2011-07-12 00:00:00 | Uncategorized

Telco networks and CDNs: CAPEX, OPEX

 

Recently I’ve encountered more and more questions about how CDNs can lower operational costs for telecom operators and content publishers.

Quick conclusion #1: CDNs are not just used to lower costs, they are a strategical (survival in a changing world) and commercial, monetization tool.

Quick conclusion #2: with a combination of an intelligent CDN plus a Transparent Caching platform you can offload up to 50-65% of all the traffic, not just in short term.

 

Within a few years time, over 90% of every bit and byte on IP networks will be video. Video traffic usage is growing exponentially. Scaling a network purely based on capacity using more fiber and switching capacity is an almost linear scaling model. While a CDN can exponentially scale the networks capacity far beyond it’s physical capacity at much lower costs.

But what kind of video traffic are we talking about? And how much of this can be offloaded? And how? The traffic can be divided in three main categories:

 

1) Premium on-net, licensed or owned content (walled garden, three screens, IPTV for example)

Accounts for approximately 25% of all video traffic. This content is mainly distributed as MPEG-TS or RTSP streams. Instead of delivering IPTV live TV and VOD content from a central hub in the network, this content can be distributed intelligently using an on-net CDN. An advanced CDN will offer the telecom operator to dynamically split long tail (storage) content and popular (traffic) content. Depending on how the CDN is tuned you can split long tail (>90% storage, <10% traffic) in the core and popular (<10% storage, >90% traffic) content at the edges nearby the last mile. The result is that telcos can offload up to 90% of this IPTV traffic type from their core facilities, backbones and metro rings. The deeper the edge delivery nodess can be placed, the more capacity can be offloaded. CDN OPEX and CAPEX costs can increase with the number of PoPs however, so the optimal architecture scenario is different for every telecom operator.

But don’t forget that a CDN isn’t just for lowering infrastructural costs. A CDN is all about monetizing content. A proper CDN enables the telco to deliver the content to other devices (three screens), both on-net and off-net via RTSP, RTMP, MMS and HTTP adaptive delivery technologies. Because modern CDNs that support unified media delivery enable a three screens strategy, telcos can keep subscribers happy and prevent churn. Because modern CDNs are abstracted from the physical network layer, they enable telcos to deliver content beyond their actual network reach, allowing them to reach a much larger potential customer base. So a CDN is not just about managing traffic growth, reducing CAPEX and OPEX, but about strategy (survival!) and business.

 

 

2) OTT content (premium content, accessible via the Internet, not exploited by the access provider)

Accounts for approximately 25% of all video traffic and is growing extremely fast. This content is mainly distributed as RTMP, Windows Media, RTSP and HTTP Adaptive streams. (read why it is not true that everything is going HTTP). Instead of delivering OTT content from a third party CDN, the telco takes over hosting and delivery, with a distributed CDN in their network. The effect is a major offload of the telcos transit, peering, backbone and metro links. An advanced CDN will offer the telecom operator to dynamically split long tail (storage) content and popular (traffic) content. Depending on how the CDN is tuned you can split long tail (>90% storage, <10% traffic) in the core and popular (<10% storage, >90% traffic) content at the edges nearby the last miles. The result is that telcos can offload up to 90% of this traffic type from their transit links, peers, core facilities, backbones and metro rings.
The deeper the edge delivery nodess can be placed, the more capacity can be offloaded. CDN OPEX and CAPEX costs can increase with the number of PoPs however, so the optimal architecture scenario is different for every telecom operator. The more content publishers can be put on the on-net CDN, the higher the savings for the telecom operator. If the top 10 of video publishers are on the CDN, an ISP can offload and accelerate over 75% of all this OTT traffic type. Video publishers have benefits too: delivery can be cheaper and the ISP actually can offer guaranteed delivery, with guaranteed performance. While global CDNs can never offer anything beyond best effort because they don’t own or control the last mile. So although reaching out to content publishers is a challenge for telcos, it is key for them to not just deploy a CDN but also invest in sales, marketing and business development.

A proper CDN enables the telco to rent out its CDN capacity to OTT content publishers. This is a major new revenue stream for telecom operators. A win-win for both the content publishers and the telecom operators. Too bad for the ‘man in the middle’ (read: global CDNs). So again, an on-net CDN is not just about managing traffic growth, reducing CAPEX and OPEX, but about strategy (survival!) and business.

 

3) Regular web traffic / regular video
The rest of the traffic on the networks is a combination of non-premium video content like user generated content, http downloads, surfing, services, email, social media, gaming, et cetera. For this type of traffic there are no monetization options so this is all about lowering CAPEX and OPEX. A large part of this content is non-premium, is static, is delivered over HTTP so it can be cached using a Transparent Internet Caching (TIC) platform. Note that it is sometimes not possible and often not allowed to just cache everything (read why caching can be illegal). The effective cache ratio of this type of traffic is between 35% and 50%.

 

BREAKDOWN: 50-66% traffic reduction is possible.

The ideal combination is a modern CDN that can power both on-net and OTT content, plus a TIC (read differences between CDN and TIC).
TIC for offloading regular traffic and CDN for intelligent distribution of premium content.

  1. Premium IPTV/Cable is approx 25% of all traffic of which 75-90% can be intelligently distributed by the CDN = 20% max offloaded.
  2. OTT content is approx 25% of all traffic of which 50-90% can be intelligently distributed by the CDN = 20% max offloaded.
  3. Regular web traffic is the remaining 50% (the majority being non premium video) of which 50% can be cached at maximum = 25% max offloaded.

The max result for a CDN+TIC can be 65% offloading. Realistically you should assume up to 50% savings.

 

Proof
This is not just a theoretical breakdown. Jet-Stream closely works with partners in their lab and real-life trials. In various setups, a Jet-Stream VDO-X CDN + TIC combination resulted in a 55- 65% traffic reduction. A traffic shaper flattened about 10-15% off the peaks of this traffic. The results were based on 2010 traffic patterns. Since video and OTT traffic will dramatically grow, the actual results may be even better in the future. Actual results will of course vary because of network architecture designs and content usage patterns.

 

Your CDNs CAPEX and OPEX

Although a CDN can scale the capacity of a network far beyond it’s own physical capacity and bottlenecks, deploying and operating a CDN costs money too. Footprint, power consumption, cost of appliances, cost of overhead appliances, aren’t the only costs. A lot of money can be saved in operations and customer support as well and these costs are highly underestimated in OPEX calculations for CDNs. On a regular basis we get RfI’s and RfP’s where many questions are about switch ports, caching settings and DNS configurations, but are not addressing operational costs, support costs, operational features, business intelligence and integration features. Typically those RfP’s originate from (sometimes very outdated) networking, appliances, caching and DNS based CDN engineering concepts. After we do a demo and a presentation, these consultants and engineers go back to the drawing board… because CDNs aren’t about lower level networking hardware (anymore), they are about a higher level approach: delivery, intelligence, business and operations.

 

VideoExchange lowest CAPEX and OPEX
Jet-Stream has taken many efforts to lower CAPEX and OPEX for building and managing a CDN:

  1. No networking appliances dependency: Jet-Stream VDO-X does not require you to use specific networking appliances such as routers and switches: the CDN runs on any IP network and can span multiple IP networks, regardless the underlying switching and routing gear.
  2. No overhead appliances: Jet-Stream VDO-X eliminates the need for any overhead equipment: no load balancers, no DNS servers, no storage vaults, no pop heads, et cetera. Mix internal, DAS, SAN or NAS storage.
  3. Flexible delivery resources: mix any vendors’ light COTS servers, heavy COTS servers, COTS blade servers, virtual servers, cloud servers and high performance appliances for the most efficient and economic architecture design. No more expensive vendor-lock-in appliances.
  4. Maximum density: our unique parallelization approach lets us run multiple delivery services for RTSP, RTMP, MMS, HTTP, HLS, Smooth (etc) natively on a single delivery node without using virtualization. This lowers the physical footprint of a CDN by a factor 5 (and saves dramatically in hardware, housing, power, cooling and operational costs), and you don’t have to stack virtualization on virtualization.
  5. Light CDN core system overhead requirements: Jet-Stream VDO-X can run from a bootable USB stick in any PC, it is extremely efficient code. Or it can be run on virtual servers or on a cloud platform or on physical servers. A +100Gbps operational CDN requires just 4-8 Linux servers for CDN core features and management. No further overhead equipment is mandatory.
  6. Automation: Jet-Stream VDO-X automatically, instantly takes broken services or nodes out of the active pool. And instantly reroutes requests to alternative services  without any dependency on 3rd party technologies such as DNS. This dramatically lowers the SLA costs required for the entire delivery infrastructure, while guaranteeing the highest uptime. Only the small core system needs a high level SLA. The CDN automatically alerts operational staff members when critical incidents happen.
  7. Dynamic resources allocation: Jet-Stream VDO-X allows you to manage delivery resources and storage with the finest granularity on a per account basis. This lets you optimize storage and resources much better, lowering the storage requirements on the edge nodes much further than can be done with purely caching based CDNs.
  8. Deployment: Jet-Stream VDO-X comes with training, documentation and deployment packages. A CDN core system and the CDN delivery nodes can be deployed on COTS (physical, virtual or cloud) within hours / days instead of weeks, months or quarters, by regular employees instead of many expensive specialists.
  9. Management: Jet-Stream VDO-X comes with a professional CDN management dashboard, which allows any regular employee to setup, manage and monitor the entire CDN, provision customer accounts and service customers. Jet-Stream VDO-X CDNs over +100Gbps capacity require less than 2FTE for 24*7 operations. Which is a huge cost saver compared to other solutions.
  10. Customer support: Jet-Stream operates its own CDN called StreamZilla. We automated all top 50 support questions and built a web based self service center. Content owners can manage their content, setup their own live streams, see realtime and historical statistics without the need for any training or documentation. This dramatically lowers the costs for customer support training and operations.
  11. API’s: Jet-Stream VDO-X provides well-documented, open standards based API’s that allow account owners to fully integrate their content publishing workflow within hours or days instead of weeks or months.
  12. Flexible licensing: Jet-Stream offers a wide variety of licensing models with low entry and scalable options, through single purpose, multi purpose, perpetual, subscription and bursting licenses.
  13. Flexible 3rd party licensing: You are free to choose from a wide variety of 3rd party vendors for delivery technologies (Adobe, Wowza, Microsoft, Edgeware). Add vendors technologies when needed.
  14. Embedding, recycling: using our Jet-Stream CDN API, you can embed delivery nodes within (existing) routers, switches, TIC servers and reuse existing COTS delivery nodes.
  15. Interconnectivity: offload traffic to other VDO-X powered CDNs on a true meta-level (not locked into networking technologies or delivery vendors) using Jet-Stream CDN resources sharing features and upcoming true CDN interconnectivity and federation options.
  16. Last but not least: no R&D costs. Jet-Stream VDO-X is off-the-shelves technology that has been designed from the ground up for telco and ISP usage, with respect for their business and with respect for content publishers. It’s proven technology that proves that media delivery can be done in a more professional way than how Global CDNs can do, and it proves that media delivery can be monetized with higher margins than with other vendors CDN technologies.