The Google/Netflix Internet Land Grab

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There are indications of an apparent paradigm shift occurring with how your favorite streaming content is delivered to you. There appears to be a “land grab” by large corporations to move their servers next to their ISPs networking infrastructure in order to minimize lag and increase profits.

land grab game

In a typical setup, when you want to watch a YouTube video, your traffic get sent across your ISP servers, over the internet then to the website’s data center (where the movie is) and then sends the data back to your ISP and then to your computer.

There is a growing move by large content delivery networks to move to a more streamlined infrastructure by moving CDNs to the ISPs. This allows companies such as Google and Comcast to save a lot of money in bandwidth traffic charges from their ISPs by reducing the amount of bandwidth required by these services and the ability to speed up the delivery of the content to consumers. Reports indicate that as many as 100 CDNs are looking to move theirs servers to a co-location setup with service providers.

Google has been making the move with its own content delivery network for several years now, and Netflix has just announced that it will be following suit in their Netflix Open Content Delivery Network. Over 70% of all Netflix traffic is being served in through server’s setup directly at several ISPs. Prior to January all of their traffic was being distributed through CDN companies such as Level 3, Akamai and Limelight.

CDN Traffic

The Internet is in its Golden Age of video. There is such a large volume of traffic being generated from online video and movie providers that many networks are striking up deals directly with the ISPs themselves to get as close to the source as possible. Video providers such as Netflix can lower their operating costs by paying less for bandwidth and be able to deliver content at higher speeds (and even HD content). However, it is only the largest content providers that can afford to do so, which inevitably forces out the smaller players in the market, squashing all competition.

Editor of Dan Rayburn doesn’t call it a land rush.“Apple, Microsoft, Facebook, and others are doing this,” stated Rayburn, “There are a handful of companies that are large enough,” he says. “But you have to be a certain sized company doing enough traffic.”

Andy Ellis, chief security officer with Akamai agrees that companies are moving to cache their content locally with ISPs, but stated that there are many services such as security and analytics that Akamai can sell them. “I don’t think we’re yet seeing a land rush into the ISPs,” he says. “I think you have to be really, really big to be interesting enough to the ISPs.”

On the surface, this could sound disastrous for third party CDNs, but we have seen time and again how competition can keep the marketplace robust and lower prices for the consumer.

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