& 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
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
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.
Women in Comms Introduction Videos
Infinera's Sales Director Paints Tech's Big Picture

6|21|17   |   4:14   |   (1) comment


Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
LRTV Custom TV
SD-WAN Innovation & Trends

6|20|17   |     |   (0) comments


Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
LRTV Interviews
Ovum's Dario Talmesio on 5G in Europe

6|20|17   |   02:16   |   (0) comments


At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
LRTV Custom TV
Putting Power on a Pedestal

6|19|17   |     |   (0) comments


ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
LRTV Custom TV
Gigabit Access: The Last-Mile Pipe for All Future Services

6|19|17   |     |   (0) comments


A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
LRTV Custom TV
Key Factors to Successfully Deploy an SD-WAN Service

6|19|17   |     |   (0) comments


As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
LRTV Custom TV
IoT Solutions: Rational Exuberance

6|19|17   |     |   (0) comments


IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
LRTV Custom TV
Realizing ICN as a Network Slice for Mobile Data Distribution

6|19|17   |     |   (1) comment


Network slicing in 5G allows the potential introduction of new network architectures such as Information-centric Networks (ICN) as a slice, managed over a shared pool of compute, storage and bandwidth resource. Services over an ICN slice can benefit from many architectural features such as Name Based Networking, Security, Multicasting, Multi-homing, Mobility, ...
LRTV Interviews
Ovum's Mike Roberts on 5G Uptake

6|19|17   |   04:08   |   (0) comments


Mike Roberts, research director for Ovum's service provider markets group, explains why he has boosted his 5G subscriptions forecast.
LRTV Interviews
AT&T's Hubbard on Intersection of SD-WAN & MPLS

6|15|17   |     |   (0) comments


Rick Hubbard, SVP of Network Product Management for AT&T Business Solutions, discusses how AT&T's approach to SD-WAN fits in with its overall virtualization strategy, explains how SD-WAN can improve enterprise customers' use of the cloud and addresses the intersection of SD-WAN and MPLS.
Telecom Innovators Video Showcase
Keep Connected IoT Devices Under Control With Allot

6|15|17   |     |   (0) comments


Allot AVP of International Pre-Sales, Daniel Keidar, explains how communications service providers can protect infrastructure and service availability from flooding attacks caused by malfunctioning or bot-infected devices connected to their network.
LRTV Custom TV
ZTE 5G World Highlights

6|15|17   |     |   (0) comments


ZTE showcases its leading 5G innovations at 5G World in London.
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
Verizon Warns of $500M Hit From Yahoo Deal
Iain Morris, News Editor, 6/16/2017
ISP Startup Targets Disruption in US Suburbs
Mari Silbey, Senior Editor, Cable/Video, 6/15/2017
Can Comcast Beat Customer Hate With a Private Cloud?
Mitch Wagner, Editor, Enterprise Cloud, 6/15/2017
BT Tech Chief Makes Plea to 5G Chip Vendors
Ray Le Maistre, International Group Editor, 6/20/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
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.