& cplSiteName &

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        ADD A COMMENT
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 Sabre
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 Sabre
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 Sabre
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 Sabre
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   >   >>
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
How Intel Is Powering the 5G Era

3|29|17   |     |   (0) comments


Light Reading tours a series of 5G "super demos" so see how Intel envisions the 5G-connected future. We take a look at a prototype connected BMW, a light pole with environmental sensors that provides 5G wireless to a smart home and a fully untethered virtual reality experience.
LRTV Custom TV
Source Photonics CEO Doug Wright Talks About the Future of Source Photonics

3|29|17   |     |   (0) comments


Source Photonics' CEO, Doug Wright, talks to Light Reading about how the company is continuously investing in its operations to meet not only its customers' current technology demands but also to deliver their next-generation technology needs.
LRTV Custom TV
Live Demo: DevOps in Service Chains & 5G Network Slices PoC

3|29|17   |     |   (0) comments


Executives from PoC collaborating companies – Patrick Waldemar, VP and Head of Technology at Telenor Research, John Healy, VP of the Datacenter Network Solutions Group at Intel, Vincent Spinelli, SVP of Global Sales and Marketing at RIFT.io, Mats Eriksson, CEO and co-founder of Arctos Labs, and Mats Nordlund, CEO and co-founder of Netrounds – review ...
LRTV Documentaries
The Year of Fat & Skinny Bundles

3|29|17   |   21:06   |   (0) comments


In this fireside chat, Roku's Andrew Ferrone predicts that 2017 will be the year of multichannel OTT video bundles and spells out other trends in the OTT and pay-TV markets.
LRTV Huawei Video Resource Center
BBWF 2016: Orange Poland's Next-Gen Central Office

3|28|17   |     |   (0) comments


Introduction to Orange Poland's legacy next-generation central office solution.
LRTV Custom TV
Viavi at OFC 2017

3|28|17   |   4:15   |   (0) comments


Light Reading's Editor-in-Chief Craig Matsumoto reports from the Viavi booth at OFC and gets an update on the 400G testing market from Tom Fawcett, VP and GM of LAB & Production. At this year's event, Viavi won three awards from Lightwave magazine and showcased an interoperability demo with Ethernet Alliance and Finisar.
LRTV Custom TV
Connecting the Entire Home With DOCSIS 3.1

3|28|17   |   3:58:   |   (0) comments


Hitron Technologies had the first cable modem certified for DOCSIS 3.1 and already has over 120,000 units in the field. Greg Fisher, CTO of Hitron, provides an update on his company's rollout of new gateways and why he thinks DOCSIS 3.1 will continue to drive value for operators into 2017 and beyond.
LRTV Interviews
Amazon Prime's Hand of God Creator on Producing for OTT

3|28|17   |     |   (1) comment


Ben Watkins is the creator, writer and producer of Hand of God, a series on Amazon Prime. At Light Reading's Cable Next-Gen conference in Denver, he explained the advantages of producing for an OTT platform versus traditional TV.
LRTV Custom TV
How Metrological Keeps Cable Customers on the Couch

3|28|17   |     |   (0) comments


Metrological offers an open source solution that reduces the time it takes cable operators to integrate OTT content into the linear television viewing experience.
LRTV Documentaries
The ABC of OTT

3|28|17   |     |   (0) comments


At Light Reading's Cable Next-Gen conference in Denver, Ben Watkins, creator of Amazon Prime's Hand of God show, explained how producing content for an OTT platform differs from producing content for traditional TV.
Shades of Ray
Why Analytics Is the Tech World's Digital Glue

3|27|17   |   02:20   |   (0) comments


It was obvious at the massive annual CeBIT enterprise tech trade show that the foundation for tech innovation right now is real-time analytics.
LRTV Custom TV
CommScope – Meeting the Demands of Tomorrow's Networks

3|24|17   |     |   (0) comments


Phil Sorksy, Vice President International at CommScope, discusses addressing the challenges faced by service providers today, and as future trends emerge.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
FTTH No Slam Dunk for Cable
Carol Wilson, Editor-at-large, 3/23/2017
Unlocking China's $194B Telecom Market
Robert Clark, 3/27/2017
WiCipedia: Supergirls, No More Excuses & Media Monitoring
Eryn Leavens, Special Features & Copy Editor, 3/24/2017
Welcome to the Wild West of Privacy
Carol Wilson, Editor-at-large, 3/24/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
At MWC 2017, Qualcomm's CTO Matt Grob talks to Light Reading's CEO and Founder Steve Saunders about the progress being made in the development of the technologies and standards that will underpin 5G.
Animals with Phones
Working From Home Doesn't Work for Everyone Click Here
You shouldn't nap on your keyboard, for instance.
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.