The coming battle for bandwidth

Michael broadband video Leave a Comment

{As published in the February issue of SeaWell’s ADAPT Newsletter}

Recent articles, bandwidth slowdowns and indeed, acquisition activity point to a growing concern that we may be in for a storm in the Internet video delivery business.

If you are Google, FacebookApple, or even Netflix, it makes sense that you’re investing some of your billions in the infrastructure that delivers your data and ensures your company’s ongoing success (Google’s capital spending rose to twice what was predicted, or $2.3bn last quarter). Likewise, if you’re Amazon or Microsoft, and your bet is on the cloud, you need the best infrastructure and delivery mechanisms available to lure new customers (Amazon’s capital expenditures rose to $2.6bn for the nine months of the year from the same period a year ago).

The problem is that, until now, cable and telco have done the lion’s share of data delivery. Their history is in building networks, and most of the data still runs over their fiber, to consumers via their ISPs.

As Stacey Higginbotham reports, operators aren’t keen to see their pipes commoditized, so they are looking to charge content companies and bandwidth providers for upgrades to the network in order to carry the increase in traffic. These “peering” points – the point where bandwidth meets ISP – are at the center of the controversy over the Internet delivery business model. The operators / ISPs own the last mile and therefore the ultimate gate. If they want to hold the new players at the edge of their networks until they pay up, they can, with consumers as the likely victims.

Operators feel that content providers – Netflix, Facebook, Apple or any studio – are getting a free ride and should be paying a part for operator’s infrastructure costs. The content provider, on the other hand, feels that the ISP has already been paid to deliver the content, through the consumer’s monthly bill. Complicating the issue is that many ISPs have their own TV networks that are competing against Netflix, Hulu and YouTube.

[pullquote type=”right”]We are in for a bumpy ride as these powerful companies fight over the business model.[/pullquote]

We are in for a bumpy ride as these powerful companies fight over the business model. Stacey is right that there needs to be a more open discussion about how to ensure quality for consumers and fair play on the network. Consumers could be in for more delays as companies fight over territory, and more so, as territories cease being the primary rationale for dividing the spoils.

Currently, less than a third of the content that is created and cached across the Internet gets delivered to the end consumer.

One of the first steps towards weathering this storm is to alleviate these pressures by incorporating better, more efficient methods of delivery. Much of the responsibility here falls on the last mile, where the operators have the opportunity to cut down on the waste by ensuring that only what is requested gets delivered, and by delivering a more accurate accounting of what content was delivered, and to whom.

MichaelThe coming battle for bandwidth

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