This document discusses the CDN (content delivery network) business prospects for 2011. It provides an overview of the CDN market including major players, market size and growth projections, drivers and services, and barriers. It then discusses reasons why telecommunications companies are entering the CDN business, potential entry strategies, positioning advantages and challenges, and examples of Indonesian telcos launching CDN services including NAP Info, Telkomsel partnering with Ericsson and Akamai, and Telkom developing its own CDN infrastructure.

1. CDN Business Prospects : 2011
Dr.Ir.Joko Suryana
PT.LAPI ITB

2. Outline
• CDN Business Intro
– CDN Players
– CDN Market Size
– CDN Market Drivers
– CDN Existing Services
– CDN Market Barriers
• CDN Telcos
– Reason Entering CDN Business
– Entry Strategies
– Positioning
– Indonesian CDN Telcos

3. CDN BUSINESS INTRO

4. CDN Market trends : Players
The CDN market is composed by a myriad of players, with different strategies.
Number of active players in the CDN industry :
• Leading CDN are mostly pure • Internet player CDN
players – Building internal solutions (Google,
– Akamai (US based) Microsoft, DailyMotion, etc …)
– Limelight Networks (US based) – e en sol tions third parties
– Edgecast, Highwinds – Offering solutions for third-
– ChinaCache, CDNetworks in Asia (Amazon CloudFront)
• Consolidation in progress within • Equipment and solution vendors
pure players also positioning
– Panther Express, Velocix – Traditional vendors : Cisco, Juniper,
Alcatel- Lucent (Velocix), etc…
• Telco CDN – Specialized players : JetStream
– Level 3, AT&T leading players for – Ericsson : Mobile Cloud Accelerator
backbone with Akamai
– BT, KPN most advanced for access

5. CDN Market trends : Market Size
• The CDN market
represented around $ 1.6
billion worldwide in 2009
(video and non-video)
• Should reach 3.5 billion by
2012 with 28% CAGR
• Still not enough
– CDN market growth <
traffic growth
– CDN market growth still
limited for an emerging
market
– Strong price competition

6. CDN Market trends : Akamai

7. CDN Market trends : Drivers
• Growth of Internet consumption and markets
– Good availability and uptime of services (ecommerce players)
– E-commerce growing by 15-25%
– Online advertising up by more than 10%
• Growth of media consumption
– Usage itself
– HD video (higher bandwidth requirement)
– QoS requirements for premium content and live, especially with the move
towards connected TV
– Involvement of players with revenues outside the online world (broadcasters,
DVD rental players, cable providers in the USA etc…)
• New screens with the TV set and the mobile phone
• New video and QoS technologies
– Adaptative streaming technologies
• Services and marketing tools
– CDN is way more than just traffic
• New pricing schemes

8. CDN Market trends : Services
• Services around content
delivery value :
– Content Creation – Delivery System
– Content Platform – Network Delivery
– Hosting – Consumption Monitoring

9. CDN Market trends : Barriers
• Profitability of CDN business falls off
• Unclear business models for significant video providers (ad-based mostly)
– Premium video content already profitable for some players (live events, some
catch-up, VOD)
• Price wars depress revenue
– Intense competition imposed by challengers of Akamai plus new entrants like
Amazon and Telcos
– 5 to 40% per year Netflix paying as low as 1.5 cents per GB
• Content providers launch in-house initiatives
– CDN providers could lose important content providers, which contribute a
large part of their revenue
• Increasingly personalized consumption
• Evolution of the nature congestion?
– Traffic more local with video?
– How to get closer to the user without getting deeper in ISP networks?
– Traffic management from ISPs

10. CDN Market trends : Barriers

11. CDN Telcos : The Reasons
• A natural extension of their infrastructure
– Natural players for managing bandwidth issues for web players, as Internet
traffic is going through their backbones (Tier 1) and/or their last-mile networks
( ISPs).
• Difficulties to monetize their network pipes due to the earlier
developments of the Internet.
– Services distribution with limited bandwidth costs, thanks to peering
agreements.
– Low transit prices inherited from the telecom bubble (over-capacity)
• Telco to reduce the cost of traffic rather than to generate significant new
revenues
– Additional OPEX savings
– Harsh competition in the short term with pure players
– More QoS for the end-users
• A few players are still reselling CDN within their wholesale offerings (old
practice)

12. CDN Telcos : New Revenue Streams

13. CDN Telcos : Entry Strategy

14. CDN Telcos : Positioning
• Competitive advantages
– Network expertise : Core Business
– ISP business : QoS management
for their subscribers
– Network tools user : Network
equipment improvement benefits
– Huge financial power :
Acquisitions and data center
investments possible
• Major issues
– Deployment : No existing
infrastructure, build from scratch
– Business models : Low margins
while huge investments
– Technical Performance :Offering
more QoS than traditional CDN
– Net Neutrality : Unclear
framework yet on the capacity for
ISPs to offer different levels of QoS

15. Indonesian CDN : NAP Info
• Since 2010, NAP Info have had deployment of numerous CDN clusters
• Same rule: traffic ratio requirement
– Ratio: (Peering+CDN boxes) :Transit=55%: 45%

16. Indonesian CDN : Telkomsel
• Telkomsel launches CDN on Ericsson, Akamai platform
– “Indonesian mobile operator Telkomsel has launched Asia-
Pacific’s first content delivery network (CDN) solution over
a mobile network. Using Akamai and Ericsson’s Mobile
Cloud Accelerator platform and Telkomsel’s mobile
network, Thomson Reuters is asking its customers in the
finance community to pay extra to get its content
delivered faster. “
Nicole McCormick/Ovum April 30, 2012
TelecomsEMEA.net

17. Indonesian CDN : Telkomsel

18. Indonesian CDN : Telkomsel
• Telkomsel launches CDN on Ericsson, Akamai platform
– In February 2011, Ericsson and Akamai announced the
launch of the Mobile Cloud Accelerator, which provides
CDN and caching capabilities using Ericsson’s SmartEdge
Border Network Gateway and Mobile Packet Gateway.
– Out of a handful of trial customers, Ericsson announced
that Telkomsel would launch the first commercial service in
February 2012.
– Telkomsel’s CDN offering reduces the download time of
content by up to 70% compared to downloads from the
same content sources without acceleration

19. Indonesian CDN : Telkomsel

20. Indonesian CDN : Telkom
• Guna medukung peningkatan bandwidth, Telkom
menyiapkan kapasitas bandwidth gateway Internet
sebesar 123 giga bit per second (Gbps), dengan
didukung infrastruktur content deliver network (CDN)
Google, Youtube, Akamai sebesar 82 Gbps di Jakarta,
Batam, dan Surabaya, serta peering domestik sebesar
32 Gbps.
• Telkom sebagai salah satu incumbent telco perlu untuk
mengembangkan bisnis CDN ini sejalan dengan
perkembangan implementasi GrooviaTV dan nantinya
akan lebih berkembangnya layanan OTT (over the top).

21. THANK YOU