Network operators can become significant stakeholders in the content distribution value chain by deploying their own content delivery networks, says Parimal Pandya
Meeting the content and service expectations of subscribers across multiple devices has presented new challenges and opportunities to network operators globally. They own the network to the end user upon which all devices connect and services run across. Operators need to focus on managing the network costs to deliver these services, while trying to leverage the increased adoption of content and services to favorably impact revenues. And at the heart of the opportunity, is the ability to improve service performance to truly differentiate their network from the competition.
To accomplish these goals, we are witnessing an emerging opportunity for network operators deploying their own CDNs (content delivery networks) to become valuable stakeholders in the content distribution value chain.
Network operators are coming to terms with the consumerization of IT; specifically the burden it has on their networks. According to a report by Nokia Siemens Networks, over 85% of traffic on the mobile network will be generated by mobile data, of which 49% will be delivered via handheld devices by 2015. At the same time, BYOD (Bring Your Own Device) is not showing any signs of slowing down. In fact, Gartner has estimated that by 2016, two-thirds of the mobile workforce will own a smartphone, and 40% of the workforce will be mobile.
The situation currently faced by many network operators is that their traffic is being served from external peering and transit. This leaves them with no control over the traffic delivered which results in unpredictable swings and a less than optimized network. The latency will thus affect Web and streaming performance to subscribers.
Operator CDNs are fast emerging as a high priority element of network operators’ strategies to support the delivery of all content and applications – their own services as well as those from over-the-top providers. They see CDN as a strategic and highly complementary way to offer new and differentiated content services and provide a superior Quality of Experience (QoE) for their subscribers. From a cost perspective, CDNs will contribute to a reduction in network infrastructure costs. At the same time, operators will be able to provide a holistic and quality experience for subscribers across a variety of IP-connected devices.
Making a start
As with every new technology, we can expect lukewarm reception initially. In my opinion, I would not hail the first phase of telecom CDN a success in terms of achieving revenue or traffic offload goals. To begin with, the past telecom CDN offerings have been somewhat limited to bit delivery, which is important, but not enough to win over many media or enterprise customers. These customers are keen to enhance their existing enterprise portfolio and differentiate their network, hosting and cloud services. The offerings will need to evolve to address enterprises’ needs to not only deliver content, but also improve service quality, simplify workflow, reach an array of devices, and provide global reach and scale.
Another reason was that the CDN offerings were only limited to the operator’s network footprint, which led to the business requirement of having “federation”. This was not in line with online businesses’ strategy and business roadmaps, seeing how they want global partners, to reach customers wherever they are or decide to be located.
Thankfully, this is changing. We see more network operators considering CDNs as a core element of their network infrastructures. We are also witnessing an emerging opportunity for network operators to become valuable stakeholders in the content distribution value chain. In my conversations with network operators, apart from improving delivery and offloading traffic, it was clear that many of them need to license, own, and operate the big bit delivery component of a CDN service.
They build their own Operator CDN capabilities, allowing them to monetize their network, reduce costs and enhance retention, customer loyalty and service satisfaction.
I see the approach to an operator CDN as a partnership. It is important to provide the right technology and platform for operators to sell services to their customers, and for global delivery. Some of these partners allow the operator to optimize and offload the traffic from premier brands from the very first day, which can have large economic advantages.
A successful partner helps operators capitalize on traffic growth and eliminate the complexity of building a CDN and interconnect across providers. Lastly, they can leverage their CDN and be an internal customer of that CDN. In other words, they can use it to deliver video services to connected IP-devices. Many networks also have large content libraries, and their subscribers increasingly want to view that content beyond the legacy set-top box.
A recent report by researcher MarketsandMarkets indicated that the global CDN industry will reach US$7.4billion by 2017, which is not the least surprising.
The proliferation of new devices in the marketplace will continue to create numerous challenges for content providers who are trying to satisfy customer demand for anytime, anywhere access to content. Consumer adoption of Internet videos and other media will continue to grow; networks around the world are going to experience an explosion in traffic growth, which will result in congestion across an operator’s network from aggregation, to backbone, to interconnect.
Parimal Pandya is Regional Vice President, Carrier Strategy (Asia Pacific & Japan), Akamai Technologies.
