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28 May-June 2013 www.csimagazine.com
CDN roundtableIn its latest roundtable, a group of panellists assembled to discuss current trends in the market for content delivery networks, an area of significance as the volume of online video grows ever larger
Panellists:
CDN roundtable
Goran Nastic (Chair)
Goran is currently the Editor of CSI) a bi-monthly publication that covers broadcasting technologies and
content distribution, including IPTV and home networking. He has ten years of experience writing about the
ICT sector. Prior to joining the magazine, Goran was an industry analyst at a telecoms research house
visiongain, where he focused on mobile market trends and developments. Goran has also worked as an
Assistant Editor for Asian Communications, a monthly trade publication focused on Asian telco markets.
Derek Gough, senior director,
Media and Internet, Level 3
Derek oversees product management within
this vertical, working closely with partners
and customers to maximise the value of
Level 3’s Content Delivery Network. Level 3
Communications provides local, national
and global communications services to enterprise, government and
carrier customers. The company serves customers in more than 450
markets in 55 countries over a global services platform anchored by
owned fiber networks on three continents and undersea facilities.
Maria Ingold, CEO, mireality
Maria heads up mireality, a technical
consultancy in video-on-demand delivery,
specialising in the secure delivery of
premium content in the first rights window.
Maria has created complete end-to-end VoD
solutions for cable and broadband, and
pushed through changes to the DTG D-Book 7 to accommodate the
secure delivery of premium pay content to other services and devices.
Prior, Maria was Head of Technology for FilmFlex Movies, where she
set technical strategy and architected its technical solutions.
John Bird, principal consultant, Futuresource
John is an international expert on consumer
electronics, digital media, mobile,
broadband and wireless sectors. John is
responsible for directing many of the
strategic consulting projects Futuresource
undertakes in digital media, convergence
and devices, and has worked with many blue chip companies. He
joined after eight years at Motorola, where he was director of business
research for the Corporate Strategy Office in the EMEA region.
Jacques Le Mancq - CEO, Broadpeak
Jacques drives the strategy and execution of
the company, the #1 European provider of
IP video delivery solutions to telcos. Prior
to co-founding Broadpeak, Jacques was with
the Technicolor Connect Division where he
assumed the role of Product Line Manager
for the SmartVision video distribution servers product family. He led
a spin-off project with five other co-founders to create Broadpeak. He
has won two Emmy Awards for his work on MPEG-2 testing.
www.csimagazine.com May-June 2013 29
CDN roundtable
Chair: How would you characterise the market now
and how it compares to the early days of CDNs?
John Bird: What we’re seeing worldwide is huge
traffic in video, both in fixed and mobile. What is
driving it largely today is free video in its various
forms. Smartphones and increasingly tablets are
driving this growth, some 70% of tablets owners
regularly watch video, and our data shows this
will surge as these device proliferate.
Maria Ingold: We’ve always needed to ensure that
we’re meeting the customer’s quality of experience
expectations as well as the studio’s security
requirements. We have to deliver content in a way
that doesn’t have breakages and is also fast, geo-IP
restricted and DRM protected, for streaming or
downloading. So it’s always a balance between
these two requirements.
Derek Gough: The market has seen three phases
of evolution and is certainly more advanced today
in terms of the technology behind CDNs. The
first phase was driven by fairly large,
de-centralised CDNs designed to handle the
offload of static content, such as small images.
The second phase was the explosion of video,
which was primarily from 2002 to 2009. Video
became the dominant form of content on the
internet and the raison d’etre for using a CDN
during this period. The third phase started around
2010 and is characterised by the general notion
that web acceleration and optimisation are now
key to enhancing end-users’ web browsing and
transaction experiences.
Jacques Le Mancq: What is interesting from our
standpoint is of course that OTT traffic is growing
very fast. But when you take a closer look at what
type of traffic is carried on the network, you see
that it is not only catch-up or free content, but a
lot of live OTT content as well, including
premium. This comes a bit as a surprise because
we usually feel that live is meant for broadcast
networks. As an example, BBC data from the
Olympics shows that everyone wanted to watch
sports events in real time, inducing a live traffic
up to 7x bigger than VoD traffic. We believe that
live traffic over these new devices will be the next
big thing.
JB: I have to agree. In France we found that
watching live is 50% bigger than on-demand.
There’s no doubt that people want live content.
Right now, 80% of traffic is probably live,
followed by catch-up and downloads.
MI: On the other hand, Thinkbox recently noted
that 15% of PVR owners never watch any live TV.
I’m definitely one of those, but then I don’t watch
news or sports. I found it interesting to hear that
the BBC spent as much time testing as developing
in preparation for the Olympics in order to make
sure that the quality of service was there. I know
they had 111M video requests and 12M were
from mobile devices. All the trends point to
increasing usage from mobile devices.
Chair: Given that the amount of live OTT traffic
seemed to have caught everyone off guard, what are
the implications of this for networks?
JLM: Live OTT traffic will have a strong impact
on the operator network at different levels. It will
highlight bottlenecks at the backbone, backhaul
and access network levels. And in order to avoid
massive and costly network upgrades we believe
that telecom and cable operators need to put in
place a more scalable way than unicast to deliver
live television to new screens.
JB: Around 400m people watched the Royal
wedding online worldwide and even YouTube
wasn’t sure if they could handle those numbers of
simultaneous viewers online although they did it
in the end. The quality maybe wasn’t full HD but
it was good enough. But essentially, you’ve got live
vs pre-recorded content and then you’ve also got
download for portability so there are two types of
live if you like.
DG: Our customers’ demands have changed in
line with the evolution of the market. In the early
days, their main objectives were to reduce costs
and there was a dependence on a heavy
infrastructural load that they would have to
manage themselves. Today, the level of awareness
of CDNs is infinitely greater. As a consequence,
we see across every market segment a greater
understanding among enterprises that the
performance of their online presence is key to
overall business performance.
MI: The stats show that IPTV from telcos is
increasing, albeit slowly. They’re aiming to get
more into the content delivery market. On the
other side you have the CDN companies trying to
figure out new ways to monetise, so they’re now
offering value add services like transcoding. And
then you have companies like Netflix who want a
really good customer experience at a low cost. So
they’ve created their Open Connect caching
system, which they are looking to move all of
their delivery towards. A number of things are
changing the CDN landscape.
Chair: What does this mean in terms of the various
relationships and business models?
JB: CDNs are basically the delivery basket for all
this content and will get paid. The conflict is on
the service provider level who having put in the
infrastructure to continue to ramp up broadband
capability don’t get paid because largely the video
is free content, either as part of a subscription or
totally free. Broadband is where the game lies now
it’s a complete shift from the traditional payTV
model where you had a carriage payment to take
that content to your subscribers. The CDN layer,
they are in the driving seat because the content
provider has to reach the edge to actually deliver
across that infrastructure and therein lies that
model - they are providing the networks that are
taking it from point of origin out to the service
infrastructure. Whether it’s owned by a carrier or
not that’s a question of economics for the carrier
and whether it’s worth investing deeper in the
network or outsourcing to a third party. Overall,
CDNs and operators both have to invest in the
network to cope with the sheer volume of traffic.
JLM: Some content providers and some CDN
service providers are now pushing for putting
their own cache servers directly in operators’
datacenters. This approach can have some interest
for small operators because it will reduce their
transit cost. But the problem is that if they accept
this from one player, an Akamai for example, they
will have to accept it from others too: Limelight,
Level 3… They will end up losing control of their
own infrastructure, piling up different components
that they don’t own. We believe that if an operator
can combine all that traffic and own its own
infrastructure, it will be in better control when it
comes to making decisions about resource
allocation, while respecting net neutrality. We are
hearing some service providers asking for private
peering payments, renting of wholesale CDN
services… these are different strategies. If
operators want to play in the CDN space, they
need to ask themselves what they can do that the
CDN service providers can’t. Operators are late to
the CDN market and still have to prove how they
can differentiate. It’s not an easy decision.
JB: The conflict at the moment is you have users
who only watch online streams so you are creating
enormous demand in the local loop and payTV
companies - who are moving heavily into TV
Everywhere - are putting their own infrastructure
right back to their own servers to make sure they
can deliver. It’s much more marginal if you are a
broadband provider pure and simple.
JLM: It makes sense that payTV OTT companies
try and deploy their own CDN infrastructure to
cut their CDN cost. However, telecoms and cable
operators should not accept to host 3rd party
infrastructure into their own network. If as a
network operator, you accept to put different
boxes from different payTV ‘partners’ it will cost
you more, in terms of network interconnection,
power and cooling, so you are making you data
centre available to everybody for free while you
could optimise traffic from different platform by
carrying it on a common infrastructure you own
and that is optimised to carry traffic from
multiple payTV sources.
JB: Do you see a basic challenge to the traditional
economic peering model of the internet?
DG: It is not inconceivable that the peering
model may cease to be relevant in the future.
Peering, whilst essentially based on equitable
exchange of traffic, is not ‘free’ – there are costs
associated with operating a model based on
peering economics. Based on current trends of
improving economies of scale, it is possible that
there will come a time when the economics of
peering do not necessarily offer a significant cost
advantage to simply purchasing transit.
JLM: We are hearing more and more operators
saying that the free peering model with CDNs (or
with a symbolic transit cost) does not work
anymore. Telecoms and cable companies want to
preserve their CapEx, and realise that if they can
delay the investments into network capacity a
little by being smart and positioning caches they
control in their infrastructure, it can represent a
big saving.
MI: Comcast and other companies are working
on QAM to IP conversion gateways which will
essentially be a home hub that transcodes content
to all the different formats required and delivers it
using DTCP to the devices within the home.
What do you make of these?
JLM: We’ve seen these initiatives and they make
sense. It’s about doing broadcast until the
ultimate edge which is in the home and this is
what we are pushing with our nanoCDN
initiative. We are saying that broadband gateways
and STBs in the home can act as caches, with
various amounts of storage and CPU power. We
do multicast to the edge; for live OTT we take the
live multi-screen channels that are unicast by
nature, make them available as multicast and
convert the signal back to unicast in the home
gateway. This way, we make sure that live TV is
scalable. This approach also allows operators to
offer something different compared to a
traditional CDN provider, and this benefits
everybody. Even for the likes of big operators
such as Comcast, it is difficult to be more
competitive than Level 3 or Akamai, because their
fraction of the market is small compared to CDN
global players. Only by leveraging their unique
assets, such as their managed network,
transcoding capabilities, multicast technologies,
can they deliver a better UX and save a lot of
money in terms of access network, core and
backhaul. The nanoCDN technology that we are
promoting is really disruptive in the CDN space.
JB: Until now, real time transcoding on the fly
would have been prohibitively expensive but we
are in the domain now where it can be done. The
only thing is you are servicing a population of
users who are nomadic so the content feed is
often customised for the individual device.
Chair: Does that mean transcoding will be done in
the cloud in the future?
MI: You still have to ensure that the quality is
there for the different devices and that the
studio’s security requirements are being met. If
you transcode on the fly from a derivative and not
a high resolution mezzanine master, you will
suffer quality loss. I’m curious to see how well the
Comcast box does the conversion. And then of
course there’s ensuring that the content is as
securely DRM’d as required and that all the
studio’s usage rights are met.
As for the security of transcoding in the cloud,
well you still have to meet the studio’s security
requirements, especially if you’re storing high
resolution mezzanine masters. And if you’re using
30 May-June 2013 www.csimagazine.com
CDN roundtable
the cloud as a delivery network you need to
ensure checks like geo-IP restrictions are in place.
JLM: Transcoding on the fly is a very nice
technology but see two weaknesses at this point.
The first is that you need to interfere with the
protection. If you do transcoding you need to do
encryption and decryption. With the nanoCDN,
we don’t touch the DRM once the content leaves
the headend protected. The other limit is the
start-up time for live content. But we are working
on this with our partners. It has a good future for
satellite especially.
MI: With Ultra HD or 4K and 8K the quality is
increasing the bits. But then you have things like
HEVC that can process the quality better. And
you also have companies like eyeIO, which Netflix
uses, who say they can optimise delivery without
having to change the actual player technology.
Chair: Going back to QoS, there seem to be so
many variables involved, like encodes and decodes,
player devices, home conditions, CDNs etc. How do
you guarantee this in a streaming environment?
DG: There has been a widespread industry shift
towards adaptive video delivery over HTTP, due to
the greatly improved video quality, the ease of use
for end-users. In addition, a move away from
proprietary formats provides more flexibility for
content owners. For some, limitations of
proprietary standards incentivise a move towards
adaptive standards, but in general, the industry
move towards HLS, HDS or DASH has been
driven by the significantly improved end-user
experience.
MI: It has to do with monitoring, doing the
analytics, looking at the user experience,
comparing it, tweaking… it’s an on-going review.
JB: It is working today. The fact of the matter is
there are 34m users on Netflix and further tens of
millions of broadcasters’ catch up services. You
get the occasional outage but in the main people
who are delivering content have made sure they
have the end of end quality is there. You may have
to drop some frames here and then but even that’s
changing. It’s not an HD broadcast level but the
industry has managed to get it to an acceptable
level and it’s improving all the time.
DG: CDNs by nature are inherently self-healing
and resilient. If a part of the network goes down,
content automatically defers to the next link in
the chain so that there is not a single point of
failure in any part of the network preventing
content from flowing. In addition, every
significant CDN will ensure full redundancy at
each point in the network to ensure that there is
no single point of failure.
Chair: Are you worried about more companies going
down the Netflix route and building their own
CDNs?
DG: On the contrary. Firstly, it is only a small
number of the largest online companies for whom
it would make sense to create their own CDN due
to the volume of traffic that flows across their
networks. For those companies, Level 3 is very
well positioned to help them with the
implementation of those solutions due to the
broad range of products and services that we
offer. For all but the very largest of content
providers, an outsourced CDN is still more cost-
effective and will continue to be seen as the
primary solution.
Chair: Do LTE and mobile broadband down the
line pose a threat to CDNs and will they start taking
away more and more of the live OTT traffic?
JB: LTE is the next step function in mobile
broadband and the next big push. But you have to
manage it properly as they are already offloading
a big chunk of mobile video onto WiFi. They are
complimenting the fixed broadcast model which
is still the most cost effective way to reach static
screens and will be for years. Having said that,
faster speeds and increasing data bundles will
make cellular broadband a big deal. We think
around 70% of all long form video has come via
WiFi or fixed broadband in the last couple of
years because of this issue, but that will change as
4G takes off.
DG: Mobile will be a key part of the evolution
going forward. This trend is at a nascent stage at
present and will evolve as content becomes more
CDN roundtable
www.csimagazine.com May-June 2013 31
widely available and optimised for mobile devices.
Today, scale is crucial for businesses who put
their websites at the forefront of their business
strategy. This will mean that players which do not
provide such scale could suffer and hence
consolidation in the market will take place with
only the largest of CDNs able to service the
volumes of content that are likely to be generated.
JLM: We believe that LTE will be very useful for
all operators, even those who want to deliver fixed
line services. We are seeing more and more LTE
routers on the market. In some cases, LTE might
displace fixed networks as it has enough
bandwidth for VoD content. What we see as a big
benefit for LTE is the eMBMS features, LTE is
finally going to make possible what DVB-H and
others failed to do. It will make new scenarios
possible for live events. The 4G architecture
resembles a full IP network and is much more
distributed and decentralised so CDNs make
much more sense. This paves the way for new and
exciting services.
JB: At the end of the day, 4G is just the next step
function. Mobile broadband is the biggest thing to
hit this industry. Worldwide, 25% of wireless
revenues come from data services and growing
fast, with video being the key driver. But they
need spectrum; therein lies the conflict. You’re
already cutting into fixed broadcast spectrum and
that will continue, which limits the expansion of
terrestrial broadcast although it doesn’t mean
DTT is going away.
MI: And they are trying to make sure that there’s
no cross leakage into the terrestrial spectrum
because it’s in the same bandwidth. That will be
interesting to see how that’s resolved.
Chair: Well, the UK’s House of Lords
Communications Committee called for TV services
to be delivered over the internet in the future so to
free up spectrum for wireless broadband. This
obviously will have an impact on CDNs and DTT…
DG: Absolutely. Up until quite recently, the
average home viewer consumed around four hours
of content via terrestrial broadcasting, with only
around four minutes via the internet. The point at
which IP distribution becomes the predominant
means of content distribution - when measured by
minutes consumed - will happen in the later part
of this decade. More content will be consumed
over IP than over terrestrial broadcast.
JB: In our view that’s a very long scenario. Right
now, in excess 95% of all viewing is either linear
or time shifted broadcast on a conventional cable,
satellite or DTT network. Online traffic is huge
but in the overall perspective of broadcast it’s still
in its infancy. Broadcast is such a cost effective
way of reaching a mass audience this shift won’t
happen for at least ten years. With online, when
you come to one-to-many situation, the numbers
just don’t add up, especially compared to satellite.
There are pure play online TV channels, but they
are almost fringe today.
JLM: The very popular channels will still be
broadcasted while the niche ones will never make
it to broadcast due to spectrum issues. So
broadcast will not go away because it’s very
efficient. Operators will need to implement some
form of multicast technology such as the
nanoCDN if they want to achieve scalability.
JB: The point about the government’s long term
intention, if you talk specifically about terrestrial
broadcast that’s one case. The other is cable and
satellite, dedicated IPTV, where you have really
huge capacity in terms of distribution. So you
have two things: the value of spectrum, and the
issue of what you want to use IP delivery for, is it
time shift TV, which IP is cost effective, or is it to
reach wireless/mobile devices? As you’re still
broadcasting 95% of the content that’s effectively
live simulcast online. But again, that will change
as internet bandwidth and capacity increases.
Chair: Finally, Limelight Networks have said they
are preparing for a scenario where CDN costs
increase as opposed to keep decreasing because of
some telcos exerting more control over network
access as a result of the large growth in online video
that someone has to pay for. Do you think such a
scenario might happen?
MI: From a retailer perspective, if the studios are
taking 70%, that leaves you with a limited amount
to split among all the service providers and
platforms.
DG: I don’t foresee this happening in the short
term, but it is quite possible in the future, given
the ongoing exponential increase in high volume
delivery. Variables might be the cost of hosting,
notably power, but this is often offset by increases
in the efficiency of the technology used.
JLM: We don’t expect this to happen due to
falling hardware costs, but what could drive prices
up is transit costs and peering agreements. In the
case of Netflix building its own CDN, is it
because they couldn’t get the price down or
because nobody could monetise that traffic? We
believe cost will go down and that network
operators can drive them down especially in the
live component where they can use their multicast
enablers or transcode enablers so that when one
million people are watching the same live channel
from connected devices they use only a few Mbps
from their network.
32 May-June 2013 www.csimagazine.com
CDN roundtable
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