Video services

AOL Goes P2P for Video

Time Warner Inc. (NYSE: TWX) division AOL will use a peer-to-peer approach borrowed from the file-sharing world of Kazaa and BitTorrent when it begins delivering high-definition Internet video to consumers next month.

Like other ISPs aiming to distribute video content over the public Internet, AOL faces the challenge of delivering its service across increasingly congested broadband pipes. And 93 percent of those pipes are owned by cable and telephone companies wanting to offer their own high-bandwidth services to consumers. (See AOL Teams for Broadband and LR Poll: Net 'Squatters' Should Pay.)

To deal with the potential bottleneck in the last mile, AOL plans to borrow space on its customers' PCs to store video content at the edge of the network. As customers begin ordering video content, small parts of the files are cached on their hard drives. When a consumer orders a video, it is pieced together from PCs (peers) nearby on the network, avoiding the need to push the entire file out from a central server. Once pieced together, the file is wrapped with digital rights management (DRM) code to control its usage after download. One of AOL's DRM rules, for example, is that the user must be connected to the Internet in order to view the file.

AOL's new video service, called "In2TV," is set to launch in March and will feature high-definition content delivered over the peer-to-peer network. AOL spokeswoman Jennifer Rankin says the initial content offering will be free, on-demand streams of older Warner-produced shows such as Alice, Chico and the Man, and Wonderwoman. But this, she says, is just the beginning. (See AOL Buys Video Search Engine.)

Two years ago AOL enlisted the help of Sunnyvale-based video distribution company Kontiki to help it devise a video strategy. Now AOL is using Kontiki's video storage and management systems designed to deliver video on a large scale. “The last mile is always a problem,” says Kontiki VP of marketing Scott Sahadi. “You’re competing for that bandwidth with television, with VOIP, with Skype calls, with instant messaging and email, and [then you] have to deliver that one-gig file of Starsky and Hutch.” (See Verso Tests Skype Filtering.)

AOL's approach is similar to the one adopted by the British Broadcasting Corporation (BBC). In 2004, the BBC conducted trials of an "Interactive Media Player" that used BitTorrent P2P technology to offer free access to archived TV programs. (See P2P Gets Serious.) Following that initial trial, the BBC also turned to Kontiki and integrator Siemens Business Services for further development and has just completed a 5,000-person pilot service. Further details are currently unavailable.

But the peer-to-peer concept itself has negative connotations for many consumers, as it is often associated with illegal file sharing and virus spreading. (See Grokster Shuts Down.)

Sahadi says Kontiki's brand of P2P is unlike Kazaa-style file sharing because there is never any direct contact between the "peer" computers themselves. (See Broadcast TV Will Never Die.) And he believes P2P networks shouldn't be judged on their somewhat checkered past: “The peer-to-peer industry has unfortunately grown up in this sort of illegal environment... based on file sharing." Meanwhile, AOL says it will be upfront with customers on the technology. “We make it very clear that this is not a file sharing network,” says AOL spokeswoman Jaymelina Esmele.

AOL will inform customers that their computers are being used for local video caching, and will give them a chance to opt out. Esmele says users can also adjust their PC settings to control how much hard drive space is being used.

On a more practical level, will customers be comfortable loaning out space on their hard drives to store video for other people? AOL is betting that video customers will understand their PCs are part of a secure "grid" that makes movie delivery faster for everybody. Kontiki believes its brand of video distribution is up to 25 times more efficient than traditional approaches.

If consumers do consent, AOL could have an advantage over other Internet video services. It might also find itself less beholden to the cable and telephone companies that own the broadband pipes.

In terms of its content offering, AOL is probably just getting started. AOL’s parent, Warner Brothers, owns perhaps the largest catalog of video content anywhere with over 20,000 video titles, and a quickly growing portion of it will be available on demand at AOL.com. (See AOL/Google: VOIP Buddies .)

With all that content and a sleek way of delivering it, AOL might steal away a lot of eyeballs from cable and telco TV. (See Google Says No to QOS Fees.) To that end, AOL has signed a deal with Intel Corp. (Nasdaq: INTC) that will make its video files watchable on regular televisions. It is also working with Microsoft Corp. (Nasdaq: MSFT) on distribution of video through the Windows Media Center, which would accomplish the same end. (See Intel Teams With Google, AOL.)

AOL has a lot to gain from its peer-to-peer Internet video business, maybe even a new identity. The company is undergoing a difficult transition from its subscription fee roots to new revenue from content and advertising. A compelling video offering may be crucial to AOL remaining an oft-clicked Internet destination.

— Mark Sullivan, Reporter, Light Reading

OldPOTS 12/5/2012 | 4:07:03 AM
re: AOL Goes P2P for Video rjm,

I think if you look carefully at seven's post that the take rate is probably 21% of those already with a connection. Those that signed up expecting to get video. I know, in canvasing my neighbors in Garland, those that expect to get FIOS in the next month expect to get video soon after getting the basic Internet & voice service.

BTW The take rate for cable in the DAL-FW metroplex is just above 15%. I believe that satellite is greater, at least in my neighborhod.

rjmcmahon 12/5/2012 | 4:07:06 AM
re: AOL Goes P2P for Video OldPOTS, I found the following site when perusing google. It's kinda of interesting


It looks like delivering news and entertainment by telephone wire has been tried since the late 1800s. The article has a link to another where they describe "Supplying broadcasts like gas or electricity."


What's old is new again it seems.

On the VZ/Keller thing. I see it as a charade. I find it unlikely that VZ can achieve in four months (a 21% take rate) what the satellite guys haven't accomplished in decades. I also believe that FCC trained economists understand the last mile is a natural monopoly and facilities based competition won't stimulate investment into upgrading the infrastructure. Also they probably understand that bandwidth abundance is a public good (by the economic definition) and hence won't be provisioned by markets. The FCC puts up this charade because they have nothing better to offer. It's kinda like what's going to happen to medicare when all the baby boomers try to get benefits or what's happening in New Orleans right now. Government rhetoric backed by a politician's promise. It isn't worth much.

Sorry to sound so negative. I am hoping some day that our industry and our governments start delivering to a higher standard.
rjmcmahon 12/5/2012 | 4:07:09 AM
re: AOL Goes P2P for Video Thanks for the pointer OldPOTS.
OldPOTS 12/5/2012 | 4:07:10 AM
re: AOL Goes P2P for Video RJM,

I saw in the Dallas Morning News today that FCC Martin will hold a public hearing on video competition Friday in Keller, where VZ launched its first video service over its fiber-optic network.


mgqx 12/5/2012 | 4:07:14 AM
re: AOL Goes P2P for Video 1) will users actually have their PC's on enough of the time, does this mean your Media Centre / Set Top Box needs to be on 24/7 connected to your broadband? There goes the power bill, and the MTBF with that hard drive constantly spinning?

2) what about places (e.g. europe) where users have bandwidth caps? all that background P2P coming off your local video cache is going to eat into your budget -- no thanks! I suppose this is OK if it's AOL owning the network and also providing the technology.

3) How can this be "P2P" when it's acknowledge that users computers (i.e. the peers) don't direct ly communicate with each other ?! Is is more marketing spin?
aswath 12/5/2012 | 4:07:18 AM
re: AOL Goes P2P for Video Mark:

Is your statement based on by now clarified story of including the video traffic and data traffic in measuring the total capacity? If not can you give us the reference to the filings?

paolo.franzoi 12/5/2012 | 4:07:18 AM
re: AOL Goes P2P for Video

Given that shopping, gambling, video gaming and porn are the biggest residential Internet uses today, it is not clear to me what residential broadband penetration does to make one more competitive. At this point, it is great speculation though.

rjmcmahon 12/5/2012 | 4:07:18 AM
re: AOL Goes P2P for Video Thanks seven. I looked at the VZ website. It would be nice if they pulled out the FiOS numbers separate from the DSL numbers. It would also be nice if they explicitly stated homes connected. I don't know what three million homes passed really means.

On a similar topic, the US has fallen to 19th in terms of broadband penetration. We're on a path to be overtaken by Slovenia who holds the 20th spot. It's hard to imagine how future US citizens will compete in a globally competitive world when it looks like they will be inheriting substandard communications infrastructures.


At its current growth rate of over 90% per year, China will pass the US in total broadband subscribers by late 2006 to become the largest broadband country in the world. The US has fallen to 19th overall in household broadband penetration, and is in danger of being passed by Slovenia in early 2007. Israel leads all Middle Eastern and African countries, and is the third country overall in broadband penetration. Hong Kong leads the Pacific Rim, with a broadband penetration rate of over 73%.
metroman 12/5/2012 | 4:07:20 AM
re: AOL Goes P2P for Video B7

The QoS should not be an issue. QoS is locally administered, whatever DSCP is written in the header can be ignored by the user's operator easily.

The point in any case is not the download/streaming of data, the description says that the file will be downloaded using a P2P network, obtaining parts of the whole file from different systems. The "connected to the internet" statement was made to sound like the user had to be connected to the internet at the time of playback of the file. The file is in the user's machine at this point so the connection to the internet would only to be to check the digital signature of the file to ensure it was valid. If the user's operator was to block the messages that check the digital signature then the file could not be played back and the service could not exist in that network. This assumes that the validation server is sitting in an AOL controlled network or on a partner/franchise network.

paolo.franzoi 12/5/2012 | 4:07:22 AM
re: AOL Goes P2P for Video

I am just quoting from the presentation that is on the Verizon website that was associated with the conference call. You should take a look.

From my understanding of Keller, the vast majority of it were brownfield. There was no commentary on how many were getting video the first time versus switched from cable/satellite. My guess would be almost all had switched.

They had some take rate numbers in the presentation. They did not say "x homes" are connected to FiOS.

rjmcmahon 12/5/2012 | 4:07:22 AM
re: AOL Goes P2P for Video I don't think VZ has to share anything when it comes to fiber networks. Taking at least 80% seems expected. Who gets the other 20%?
rjmcmahon 12/5/2012 | 4:07:23 AM
re: AOL Goes P2P for Video Verizon 21% penetration in Keller, Tx for video on their call last week.

A 21% penetration rate sounds pretty good for such a short time. I don't think satellite has that high of a penetration rate and they've been going at it for a few decades.

Did they mention how many homes were new builds versus switchovers from existing providers?

Any hard numbers on homes connected or did they keep the numbers based on homes passed?
paolo.franzoi 12/5/2012 | 4:07:23 AM
re: AOL Goes P2P for Video

You should add the cavaet, in the NFL cities, to your statements. One of the downfalls of the new long haul carriers is they all went after the same traffic.


I agree with you. Verizon 21% penetration in Keller, Tx for video on their call last week.

stephencooke 12/5/2012 | 4:07:24 AM
re: AOL Goes P2P for Video Mark,

Other than for access purposes there is almost zero reason to deploy new fiber in the US. The amount of fiber that was deployed since 1995 is enormous. Here is the thing though, it is not dark fiber that matters but dark wavelengths. Assume that any existing fiber, whether lit or not, is at maximum 10% utilized (as there are up to 160 lambdas specified on the ITU grids depending on frequency spacing using all bands). Currently the standard is 10GHz/wavelength for commercial purposes with some companies talking about 40G. I don't see 40G as worth the effort due to its susceptibility to non-linear and third and fourth order effects (eg: PMD). The potential here is for 1.6TB/s/physical fiber. Other than in labs I don't think there are any such links in service.

The point is that Peter is right for the metro and core networks. However, the amount of network bandwidth necessary is defined by the edge. Until higher bandwidth access technologies come about, and the state-of-the-art ones get deployed in volume, there is no real need to add any more backbone or metro fiber.

Mark Sullivan 12/5/2012 | 4:07:24 AM
re: AOL Goes P2P for Video Former BT CTO Peter Cochrane tells me that there is so much dark fiber laying around in the U.S., and that the pipe that is actually being used isn't being used nearly to capacity. Seems to me that the telcos could easily remedy the U.S.'s poor ranking among developed countries in broadband proliferation if there was a compelling business reason to do so. Right?
materialgirl 12/5/2012 | 4:07:25 AM
re: AOL Goes P2P for Video Dear Mark:
I think this is the future, and that we have a hardware-oriented crowd here. These "underground", shared, technologies have always taken off quickly because they alleviate a scarcity. We all have more storage and CPU power than we use, which will only get worse. We all have less bandwidth than we would like. If possible, we will alleviate the scarcity with the plentiful resource.

Yes, meshes and grids are the ultimate nightmare of centrally managed monopolies, who benefit on scarcity. If possible, users do what is best for them. The ultimate question will be how compelling the content is anyway.
rjmcmahon 12/5/2012 | 4:07:25 AM
re: AOL Goes P2P for Video Telco TV equals Cable TV and Sattelite TV. Anybody going to disconnect their cable to be able to hook up their AOL connection?

I think this question can be asked of VZ's FiOS TV as well. Are people going to disconnect from existing cable/satellite providers and switch to VZ's FiOS TV service? If people don't switch to FiOS TV then what happens to VZ's fiber business case? (Can they make it on internet/voice alone?) If it turns out there is no ROI then isn't it in VZ's shareholders' interest to discontinue the projects? Where will that leave the US when it comes to competitive communications infrastructures?
Mark Sullivan 12/5/2012 | 4:07:25 AM
re: AOL Goes P2P for Video Verizon filed documents this week saying that it plans to reserve 80 percent of the capacity on the FiOS fiber network for Verizon-branded services. He who owns the pipe is in control. Interesting.
Mark Sullivan 12/5/2012 | 4:07:25 AM
re: AOL Goes P2P for Video Thank you. As for the content, I cant think of any player in better position than AOL, assuming, of course, that the bond with their parent company is strong. -M
paolo.franzoi 12/5/2012 | 4:07:26 AM
re: AOL Goes P2P for Video

Telco TV equals Cable TV and Sattelite TV. Anybody going to disconnect their cable to be able to hook up their AOL connection?

Depends on: Content and Price.

In places where their won't be an upgraded network deployment, this might be quite viable. But in those places, digital satelite will be the biggest challenger.

Mark Sullivan 12/5/2012 | 4:07:26 AM
re: AOL Goes P2P for Video Is this a real threat to telco TV?

Will consumers put up with having video caches on their machines?

Will the RBOCs do anything to impair AOL's P2P plans?

I know what the 'interested' parties say. What do YOU say?
paolo.franzoi 12/5/2012 | 4:07:27 AM
re: AOL Goes P2P for Video

Actually, it won't. The video services of the Operators will come in at a higher QoS than any Internet traffic.

Biggest issue generally will be some of the Bit Torrent issues with opening holes in firewalls and creating DMZ zones.

metroman 12/5/2012 | 4:07:27 AM
re: AOL Goes P2P for Video - OK so I understand the concept but it will create issues with operators offering their own video services.

One statement made in the article says "the user must be connected to the Internet in order to view the file". I assume that this will incorporate some form of registration with a server doing content verification. Assuming that this exchange will have a unique port number (UDP/TCP) it would be easy for an operator to filter these messages and prevent use of the file. If "connected to the internet" means having link and an IP address then there is no real security.

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