March 10, 2011
By Dom Robinson Contributing Editor
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For the rest of the Spring 2011 (Sourcebook) issue of Streaming Media magazine please click here

Telcos and the State of Content Delivery

Indeed the TDN is a relatively new service model for network owners. In the past 20 years, we have seen public switched telephone network (PSTN) services evolve to include fax, integrated services digital networks (ISDN), dial-up internet, broadband internet, and triple-play TV/IPTV. Now, we are seeing high-speed broadband being rolled out, driven by the demand not for a few kilobits per second of lexical data but for megabits per seconds of streaming video—delivered independently to each user.

Not only does this data need to be delivered between the telcos’ exchanges and the end users’ computers in their companies and their offices, but it also needs to be delivered throughout the exchanges and to each of the regional autonomous system networks that comprise the telcos. Each of these AS networks has its own connectivity to central Tier 1 global interconnectivity. These connections (often called peerings) are finite and often are not so much sold on price as on a swap of data volume. If you don’t have traffic to send to the Tier 1, you can’t generally walk up and just buy a connection of X number of gigabits per second from the Tier 1. The idea is that because you have so much data flowing onto its network, it agrees to give you an equally large connection to receive data from its network. This is a “peering.” For a true Tier 1, no money changes hands with its “peers” (“settlement-free peering”).

This design helps the Tier 1 with the logistics of prioritising the management of these peerings, and it ensures that the network grows symmetrically at the core. In an ideal world, consumers would all simply connect directly to the Tier 1 with a single hop to any other point. But that would be hideously messy to provision for the Tier 1 and topologically impossible to achieve both physically and in terms of network planning—hence, we have a hierarchy of Tier 1> Regional Telco>ISP. If you don’t offer enough inbound traffic to the peer, the Tier 1 will generally tell you to buy a transit connection from a telco (if you are a sizable player) or from an ISP, and these are much more expensive. Regional telcos will generally either have settlement-free or paid-for (“private”) peerings with each other and with Tier 1’s. Outside the U.S., many public peering exchange points exist too.

The telcos and bigger telco-based ISPs then sell the ISPs “transit” ports. These transit ports are big business. Where the transit connects you to is critically important, and the price you pay will be governed by the Tier 1 transit interconnections that the telco offers, as well as where the telco can “take you to” in as few “hops” as possible.

The telcos have traditionally just bought more and more private and some public peerings with other telcos and with Tier 1 networks. This peering setup of a telco gives a “quality” to its transit offering. This is how value and price have been held to ensure that regional telcos make a margin on the peering costs. Better peerings typically equals more expensive transit.

As CDNs have entered the market, they too have made traffic deals significant enough to drive a peering relationship with other telcos and Tier 1 networks. However, their traffic deals could be driven by just a few high-traffic/high-value relationships rather than the traffic generated by the hundreds of ISPs and the tens of thousands of end users they service. These hundreds of ISPs require the telcos to provide physical connections to facilitate their services. They also often require the telcos to provide the thousands of connections to the end users. That’s a huge infrastructure requirement to drive the traffic volumes.

The CDNs’ customers also drive huge traffic volumes onto the Tier 1 and peering points—but only one CDN customer (typically a content publisher) could generate as much if not more traffic inbound to the Tier 1 as many, many ISPs.

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