Internet Television Broadcasting - One CDN Winner

Internet Television Broadcasting

Radio stations have been “broadcasting” on the internet for some time and Hulu and a few others have been “broadcasting” TV over the internet for a while too. But to avoid any doubt the internet is not a broadcasting environment. The TV you get via you Ariel (antenna) or satellite dish (TVRO) is broadcast – that is, it is being sent once to a wide geographical area (footprint) and you simply need to turn on to receive it. Often referred to as “point to multipoint”. There is no return path and the broadcaster has only statistical surveys to confirm and calculate who, if anyone, is watching.

Move to the internet and (ignoring CDN’s for the time being) each computer watching the video has a separate and direct connection back to the source server. They may be watching the same content at the same time but each is watching a unique stream. This is “point-to-point”, even if there are lots of destinations.

So a broadcast digital channel (via an antenna or dish) transmitted at 1.5mbit/s it is using no more than 1.5mbit/s to reach 1 or 10million viewers (assuming a single footprint). 10million viewers over the internet and the bandwidth required 1.5mbit/s x 10million = 7,500 gbit/s. (7.5Tbit/s). The bandwidth used would be no different if each of the 10million viewers were each watching a different programme (content).

Your internet service provider (ISP) built their business model on the assumption of much lower bandwidth utilisation (hence those fair usage policies to limit your maximum use) from their view of the world around 2005 (give or take a few years).

Your ISP connects to the internet via a big “pipe”. They spread the cost of that connection amongst all their customers. They also have a deal with their service provider where they pay for bandwidth used. As more customers start to watch video, such as the BBC iPlayer the bandwidth used goes up, pushing up their costs. The BBC doesn’t pay your ISP and I’m sure, like me, you don’t want to pay any more too.

My view is I’ve paid for up to 8mbit/s 24/365 a year and unless I exceed that why should I pay more?

There is another problem too in that the internet backbone gets clogged up as all these video streams compete with each other to get across the internet. The result is the internet slows down, video IP packets get lost, the video stutters or freezes, or drops out completely.

What is the solution? CDN, or content distribution networks, have been around from 2000 or so. The solution then and now has changed very little. The content source (say Disney) would want the end user to get a reasonable experience and for Disney not to be blamed for bad, interrupted, jerky or lost steam. The CDN would take the video stream over a separate network, bypassing the internet, and store the video at the edge of the Internet. This involved putting lots of edge servers in. The result was that instead of getting the video from the Disney site (invisible to the consumer) the request was redirected to the CDN edge server avoiding internet congestion and giving Disney (or whoever) a quality of service that customers expected.

Since then consumer bandwidths, choice of video, choice of supplier, and customer expectations have all increased. It isn’t the odd event but an everyday demand for video that is swamping ISP’s. Customers expect a relatively TV type experience, and increasingly HD. ISP’s could ignore the odd event as over a month or so it would even out. The constant demand of consumers for video is growing.

Some even believe that customers will get all their video over the internet and antennas and dishes, will be a thing of the past. I have my doubts, but the opportunity to insert different adverts to each stream specifically based on your profile. It could use your browser history where you have been looking at new TV’s to insert adverts about new TV’s or local retailers. All clever stuff, but would I want it hummm! As long as it didn’t start using information from the “adult sites” I visited!

Whatever the future holds the problem is that the content provider is getting paid for their content (advertising, subscription, pay-per-view or licence fee/tax) they are (currently) paying the CDN to get it to the edge of the network and the “poor” ISP is then having to pay for it to get onto their network and to their consumers. As it has grown it is now too much for them to ignore so most have employed “traffic shaping”. Traffic shaping means that content coming from a particular source is restricted, effectively artificially re-introducing the problems that the CDN was bypassing.

This is interesting as there is no longer a technical problem with delivery video but almost purely about money and business. Here are some things to consider;

Your ISP is Sky and you have a fantastic video service of Sky content. Your friend it with TalkTalk and their video service is crap. Sky maybe £2/month more but if it’s worth it your friend changes ISP. What option does TalkTalk have if customers migrate away?

Sky content on the Sky ISP platform is great (as they own the content and want to push their content and their adverts that sit around it). Knowing sky there will be some value added up sale to try and extract a little more money out of you and increase the ARPU (average revenue per user). However, BBC and ITV content is not so good. BT ISP has good BBC, ITV and BT Vision content, but not Sky. Suddenly the ISP market is more differentiated (not just price) but also more confusing for the consumer.
One option the ISP’s can do is to look at how they can deliver the service the customer wants at a reduced cost. One option doing the rounds is by extending the CDN concept into the ISP’s networks e.g the CDN server sits in the local exchange. This reduces the cost of bandwidth connection into the Internet.

Who pays? The CDN’s can stump up some as they have reduced their costs. The broadcaster/content owners as they don’t need to the original CDN service.

How would this work? The each ISP pays for a CDN service and then charges each broadcaster for using it. Where is the competition in all this? Won’t the CDN providers and the ISP all have to charge the same? There is a lot more detail but that’s potentially solved the problem.

What if a broadcast/content owner doesn’t want to pay the ISP? They stop paying their CDN provider as the “traffic shaping” negates most of the benefits.

What happens if CBS decides to sell/deliver programmes direct to the UK consumer rather than a broadcaster? Who contracts with whom, and for what, revenue share?

The broadcaster is really a content aggregator, it could be argued that Google and other search engines, YouTube, Facebook or some new entrant, could take over that aggregation role. To be effective the CDN will need to collect the content from all the sources (certainly the big boys) too. The technical issues are minor compared to the commercial and rights issues and complicated web of relationships that could emerge. Then bung in fads and transient events, start-ups and the short attention span of internet users and this will be a dynamic market.

My point? There is a lot of jockeying going on behind the scenes and little new revenue is generated. Like the DTH satellite platforms in Europe there is probably only room for one CDN provider (for Video at least) in each territory, so expect a fierce battle to kick off soon.