What's Holding Back the SuperCDNs?

Service providers are in a position to create a new and better content delivery network model, but haven't seized the opportunity

Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation

March 21, 2011

3 Min Read
What's Holding Back the SuperCDNs?

Content delivery networks (CDN) such as Akamai Technologies Inc. (Nasdaq: AKAM) and Limelight Networks Inc. (Nasdaq: LLNW) generate billions of dollars in revenue for accelerating content delivery and improving the end user's quality of experience (QoE).

But CDNs don't own the last mile – service providers do. Service providers can cache content closer to the end user, and thereby offer a better QoE. They can also use network management tools to better manage traffic and even guarantee quality of service. They also own the billing relationship and can create new tiered services, or target advertising for additional revenue.

These advantages should allow service providers to create a "SuperCDN" capable of adjusting faster and more effectively to network traffic, avoiding upstream congestion by serving video from the telecom edge and being more innovative with pricing models.

Some service providers have also discussed the idea of wholesaling CDNs. In this scenario, the operator-owned and -managed caches would be leased to traditional CDNs. This would allow for open access to the operator's network by other service providers, content owners and perhaps existing CDNs, but enable operators to share in the revenue generated by over-the-top content delivery.

Several Tier 1 operators are running their own CDNs today, but they don't offer the unique differentiators mentioned above. The factors holding up the SuperCDN include:

  • Operator prioritization: While they often complain about OTT providers making money over their infrastructure, operators aren't really tackling this space aggressively. This could be due to conflicting priorities and a lack of clarity around the business models for a service provider-owned SuperCDN.

  • Traffic management hand-offs: For the wholesaling model, developing interfaces for the hand-off of content assets from the traditional CDN to the service provider's cache is a challenge. The operator's traffic management systems need to be able to interact with the CDN's traffic management systems to ensure that content is cached and delivered in the most intelligent way possible, seamlessly from beginning to end.

  • Net neutrality: As with any network management approach, the uncertainty around net neutrality and acceptable traffic management is an issue. While transparent caching appears to be a generally acceptable practice even in the U.S., commercializing a content delivery operation, using policy tools to prioritize (or deprioritize) traffic, and exploiting any network ownership advantage could create controversy, bringing down the wrath of regulators. However, outside the U.S. this is less of a hurdle, and operating a wholesale model would likely calm many objectors even in the U.S.

  • Media delivery commoditization: The flood of CDNs that entered the industry a few years ago have succeeded in dramatically reducing costs for content delivery. However, the massive and continuing growth in OTT video still makes this an important opportunity for operators.

With video traffic forecast to grow steadily, caching and content delivery will be an important issue for operators in the future – not just to alleviate OTT traffic costs, but also to explore new revenue-generating services. Despite relatively few announcements, trials and tests have been conducted by several of the largest service providers in the U.S. and Europe. We anticipate this will be a key area for service providers as they try to cope with the flood of video on their networks and look for ways to generate incremental revenue from it.

— Aditya Kishore, Senior Analyst, Heavy Reading

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About the Author(s)

Aditya Kishore

Practice Leader, Video Transformation, Telco Transformation

Aditya Kishore is the Principal Analyst at Diametric Analysis, a consultancy focused on analysing the disruptive impact of Internet distribution on the video and telecom sectors, and developing the necessary strategies and technology solutions required to drive profitability. He can be reached at [email protected]

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