Yesterday, BT announced that it would spend roughly $US 3 billion to roll out a new fiber based broadband service capable of supporting up to 100Mbps with the goal of making  it available to 10 million homes by 2012. Similar to AT&T’s UVerse service, in most cases the BT fiber will link directly to the street cabinet, called FTTC (fiber-to-the-cabinet), and will not be installed to the home, called FTTP (fiber-to-the-premises), like Verizon’s FiOS service is. The Olympic village and other select locations will have the fiber connected directly to the premises, but those look to be less than 10% of the installs.

Reports say that BT will provide customers with an initial speed of 40Mbps with it increasing to 60Mbps based on accelerating the technology. Today, BT’s standard fast broadband speed now tops off around 8Mbps with ADSL2+ offering a maximum speed of 24Mbps. However, a large portion of UK broadband customers of BT still complain they see nowhere near the 8Mbps rate advertised and are being mislead. Virgin Media is hitting back at BT’s announcement saying they have already spent $26 billion to make 50Mbps rates available to 12 million customers in the UK by the end of this year.

Reports say that the UK still lags behind economies such as France, South Korea and Japan in terms of the maximum broadband speeds available to consumers. The bottom line for folks in the UK is that more competition is coming to the area which means speeds should increase and prices should go down, over time. More competition for truly fast broadband connections are needed in the UK and they need to be rolled out in outlying areas and not just major cities, something BT is saying they are committed to doing.

Following up on my post last week about hybrid-based CDN Velocix, I spent some time chatting with their CMO John Dillon about the company’s hybrid offering and what he’s seeing from P2P customers in the Europe and how that compares with the U.S. market.

Question: When do you expect the company to be profitable?

John: We don’t make any forward looking statement about our financial position.  Velocix is privately held and backed by two of Europe’s leading venture capital firms – 3i and Amadeus.

(Note from Dan: To date, Velocix has raised just over $40 million and is not yet profitable. I estimate they will do between $6-9 million dollars in
revenue for 2008.)

Question: How is the European market for P2P services different than the U.S. market?

John: Outside of the UK, the understanding and level of interest in the use of P2P technology for delivery of legitimate commercial service is fairly consistent. It it widely accepted that this technology will play a fundamental role in shaping the future of online video. The reality is that the majority of the accounts we have today are interested in P2P but are using our traditional http and streaming services. Right now, they just want to get launched so that they can start to build an audience.   

The benefits of Hybrid P2P is not always obvious at the outset.  It is only when online services begin to gain traction with significant audiences, that the cost of delivery and scalability become significant factors. This is when P2P begins to look increasingly attractive as an option. In the UK however, there is a micro-climate around a number of the major broadcasters. The BBC, C4 and Sky have all successfully launched P2P-download based catch-up TV services. 

Question: What percentage of your revenue comes from the U.S. today, and how do you expect that to grow moving forward?

John: Our business splits out at approximately 40% U.S., 50% EMEA (Europe, Middle East, Africa), 10% Asia Pacific. The US is a key growth market for us. As a European headquartered company, it is fair to say that we currently have a stronger market presence in our home market than elsewhere. However, we have just secured a number of key strategic wins in the U.S. and will be looking to accelerate our growth plans in this geography off the back of these deals.

(Note from Dan: Some of these U.S. based wins John references are significant and this is not a case of the CMO just giving marketing speak. I’ll detail some of these wins at a later date, when I am allowed to talk about them.)

Question: Why do you think so many broadcasters in UK had started to use P2P in some form, but no major broadcasters in the U.S. have adopted it as of yet?

John: I referred to this phenomenon earlier as a micro-climate surrounding leading broadcasters in the UK. The reality is that these guys were the pioneers. There were few if any other examples for them to follow at the time. They were blazing a new trail. In late 2005, the BBC began, what was at the time, one of the first commercial P2P trials. The first to launch however was UK satellite TV provider Sky, with their Sky by Broadband service, subsequently re-branded as Sky Anytime. Next to launch was Channel 4’s with their 4oD catch-up service. Finally, and arguably most significant of all was the launch of the BBC iPlayer service last year, augmented with streaming services this past Christmas.

I’m guessing that in these early days, ideas and plans were shared and they all ended up taking a very similar approach. What is interesting to note is that looking forwards, they plan to officially collaborate together, learning from their collective experiences to-date, to unify their approach with a project announced and code named Kangaroo.

Question: What is the barrier to entry for CDNs to make their
stand alone CDN offering a hybrid one and what is the cost/development
time?

John: A number of traditional CDNs have made noises about hybrid-P2P. Some
have made technology acquisitions and others have formed strategic
partnerships. Few have actually launched commercially available
services however, and little if any focus or marketing is evident. This
is most likely due to both economics and technology.

Firstly economics. Say for example, a major customer of a
traditional CDN provider could achieve 30% peer efficiency (30% of
delivery services from peers rather than from CDN caches) on average.
This would be a 30% reduction in revenue and a significant reduction in
profit contribution for the CDN. Significant market uptake would
challenge quarterly driven publically quoted CDN providers, placing
intense pressure on existing business models and cost structures.

From a technological perspective, bolting a P2P client network onto
an http caching infrastructure is clunky at best, with caches providing
“fill-in” via http byte-range requests. Custom routing and delivery
logic and algorithms are required both at the client and server end, to
force the network into performing unnatural acts to fulfill the
delivery requirement. Hybrid-P2P required a company to have the
appropriate business model and a network architected in a fundamentally
different way. It took us roughly 18 months to build out our network so
barriers to entry are significant.

Question: Please explain a little bit about how your network was built to support P2P from day one and how that is different from the other providers.

John: From the outset, we wanted to create a CDN optimized for delivery of large assets such as video, software and games. We realized very early on that the http protocol is not great for this. Http is ideal for serving web pages where connections are maintained for a few seconds. Even if a request fails, simply clicking refresh is acceptable and usually fixes the problem. There are two fundamental limitations:

1) For delivery of larger assets, like video for example, connections can last anything from a few minutes to several hours. Clicking refresh for a failure mid way through is not an acceptable option. Http is a single source protocol that represents in a single point of failure.

2) CDNs essentially replicate popular content in cache severs located around their networks. This is relatively straight forward for small files, but becomes problematic for larger multi gigabyte files. A significant shift in traffic profile can blow existing CDN routing and caching algorithms out of the water! Distributing and storing multi gigabyte files on a caching server network is a major operational challenge, particularly for traditional CDN providers who created and optimized their networks for website acceleration. 

What is interesting to note is that http limitations are essentially where P2P’s strengths lie. P2P is a proven technology optimized for delivery of massive files over time, rather than web pages in a few seconds. P2P protocols are designed to take content from multiple source locations rather than a single source, eliminating a single point of failure. Also, rather than the entire file being the smallest unit of currency, P2P slices large files into thousands of pieces, making them much easier to propagate across highly distributed networks.

These observations served as the design goal and fundamental architectural principle for the build-out of our CDN. Within our network, our cache and storage servers communicate using P2P protocols. All routing and management intelligence is based on P2P principles. We essentially have a high performance P2P Cloud network, where the peers are high performance cache servers. 

When a file is requested, our network uses sophisticated cache selection algorithms to identify a number of suitable cache servers for the delivery. This selection is made using both performance and economic criteria to maintain the required delivery speed at the lowest possible cost. These delivery cache servers communicate with each other and also “chatter” with other servers on our network, to make sure they have the content required to service the delivery need.  The delivery process dynamically blends content and bandwidth from the selected cache servers, ensuring that the resulting bitrate meets committed service levels. If at any time, performance from a delivery cache server degrades, either the others up their output or an alternative cache server is brought on stream.

I’m trying to get some feedback on which newswire service is best for journalists who want to be notified via e-mail the moment a release from a particular company or with a particular word hits the wire. While I already get so many releases sent directly to me, and via RSS feeds and Google Alerts, I’m interested to hear what others may be using. I am looking at PRNewswire.com’s service for journalists, but so far have not been impressed with the releases it is sending me. I welcome any feedback in the comments section or to me directly.

The folks over at Vudu sent me a review unit  of their VUDU set top box and while I really would like to
keep it for myself, I feel it would only be fair to give it away to a
reader of my blog.

UPDATE: Drawing is now closed. Christopher Bruss from Los Angeles, CA was selected as the winner using a random number picker website.

To qualify to win the unit, all you have to do is leave one comment
on this post with a working e-mail address. I will pick one person a
week from today using a random number picker website
and ship it out to the winner at no cost. (Sorry, U.S. residents only)
The unit comes with all of the original materials, box, remote and
cables.

While I was planning on doing a review of the unit for my blog, the guys at HDTV Magazine already did such a detailed writeup, along with comparisons of other devices, that I would not have anything else I could add, so I’m happy to point to their review. There is also a good review of the unit from Last100.com

I've been able to confirm that Limelight Networks will be streaming all of the movies for the new Xbox 360 Netflix offering and that this is part of a recently expanded contract between Netflix and Limelight. I'm still trying to get some details on who is actually paying for this, Netflix or Microsoft, or a combination of the two, but I expect we'll hear more from Limelight about this later in the year. On a side note, I think it was a good Q2 for Limelight and I expect them to be on the high end of their revenue guidance or to have beat estimates.

During Microsoft's keynote presentation at E3 today, Microsoft announced an exclusive deal with Netflix where Xbox 360 Live users will have the ability to stream all content from Netflix's watch now service, for FREE, to their consoles. Update: During the keynote Microsoft said this was free to Xbox Live members, and did not say anything about also having to be a Netflix customer. Now that the press release is out, it states you have to be a member of both. With a current install base of 10.3 million Xbox 360 units, and 12 million Xbox Live members, this won't make a huge impact on how movies are consumed, but it is a start. The real problem, which is the same one the Netflix Player by Roku has, is that today, Netflix has only 10% of their inventory, or 10,000 titles, current available for streaming via the Netflix watch now service.

Details on when this service will launch were not mentioned. I also wonder who's paying for all of the bits that are going to be delivered to Xbox 360 users for these movies? It's costing either Netflix or Microsoft something out of their pocket, especially since they use a CDN for the delivery. (will confirm the CDN being used shortly if possible The CDN is Limelight)

Microsoft also announced that downloadable movies and TV shows from NBC/Universal will be available for the Xbox 360 as well "in the near future". Exact dates and shows were not announced, but I expect we'll hear more shortly as the keynote is still going.

In odd irony, I could not find a live stream of Microsoft's E3 keynote anywhere online. Just happened to be watching G4 TV today which was showing the keynote live. After looking everywhere, I did find the live stream on the G4 TV site, which is now on the home page.

This morning, Velocix (formerly known as CacheLogic) made three interesting announcements around their hybrid content delivery network. Velocix announced that it has acquired the exclusive license for RawFlow’s live streaming P2P technology, will provide a hosted version of Kontiki’s P2P delivery solution and announced a new P2P platform offering for developers of commercial P2P media services and applications.

Acquiring the exclusive license to Rawflow’s live P2P streaming technology is a smart move on Velocix’s part and should help to push P2P along with regards to live delivery. I speak to a lot of content owners and some of the major broadcasters who stream live video all day long have tested just about every P2P based solution on the market looking for ones that specifically support live. The feedback I get from customers is that Rawflow is the only P2P technology they have tested that truly works for live and scales to their needs. While I know other P2P providers will say they support live, most don’t, and most are pretty upfront about only supporting on-demand.

For Velocix, they get to add live P2P capabilities to their network and combine it with their carrier based CDN offering. Rawflow will now shift its focus and concentrate 100% on its SelfCast consumer offering. Velocix will also inherit existing RawFlow delivery customers and will assume responsibility for servicing their digital delivery needs moving forwards. While the revenue Velocix gains from the transition of Rawflow’s customers to their network is small, it will grow over time with Velocix now acting as the back-end delivery network for Rawflow moving forward.

Velocix also announced that it is partnering with Kontiki and will now support Kontiki’s Delivery Management System (DMS) across the Velocix network. This is a smart move by both companies as it gives customers who want to use Kontiki an alternative to owning and operating the application and hardware themselves. Over time, this should enable content owners to be able to test and use the Kontiki service without having to spend a lot of money upfront to license and technology and build-out their own hardware. It also give Kontiki an additional revenue stream as they will now be able to offer its customers Velocix http download and video streaming services. It also helps both companies on the development front as Kontiki and Velocix are some of the oldest P2P based companies in the industry and have a wealth of knowledge on P2P that can now be shared amongst the companies.

Finally, Velocix also announced a new offering called P2P+ for developers of commercial P2P media services and applications. Unlike other traditional CDN providers who’s networks are not setup to work with P2P providers, Velocix’s new offering now allows independent P2P application and software providers to run on its hybrid, P2P based network. Existing P2P based delivery services and application providers, including Kontiki, Rawflow, MediaMelon, Babelgum, and Bollywood.tv, are already taking advantage of Velocix’s new P2P+ product and are running today on their open platform.

Velocix is a very interesting company to watch on multiple fronts. To date, they are the only true hybrid CDN in the market that is architected to support both single source (http) and multi-source (P2P) protocols and as a consequence is uniquely positioned in the market for when P2P gains traction. While other CDNs are working to enable a single P2P based company or offering on their network, Velocix has a network that can work with any P2P based technology. And since Velocix offers more than just P2P based delivery and has a suite of traditional CDN based delivery solutions, including being in Adobe’s Certified Flash Video Streaming Service program, content owners can’t use both technologies under one roof. In January of this year Velocix raised $25 million which also gives them an edge on many other P2P companies who have raised less than half that and won’t survive in the market if they don’t show some revenue by the end of next year.

To me, Velocix is going about this the right way. For some time now I have been saying that P2P is not a replacement for CDN, it’s a complement to other kinds of delivery and in order for P2P to be successful, it needs to be combined with a traditional CDN offering. To date, Velocix is the only CDN who is bundling in a P2P based offering with CDN and making it all work on one network. Recently, I have heard from various large customers who have been testing the Velocix network for both kinds of delivery and have been impressed. Expect to see some large customer announcements, names we all know, very shortly.