More ISPs Not Letting CDN Place Servers Inside Their Network, Doing It Themselves
I've recently spoken to quite a few ISPs about their practice of letting CDNs place servers inside their network to reduce their costs. With video traffic starting to become a real burden on more ISP's network, many are under the impression that CDNs like Akamai and others can just place their CDN servers in the last mile anywhere they want. While this was an easy and common practice for CDNs over the past few years, this is no longer the case.
Over the past twelve months or so, many of the ISPs I have spoken with said they are denying requests from the CDNs to place servers in their network or are kicking out CDNs who previously had gear in their facilities. Many of the ISPs said they are now focusing on doing it themselves and we have seen examples of this with companies like Verizon deploying video servers on their network for FiOS customers. Over time, nothing would stop Verizon from going to a content owner like Disney and cutting a deal to deliver Disney's content directly to Verizon's customers, essentially cutting out the CDN.
It's also been interesting to hear many ISPs tell me they have allowed some of the biggest CDNs to put gear on their network, only to see much of the gear go unused. I think this is because a CDN server placed inside an ISP network needs to be filled.
The cache fill is data from the CDN’s origin (or the CDN’s customer’s
origin) and most of the time, this fill will come from outside the ISPs network. The cache fill data plus the cost to house and power the CDN’s server is typically borne by the ISP. But if video is not being served from the CDN servers within the ISP network is there a real benefit to having them there? Many of the ISPs I spoke to said no and didn't see the value in letting the CDN reach their end customer for free.
It is important to remember that the ISP owns the customer, not the CDN. The CDN's customer is the content owner, but if the CDN has not done enough deals to get their servers inside ISPs or does not have enough peering in place, content owners could start dealing directly with the ISPs. Amongst the large ISPs I am talking to, those doing billions of revenue a quarter, this trend of kicking out CDNs is one that seems to be gaining traction and I hear a lot of them purchasing their own gear or working with companies like BandCon.
That said, while this all makes sense on paper, we have to see how many content owners are actually willing to deal directly with ISPs. Any major content owner who wants to bypass or supplement a CDN would have to cut deals with a lot of ISPs since no one ISP accounts for the vast majority of eyeballs. In Europe this would be easier as a few ISPs control nearly all of the consumers, but in the U.S., content owners would have to cut a lot of deals. It would not be hard to do, but one has to wonder how much expertise content owners will have to put this in place. For the major content owners, completely doable, but you'd have to be doing a ton of traffic and have quite a large reach to make it worthwhile.
Content owners may not want to do deals with ISPs until HD video is truly adopted and many ISPs are still building out their own CDN offering, not yet selling the service. So until they make it known to content owners that they can deal directly with the ISP, it's too hard to know what impact this will have in the long run. What impact this could have directly on the CDN industry we don't yet know, but this is clearly a trend, something I am hearing more and more of and something to keep an eye on.