Network Status 2009: The European CDN Market
CDN in a Box
Looking closely at the IP fibre network in Europe, as I alluded to earlier, there are big regional players, usually the incumbent telecoms operators, who have invested significantly in laying IP networks to service the requirements of national telephony networks, including IP for xDSL. These networks do not necessarily have the topology or data-flow management systems required for delivery of high-quality-of-service video data, but they are very significant in capacity and depth, often reach right into homes in the region, and already carry internet data. Recent innovation or initiatives from EdgeCast, Jet Stream, EdgeStream, Velocix, and Flumotion has enabled these IP networks to operate as CDNs and at relatively low cost, in Jet Stream’s case with zero cost upfront and sleeping network deployments activated on demand.
Jet Stream, Velocix, Flumotion, and EdgeCast have developed their own CDN management software that optimises the flow of video traffic around the network and manages storage, cache, load balance, reporting, and monitoring of network activity. All of these companies offer this as a managed instance licence on clients’ networks, in addition to offering their own CDN infrastructure. In the case of Velocix’s Metro product, this allows its clients to benefit from the economics that an in-house CDN brings using vested infrastructure whilst having the global Velocix CDN as overflow/backup for the delivery of international traffic.
EdgeCast enables Global Crossing and Deutsche Telekom with its Wholesale CDN solution, which the company positions against Akamai and Limelight. However, I did not get an opportunity to speak with Deutsche Telekom to get a direct confirmation; I hope someone at the company can comment and elaborate on this for me. I think this could promote an important trend and is worthy of further investigation.
Almost without exception, the local CDNs and software vendors cited their ability to do business without having to compete on price with the big three; most even stated that they rarely if ever meet them in tenders. Local knowledge, local deployment, and bespoke development teams are valued highly in the European market, and a premium is almost always paid for this local attention.
Global-MIX is also bringing to market a product that gives network operators multicast capability, capitalising on its investment and multicast patents. If I understood this right, I believe this could have a major impact on the cost efficiencies of operating live streaming online, especially as Global-MIX will support Flash.
EdgeStream (in which I will disclose that I am an investor) deserves a mention as it has also developed a product offering that is the same model of network empowerment. Vinod Sodhi, EdgeStream CEO, is actively seeking strategic partners in Europe. It has patented technology that allows propagation of high-quality video over very long distances from one or two server locations, which is ideal for providers with existing infrastructure seeking to stream more than 1Mbps. For practical and high-availability requirements, implementations with just a handful of server locations are needed for European coverage. Like Jet Stream and Global-MIX, this results in a solution with very low cap-ex and op-ex fitting the trend in Europe well.
Other trends to note include the general high interest in variable bitrate technology such as Microsoft Silverlight’s Smooth Streaming and Adobe’s Dynamic Streaming for Flash. With services such as BBC’s iPlayer raising the bar of visual and production quality and quantity, the industry is motivated and encouraged to move up the average by 200Kbps–300Kbps.
Mike Shaw of comScore points out that the rise in long-form content is not cannibalising the consumption of short-form, YouTube-style content and that trends are seeing growth across all metrics. Figure 3 shows an abbreviated set of data provided by Shaw that clearly demonstrates this trend. A continued and sustained move to web-based video players and more support for multiple platforms and browsers are also contributing to the growth. Channel 4 in the U.K. is a good example, seeing a clear uplift following Mac support and a move almost entirely to browser-based delivery.
The Future
I think we are just at the beginning of trends that are clearly empowering existing IP network operators and telecom companies at a highly localised level. Look out for more creative technology enabling delivery directly to web browsers with services increasing their bitrates to take advantage of lower CDN video delivery costs. Jet Stream, Velocix, and others are doing the empowering, and I’m sure we’ll see more activity from CDNs and other new European entrants offering a mix of empowering software as a service and global CDNs for international delivery.
Global-MIX’s Robinson mentioned something that I immediately found obvious but interesting, that I would like to share as a final thought. The internet in Europe is centred around three key public Internet Exchange Points: AMS-IX, DE-CIX, and LINX. This provides Europe with a topological advantage and efficiencies to the European networks that the U.S. doesn’t enjoy, a point Robinson makes to illustrate the potentially lower demand in Europe for “global” CDNs, compared to the U.S.