Light Reading
New tool from Sandvine tells MSOs how many dollars are being exchanged over their network by over-the-top service providers

How Much Is Netflix's Traffic Worth?

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
9/9/2011
50%
50%

A new dashboard app from Sandvine Inc. (London: SAND; Toronto: SVC) tells MSOs not just how much over-the-top (OTT) video traffic they are carrying but also spells out how much revenue they're losing to emerging video competitors like Netflix Inc. (Nasdaq: NFLX) and Apple Inc. (Nasdaq: AAPL)

Sandvine's Real-Time Entertainment Dashboard uses deep-packet inspection (DPI) to track streaming audio and video traffic from those OTT sources, going as far as quantifying the quality of the video experience and how long customers are viewing those streams.

Sandvine, says CTO Don Bowman, can also use this data to give its carrier customers a ballpark idea of the amount of revenue associated by the adoption of over-the-top services. For example, it can determine how many customers are using Netflix or Spotify streams and multiply that by the monthly subscription fees they're paying those companies, or calculate about how much iTunes is making with its online movie rentals.

"It gives [MSOs] an idea of the commercial value of their network," Bowman says. "Carriers are interested in how many dollars are being exchanged over their network, and how many are paying a premium for Hulu or paying Spotify."

While this could be filed in the good-to-know category if data suggests that Netflix is attributing to the decline of MSO basic cable or VoD revenues, Sandvine insists it goes deeper than that, able to judge streaming video quality that a given content delivery network (CDN) is achieving. It claims its system knows, for example, when a video is buffering, stalling or switching to a lower-resolution stream if adaptive bit-rate technologies are in play.



That sort of info comes in handy for carriers that are investing in CDNs or building their own – the sort of thing Alcatel-Lucent (NYSE: ALU) is pitching with its AppGlide Video Analytics system. Now they can point fingers if it appears that a CDN is under-investing or somehow cheating the routing rules. (See AlcaLu Gets Down With OTT.)

"That data becomes part of the negotiation when they try to get Netflix to host on their CDN," Bowman says, noting that Sandvine's system can apply a mean opinion score for the perceived video quality being provided by a given CDN.

Staying ahead of the bandwidth curve
Another benefit is it helps operators keep tabs on how much bandwidth OTT is devouring and give them a sense of future growth trends. Until 2009, operators could count on a 30 percent to 40 percent increase each year, but they've been facing annual increases of 60 percent and 80 percent over the past two years as Netflix traffic went gangbusters. (See Netflix: The Internet's US Traffic King .)

Operators "are also worried about the next phase: multiple [OTT] streams to the home," Bowman says. "They've been getting a handle on a single stream to the home, sometimes in HD. They're now facing multiple HD streams."

Among recent examples, Netflix tweaked its policy so all customers, no matter the subscription level, can stream to at least two devices at the same time.

That will not just get expensive but cause operators to dedicate more Docsis capacity per user, perhaps as much as 10 Mbit/s to 12 Mbit/s just for OTT video.

Sandvine hasn't named any commercial customers for the new dashboard, but it started beta testing this summer. Some notable Sandvine customers include Comcast Corp. (Nasdaq: CMCSA, CMCSK), which happens to be building a CDN, StarHub and Liberty Global Inc. (Nasdaq: LBTY). (See Comcast's 'Project Infinity' Takes Flight .)

— Jeff Baumgartner, Site Editor, Light Reading Cable



(19)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Page 1 / 3   >   >>
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
12/5/2012 | 4:54:24 PM
re: How Much Is Netflix's Traffic Worth?


That's great--MSOs knowing how much OTT video is going through their networks. So the next question: What are they going to do about it?


 


My thought: Forget OTT video as competition, start thinking cooperation. There do not necessarily have to be losers in this game.

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 4:54:23 PM
re: How Much Is Netflix's Traffic Worth?


mendyk,


I actually disagree with your assertion as it would cause a huge net neutrality problem.  For example, if I were Netflix I would then demand that Xfinity TV (the streaming version) be unbundled and charged for use on Comcast.  There is precedent for that in the FCC (Project Pronto for example).  What I think will happen will be that bandwidth caps and overage charges will make it more of a choice.


I keep waiting for OTT replacement services - now that will be when the war starts.


seven


 


 


 

kaps
50%
50%
kaps,
User Rank: Light Beer
12/5/2012 | 4:54:23 PM
re: How Much Is Netflix's Traffic Worth?


How about a console for end users to show them if their ISP is performing up to snuff? Or is that simply too revolutionary?

kaps
50%
50%
kaps,
User Rank: Light Beer
12/5/2012 | 4:54:23 PM
re: How Much Is Netflix's Traffic Worth?


How about a console for end users to show them if their ISP is performing up to snuff? Or is that simply too revolutionary?

shygye75
50%
50%
shygye75,
User Rank: Light Beer
12/5/2012 | 4:54:23 PM
re: How Much Is Netflix's Traffic Worth?


The OTT free ride will end at some point. If Netflix hasn't baked this into its long-term business plan, then it will be in for some interesting challenges.

shygye75
50%
50%
shygye75,
User Rank: Light Beer
12/5/2012 | 4:54:21 PM
re: How Much Is Netflix's Traffic Worth?


We'll see. I'm trying to think of another large-scale business in which Company A makes its money by using Company B's resources at no cost. Any examples? 

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 4:54:21 PM
re: How Much Is Netflix's Traffic Worth?


 


That says that LR (which is an OTT provider of Flash video - stupid ads) will pay the destination ISP.


I absolutely disagree with your assertion on this.  I think that again, they will charge their users for usage not the senders.  OTT is not riding for free by the way.  They pay their ISP for their service.  The issue is that there is no reciprocal compensation like we had in the phone networks.  What is happening in all ISPs today (in the US) is that all delivery of all content is free.


Now, what CAN happen is that the peering points that the OTT video is being provided from in the terminating networks could have peering agreements which change the money somewhat.  This would then be pushed back to the video provider.


I think this was the whole Level 3 argument from earlier this year and makes sense to me.


seven

shygye75
50%
50%
shygye75,
User Rank: Light Beer
12/5/2012 | 4:54:21 PM
re: How Much Is Netflix's Traffic Worth?


At some point, OTT providers will have to pay for the use of others' resources.


"After all, we are not communists."

Cooper10
50%
50%
Cooper10,
User Rank: Light Beer
12/5/2012 | 4:54:20 PM
re: How Much Is Netflix's Traffic Worth?


If content is transported within the bandwidth allocated to the high speed data connection, then yes, absolutely that usage would "count" toward any usage under a metered usage model, whether the content was coming from Xfinity or Netflix.  However, the owner of the network has the perogative to use their bandwidth as they choose - and if they choose to use a portion of it (separate from the HSI data channel) to offer IP video, then it is, by definition, not an OTT service.  This is exactly what AT&T is already doing with U-Verse.  Netflix didn't build a network, therefore the only delivery method they have is OTT.  Providers who invested in building a network have more choices.

shygye75
50%
50%
shygye75,
User Rank: Light Beer
12/5/2012 | 4:54:20 PM
re: How Much Is Netflix's Traffic Worth?


I'll guess that the sum total of LR traffic for one year doesn't equal the sum total of Netflix traffic for one day. And LR isn't providing a service that competes directly with anything in a network operator portfolio. And, as you've pointed out, the cost of connecting to the Internet isn't zero. So it's an issue of fair-price resource use vs. abuse. Net neutrality will provide cover for the immediate future. Long term, we'll see. Operators are now getting the tools to identify and isolate traffic; if they're going to cap and charge individual subscribers, there's at least some reason to believe they'll take the next step and focus on traffic originators. Especially if those originators are eating into other lines of business in which they've invested a lot of time and effort to develop.

Page 1 / 3   >   >>
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Using Service Quality to Drive WiFi Monetization

10|22|14   |   6:51   |   (0) comments


Live from the SCTE conference: Heavy Reading's Alan Breznick explores the forces shaping the WiFi opportunity in an interview with CableLabs' Justin Colwell and Amdocs' Ken Roulier.
LRTV Custom TV
Distributed Access Architectures – 2

10|21|14   |   8:51:00 AM   |   (0) comments


ARRIS CTO Network Solutions Tom Cloonan discusses why many if not most MSOs will continue with integrated CCAP, while addressing why some are also looking at two futuristic, distributed access architectures: Remote PHY and Remote CCAP.
LRTV Custom TV
Distributed Access Architectures – 1

10|21|14   |   9:01   |   (0) comments


SCTE Sr. Director of Engineering Dean Stoneback discusses the pros and cons of distributed access architecture (DAA) and its various forms, which range from basic Remote PHY to full CMTS functionality in the node.
LRTV Custom TV
The WiFi Road to Riches – 2

10|21|14   |   3:58   |   (0) comments


ARRIS Senior Solution Architect Eli Baruch talks about how MSOs can enable public and community WiFi through 1) outdoor access points, 2) businesses seeking to offer WiFi to customers, and 3) residential WiFi gateway extensions.
LRTV Custom TV
The WiFi Road to Riches – 1

10|21|14   |   10:15   |   (0) comments


SCTE Director of Advanced Technologies Steve Harris discusses WiFi deployments, drivers, challenges and advances, including 802.11ac, carrier-grade WiFi, community WiFi, Hotspot 2.0, Passpoint, WiFi-First and voice-over-WiFi.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Analysts Warn of Major NFV Gaps
Carol Wilson, Editor-at-large, 10/22/2014
Is Health the Killer App for the IoT?
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/22/2014
iPad Air 2 Lets Users Switch Carriers Any Time
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/17/2014
Drones Hover Over the IoT Sector
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/23/2014
NYC Subway Wireless No Cure for Ebola Fears
Dan Jones, Mobile Editor, 10/16/2014
Like Us on Facebook
Twitter Feed