nScreenMedia OTT multiscreen media analysis

Caching, not the courts, can help Verizon reduce broadband costs

Verizon’s lawsuit challenging the FCC’s authority to enforce its net neutrality rules entered oral arguments on Monday. The Wall Street Journal, in reporting the piece, highlighted one of the core issues for broadband providers: the belief that companies like Netflix should pay operators for the bandwidth they use on broadband networks. Netflix rebuffed the idea, and claimed to already have invested in infrastructure to make broadband more efficient. What Netflix is referring to is caching technology, and it can go a long way toward remedying the operator’s complaints.

Last year, Netflix announced the creation of a private CDN called OpenConnect. The primary objective of OpenConnect is to save Netflix money: the company must pay CDN’s like S3 to stream videos to subscribers and can save money if it can shift this delivery to OpenConnect. A key component of OpenConnect is equipment the company puts in an operator broadband network. This equipment, which Netflix will provide to an operator for free, keeps a copy of the most popular videos on Netflix. This cache of content in the operator broadband network has important benefits for Netflix, and, as it turns out, for operators too.

One of the overheads of running a broadband network is the cost to tie into the broader Internet. An operator must pay to transport data back and forth between its broadband network and the Internet.[1] Every time you request a Netflix movie the video is transferred to you over the operators Internet tie. And a lot of people are requesting those videos. This is why operators want Netflix to pay for access!

OpenConnect cache helps fix this problem. When you request the latest episode of Hemlock Grove it is streamed from the cache, which is in the operator’s network. In other words, it doesn’t go across the operators Internet tie. Given that Netflix is responsible for 33% of traffic at peak times this could save operators a lot of money.

So why aren’t operators jumping all over OpenConnect? Simply put, it doesn’t scale. It’s great that OpenConnect can dramatically reduce the 33% of Netflix traffic, but what about the rest?

Luckily, solutions are in the market from companies like Qwilt and Cisco that can optimize Internet tie traffic for every video provider, not just Netflix. These so-called transparent caches watch all traffic for the most popular content and cache it locally, in the operator’s network. From the latest million-viewer YouTube cat video to breaking news about the Yosemite Rim fire, transparent caches will identify the most popular videos and store them locally, saving the operator money in the process.

While Verizon fights the FCC in court it could be that technology, in the guise of transparent caching, will fix one of the biggest reasons it is there.

nScreenMedia will soon deliver a free white paper on the topic of caching. Watch for its availability later this month.

Why it matters
Trying to charge OTT video providers for the bandwidth they use on broadband networks is difficult to do and runs the risk of angering broadband subscribers.

While Netflix’ OpenConnect can help operators minimize costs associated with its service, it does nothing for the 67% of traffic that is not Netflix.

Transparent caches can help operators reduce the most bandwidth-consuming traffic regardless of the service providing it.

[1] It is a little more complicated than this for large operators, but in essence it boils down to the same thing.

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