.netmanias.com to view more posts What's all about the last week's Managed CDN services agreement between KT and Akamai? April 1, 2013 | By Harryson (tech@netmanias.com) | Netmanias Tech-Blog | www.netmanias.com Last week (March 27, 2013), KT, No. 1 telecommunications company in Korea with annual revenue of $22.3 billion in 2012, has entered into an agreement with Akamai, the world's No. 1 CDN service provider with annual revenue of $1.37 billion in 2012, for using Akamai's Managed CDN services. Since 2012, world's leading CDN service providers including Akamai, Limelight, Edgecast, etc. have offered Managed/Licensed CDN services to many telecom operators across the world. So, it would be worthwhile to know what these services are and what the background of launching the services was. 1. Telecom operators, building On-Net CDNs to win OTT customers from global CDN service providers Over the past few years, video services by OTTs (Over-the-Top, Internet video services providers) have been a huge success in the market. In response to such success, telecom operators from all around the world (e.g. Verizon, Time Warner Cable and CoX in USA, and BT, Virgin Media, Telecom Italia and Telefonica in Europe) have been building their own CDNs (Operator On-Net CDNs) on their IP networks in order to develop new profit sources through offering CDN services to CPs/OTTs, and lower the IP network costs arising from increasing CP/OTT traffic. Content service fee Akamai/ Limelight User (Operator subscriber) Operator IP Network CDN fee Global CDN OTT CP/PP Content service fee User (Operator subscriber) CDN fee CP/PP Operator CDN Why not do this! (Operator Wholesale On-Net CDN) Content Flow Money Flow OTT
  2. 2. Netmanias Tech-Blog: What's all about the last week's Managed CDN services agreement between KT and Akamai? 2 One of the greatest advantages of an operator On-Net CDN is the fact that it can provide video quality almost as good as TV. This was made possible because operators could place the edge servers at edge of their IP networks, allowing the servers to be located much closer to users than global CDN service providers'. On the other hand, one disadvantage was that, since the IP network of each operator works only within the country that the particular operator belongs to, it is difficult for the operators to compete with global CDN service providers like Akamai (Akamai alone has 127,000 edge servers installed in the IDCs owned by many telecom operators across the world). For example, if OTT A uses CDN services offered by KT, only those who subscribe to KT in Korea can enjoy the benefits of such CDN services. So, If OTT A wishes to provide video services in Japan, it should use CDN services provided by a Japanese operator, e.g. NTT. Thus, for OTTs, it is such a hassle because they have to execute a CDN services agreement with each telecom operator they are using, and collect statistics reports individually from every one of the operators. Because of such hassle, it makes much more sense for OTTs to use global CDN service providers to reach customers all around the world. Thus, in an effort to solve this issue, telecom operators are trying to standardize the CDNi (CDN Interconnection) in IETF. Using this technology, CDNs from different operators can be interconnected to be seen as one powerful CDN to their customers (CPs/OTTs). Many telecom operators and Telco vendors have been cooperating in interoperability tests to commercialize the technology. User Operator IP Network Global CDN OTT Operator Data Center Operator Operator Operator On-Net CDN IP edge IP backbone Akamai edge servers Akamai Global CDN Operator Data Center IP edge IP backbone Case Study 1. BT – Cisco – BBC 2. Verizon – Alcatel (Velocix) – HBO/Stars OTT OTT
  3. 3. Netmanias Tech-Blog: What's all about the last week's Managed CDN services agreement between KT and Akamai? 3 Then, what are telecom operators trying so hard for? What they want eventually is to compete with the global CDN service providers, and win customers (CPs/OTTs) and profits from them. We have covered the strategies used by the telecom operators. Now, let's see what strategies the global CDN service providers are using. 2. Counter-strategies by global CDN service providers: Why bother when you can use our S/W As counter-strategies, the global CDN service providers, such as Akamai, Limelight, Edgecast, have introduced a concept of Licensed/Managed CDN services, aiming at telecom operators. Hey OTT ! 1) See? Our footprint is almost as global as others! 2) Only one contract with our leader! Operator A CDN (US) Operator D CDN (S- America) Operator B CDN (UK) Operator C CDN (Asia) CDNiUser OTT CDN fee Content Flow Money Flow Content service fee Operator IP Network Global CDN (Akamai) User (Operator subscriber) OTT CDN fee Operator IP Network Global CDN (Akamai) User (Operator subscriber) OTT CDN fee CDN S/W license fee Why not do this? Content service fee Content service fee installing CDN edge servers of global providers at the IP network edges of telecom operators Content Flow Money Flow
  4. 4. Netmanias Tech-Blog: What's all about the last week's Managed CDN services agreement between KT and Akamai? 4 The Licensed CDN services will allow a telecom operator to purchase a CDN S/W from a global CDN service provider, and build and operate its own CDN on its IP network. And, the Managed CDN services will allow a global CDN service provider to build a CDN in a telecom operator's IP network by using its solution, manage and operate it on behalf of the operator. So, the message is delivered loud and clear. "Why bother when you can use our S/W?" Egdecast first introduced this kind of service in 2011, winning customers including AT&T, DT, Telecom NewZealand, TELIN, PACNET, etc. Then in early 2012, Akamai joined, providing the same services and executing Licensed/Managed CDN services agreements with Orange, AT&T, Swisscom and KT. The global CDN service providers list the four benefits that a telecom operator can have by using these services as follows: First of all, it takes a lot of works, time, money, efforts and concerns for a telecom operator to plan, test, build and operate its own CDN. And all of these problems can be taken care of at once by simply using the Licensed/Managed CDN services from one of the global CDN service providers. Second of all, for example, if KT, a telecom operator, installs CDN edge servers of Akamai, a global CDN service operator, in its IP network edges, it can significantly lower the network costs by reducing traffic from Akamai's CDN (Akamai delivers 15~30% of global Internet traffic). For operators who have already had Akamai's edge User Operator IP Network Global CDN OTT IP edge IP backbone Akamai edge servers Akamai Global CDN Operator Data Center Akamai Managed CDN IP edge IP backbone Akamai edge servers Akamai Global CDN Operator Data Center Operator On-Net CDN Akamai customers w Introducing Akamai edge servers at operator’s IP edges J Operator: Lower backbone costs Less costly IP backbone expansion required to cover traffic from Akamai customers (e.g. Netflix) J Akamai: OTT customers' video QoE enhanced Netflix traffic delivered directly from IP edges of the operator (Low RTT) J Akamai: Drastically lower IDC costs Netflix traffic is delivered from operator’s IP edges, drastically reducing Akamai’s traffic within IDC L Operator: Higher backbone costs Heavy traffic from Akamai customers (e.g. Netflix) resulting in costly IP backbone expansion L Akamai: OTT customers' video QoE degraded Too long distance between Akamai's edge servers and users (High RTT) L Akamai: Higher IDC costs Netflix traffic is delivered from operator’s IDC. So, the more Netflix users or the higher encoding rates, the higher IDC costs OTT OTT
  5. 5. Netmanias Tech-Blog: What's all about the last week's Managed CDN services agreement between KT and Akamai? 5 servers installed in their IDCs, it would be a good chance to reduce backbone costs. And for those who haven't, a good chance to reduce both transit and backbone costs. Third, a telecom operator can provide CDN services to its customers (CPs/OTTs) in its home country through the CDN network built by using CDN S/W purchased from a global CDN service provider, and make profits (CDN fees). Here, what differentiates the operator from its local CDN competitors is the fact that it has a CDN that is federated with Akamai global CDN (Actually, both CDNs are run by the same Akamai S/W), which looks very attractive to a CP looking for a CDN service provider. Fourth, a telecom operator can also provide its own video services (IPTV/VoD, N-Screen) using this CDN. Global CDN User (Operator subscriber) OTT Global CDN User (Operator subscriber) OTT Operator IP Network Lower network costs arising out of traffic from global CDN service providers Customer of glocal CDN service providers Customer of glocal CDN service providers ISP ISP ISP ISP ISP ISP ISP ISP Global Internet User Operator IP Network Global CDN Global User IP edge IP backbone Off-Net Akamai edge serversAkamai Global CDN (127,000 edge servers across the world) Operator Data CenterOperator On-Net CDN Operator Customers Domestic CP/OTT /Cloud J Operator: Creating CDN profit streams Rapid CDN network deployment Winning domestic CP/OTT customers using its own branded CDN J Operator Customers: Reaching out to customers locally and globally Enabling fast contents delivery to global users through federation with Akamai global CDN Operator Headend
  6. 6. Netmanias Tech-Blog: What's all about the last week's Managed CDN services agreement between KT and Akamai? 6 Now, for the telecom operators, one big question is whether to  buy On-Net CDN solution from telecom vendors (Cisco, Alcatel or a local vendor) and build its own CDN; or  simply buy CDN S/W from one of the global CDN service providers. Probably, KT has had the same question for a long time. The agreement between KT and Akamai on the Managed CDN services last week may be a sign that KT chose to go with option b), purchasing Akamai's S/W. It would be interesting to see what CDN services will be provided by KT soon. Internet Resources related to Akamai Licensed/Managed CDN 2013.03.26, KT and Akamai Expand Strategic Partnership 2013.03.14, Swisscom and Akamai Enter Into a Strategic Partnership 2013.02.13, New AT&T Content Delivery Network Offer Accelerates Bits and Bytes for Business 2012.12.06, Akamai and AT&T Forge Global Strategic Alliance to Provide Content Delivery Network Solutions 2012.11.20, Orange and Akamai form Content Delivery Strategic Alliance 2012.11.13, Akamai to Acquire Verivue 2012.02.28, Akamai Announces Aura Network Solutions for Operator Content Delivery Networks
  7. 7. About NMC Consulting Group (www.netmanias.com) NMC Consulting Group is an advanced and professional network consulting company, specializing in IP network areas (e.g., FTTH, Metro Ethernet and IP/MPLS), service areas (e.g., IPTV, IMS and CDN), and wireless network areas (e.g., Mobile WiMAX, LTE and Wi-Fi) since 2002. Copyright © 2002-2013 NMC Consulting Group. All rights reserved. 7 Carrier WiFi Data Center Migration Wireline Network LTE Mobile Network Mobile WiMAX Carrier Ethernet FTTH Data Center Policy Control/PCRF IPTV/TPS Metro Ethernet MPLS IP Routing 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 eMBMS/Mobile IPTV Services CDN/Mobile CDN Transparent Caching BSS/OSS Cable TPS Voice/Video Quality IMS LTE Backaul Netmanias Research and Consulting Scope Visit http://www.netmanias.com to view and download more technical documents. Future LTE IP/MPLS CarrierEthernet Networks Consulting POC Training Wi-Fi Infrastructure Services CDN Transparent Caching IMS Concept Design DRM eMBMS protocols Analyze trends, technologies and market Analysis Report Technical documents Blog One-Shot gallery We design the future We design the future We design the future

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