The CDN Federation: Spreading Benefits Across the Web-Video Value Chain
Whether driven by live sports or blockbuster movies, the explosive demand for Internet video keeps rising. Increasingly, consumers want it all, and they want it on any device, at any time. Indeed, by 2015, Cisco projects a quadrupling of IP traffic, 90 percent of which will be video.
This is an exciting trend, for sure. But headaches abound, up and down the value chain. For service providers (SPs), this torrent of web content places an undue burden on the network. And SPs gain little in revenue, since over-the-top content providers often outsource the distribution of their material to pure-play content delivery network (CDN) companies. Meanwhile, the content providers—who increasingly charge consumers for their offerings—fear that they may not be able to maintain standards of quality. As for those paying customers? They want their video now, and they expect it to stream perfectly.
Cisco IBSG has been exploring an important solution: the CDN federation. This was a topic of discussion at the CDN World Summit 2012, at which I attended and spoke last week in London, and it is an ongoing focus for my team. In particular, Cisco IBSG and SPVTG—in collaboration with leading SPs—have driven a three-phase pilot program to test the concept.
In recent years, service providers have been deploying their own proprietary CDNs within their networks. This is to lessen the burden of heavy IP traffic and also to gain some extra revenue from content providers. In a CDN federation, separate SPs interconnect—and leverage—one another’s CDN resources. Cisco defines the concept as multi-footprint, open CDN capabilities built and shared by autonomous members.
CDN federations would benefit all players:
- Consumers gain in quality of service, since the closer the cache is to the end user, the faster the response time. Also, a multitude of interconnected CDNs and content providers can offer in a much wider variety of content.
- SPs can increase revenue by offering a better value proposition to content providers. Pooling data across separate CDNs lessens the overall burden on the network, especially as mobile devices proliferate.
- Content providers will be assured that their offerings—in particular, paid content—will be distributed with guaranteed service, and to a wider, potentially global audience.
- Pure-play CDNswill gain an opportunity to reduce CapEx and OpEx by interconnecting and establishing a wholesale relationship with operator-owned CDNs.
There is no doubt that the CDN market is growing. A $2 billion industry in 2011, it is projected to reach $6 billion in 2015. We believe that CDN federations will increase SPs’ market share while driving expanded growth for the industry as a whole.
The second phase of the CDN federation pilot was completed in June, and the final phase will begin later this year. Important concepts have already been proven in a real-world setting, including interconnections across continents and over various streaming protocols. On the business side, new value propositions and business arrangements have been formulated.
Furthermore, clearly defined roles are being established and tested: prime CDN (presents retail offers to content providers, along with value-added services); sub-CDN (expands the prime CDN’s footprint and carrying capacity in a wholesale arrangement); and CDN Exchange (an optional, neutral intermediary that would facilitate tasks such as accounting and billing).
A key element of the CDN federation pilot is its open, standards-based approach. We believe that standardization will be crucial if SPs from disparate regions hope to pool their resources. All data from the pilot program is shared with the industry’s standards bodies, including the IETF.
Overall, the CDN federation offers content providers more choices for delivery of their offerings over a much wider, potentially global footprint—and with greater reliability. SPs lessen the burden on their networks while gaining new revenues and cost savings. These gains bring value where it matters most—to the end user.
With the CDN federation pilot, a great idea is becoming a workable reality—one that will benefit all players, up and down the web-video value chain.