Content Delivery Networks:
Emerging Opportunity for Service Providers?

Although at first glance these Net newcomers appear to pose a threat to ISPs, digging deeper we find a strong symbiosis — and potential revenue opportunities.

Lisa Phifer
VP Core Competence, Inc.
[November 30, 1999]

To become a robust, reliable service provider, you have to invest heavily in your own network infrastructure: load balancing for nonstop delivery, caching for speedy Web response, distributed, replicated servers to limit the impact of Internet congestion. At the same time, you'll need to manage upstream bandwidth to strike a delicate balance between customer satisfaction and cost. Or, if that seems like too much work . . . simply partner with an up-and-coming Content Delivery Network (CDN) provider such as Sandpiper, Akamai, or Edgix and leverage someone else's network investment.

What is a Content Delivery Network?
Sandpiper defines a CDN as "a dedicated network of servers, deployed throughout the Internet, that Web publishers can use to distribute their content on a subscription basis." A CDN is essentially an overlay network of customer content, distributed geographically to enable rapid, reliable retrieval from any end-user location. CDNs use infrastructure technologies like caching to push replicated content close to the network edge. Global load balancing ensures that users are transparently routed to the "best" content source. Stored content is kept current and protected against unauthorized modification. Customer-accessible traffic logs enable data mining for marketing and capacity planning.

Most importantly, customers—typically, large enterprise Website owners—determine the content served by the CDN by selectively reassigning URLs to embedded objects. Dynamic or localized content can be served up by the customer's own site, avoiding the CDN, while static and easily distributed content can be retrieved from the nearest CDN server. According to Akamai, banner ads, applets, and graphics represent 70 percent of a typical Web page—content types easily offloaded to Akamai's FreeFlow CDN. Sandpiper's Footprint can handle other content types and can even use customer-delegated domain names like http://ww1.yourcompany.com/image.gif to offload content while maintaining customer branding.

CDN customers pay a premium price for premium services. For example, Footprint customers specify a Committed Aggregate Information Rate (CAIR), measured in Mbits per second, that can be changed daily. Monthly invoices apply rates based on CAIR to charge for delivery of the customer's content to end users.

Turning competition into opportunity
At first glance, a CDN might sound like steep competition for top-tier Web hosting service providers. Scott Yara, Sandpiper's VP of Marketing, wants you to think again: "Sandpiper allows Web Site Colocation and Hosting partners to resell Footprint directly to customers. These partners are an important distribution channel for Sandpiper." Footprint partners must satisfy minimum requirements, including 24x7 NOC support and Footprint-savvy sales and marketing staff. In return, Sandpiper offers Footprint subscription revenue sharing and a reduction in overall network costs through access to the Footprint CDN. "Elite" partners realize all subscriber revenues and can privately brand the Footprint service, but must commit to sales targets and contribute to joint marketing programs.

A different opportunity exists for Internet Access Providers. Akamai refers to this as its Accelerated Network Program; Sandpiper calls it the Footprint Alliance. IAPs broaden the reach of the CDN by providing POPs in return for network infrastructure gear and access to the CDN. To understand how this opportunity works, we first need to look inside the CDN.

Under the covers
Each CDN operates a bit differently, employing carefully crafted and sometimes patented network architectures to achieve its service goals. Akamai deploys its own rack-mounted, custom OS, Intel-based servers in IAP-owned POPs, at no cost to qualifying IAPs. To qualify, domestic providers need DS3 or better upstream connectivity, secure POPs, and 10,000+ subscribers.

Edgix plans to support its HotMedia service with a rack-mountable satellite receiver and a Dell caching appliance running Novel ICS, plus a rooftop satellite dish for upstream connectivity. HotMedia is currently in beta trials; pricing and partner details are not yet available.

Sandpiper provides a COTS combo of Alteon L4 switches, Sun RAID content storage, and Inktomi caches free of charge to "Premier" Alliance members (IAPs that provide direct or indirect access to 100,000 end users and 2 x DS3 or better connectivity.) Alternatively, Sandpiper will "Footprint-enable" an IAP's existing cache(s), allowing participation by smaller IAPs and those with existing cache infrastructure.

Although approaches differ, the basic benefits are similar in each case: reduced bandwidth consumption and latency for sites accessed through the CDN. Partnering with a CDN provider may also be simpler than designing, installing, and managing a private cache network to speed content delivery.

Getting a piece of the action
If industry interest is any indicator, CDNs hold promise. Cisco recently invested in start-up Akamai; Sandpiper merged with high-speed over-net provider Digital Island. According to Sandpiper's Yara, "the Digital Island merger only enhances service provider partner opportunities—Footprint partners will now have even greater coverage and bandwidth at their disposal."

Players in the emerging CDN market will be working to differentiate themselves. While Sandpiper and Akamai rely on partner-provided landline connectivity, Edgix will build a separate satellite network to deliver content. Akamai uses no-cost hardware to lure service provider partners. And Sandpiper differentiates itself by supporting all content types. According to Yara, "We actually assemble pages on the fly; we aren't limited to static content like Akamai. We also have an open architecture that accommodates streaming media."

CDNs are relatively new and ISP partnership programs will likely evolve over time. But one point seems clear: for a CDN to excel, it must have a broad reach. Partners are key to obtaining access to both POPs and subscribers. Service providers may be wise to leverage this point to their own advantage.

—End