Netflix Creates Its Own Content Delivery Network

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Clearly, streaming video is one of the biggest drivers in the explosive growth of the Internet and broadband networks. Indeed, it probably is the biggest. Getting all those images across the Internet is one of the reasons that IPv6 - which is celebrating its turn-on day today - is a big deal.


Content delivery networks (CDNs) are a long-established approach to cut down on that traffic and deliver video more efficiently. The idea is pretty simple: Having such a network in place can cut traffic by strategically caching content. An important byproduct is that a CDN enables the company to avoid the pitfalls of using the public Internet to traffic its data. Service providers in some cases create their own CDNs. They also use commercial providers - Akamai is the largest, which Limelight and Level3 significant players - or a combination.


This week, Netflix announced that it has created Open Connect, its own CDN. The company already is using it to deliver about 5 percent of its content. Netflix points out itself that the other major OTT video provider on the Internet, YouTube, has long had its own CDN.


There is a lot of money in CDNs, and how well they operate is hugely important to service providers. GigaOm reported that Netflix won't charge for peering - the handing off of streaming traffic to customers' ISPs - and will share its technical plans. The site is unsure whether this is realistic:

It remains to be seen how receptive the Comcasts, Verizons and AT&Ts of the world will be to the idea. Telcos like AT&T have built their own CDNs, and they charge content providers like Netflix to cache their content. Other ISPs actually earn a paycheck from commercial CDN providers to host content servers on their networks. With the Open Connect, those revenue streams would go away. But if ISPs were to take Open Connect into their networks they could save considerably on network transport costs by moving the source of Netflix's enormous traffic flow closer to their customers.

The CDN market is complicated. For instance, Amazon Web Services is a competitor, though its main business isn't CDNs. This Investors.com piece looks at some recent moves by Amazon's CloudFront and its potential threat to Akamai. The bottom line is that any player with enough fiber resources in enough places - and a way to link them together - can mount a CDN service and must be considered a player.


EdgeCast Networks, another CDN player, announced IPv6 compliance today. It seems that such a step is table stakes to be a player in the business. This ZDNet post outlines what Akamai has done in IPv6.


In the bigger picture, it will be interesting to see how CDNs continue to evolve in the future. The Netflix move is significant. A major player that doesn't seek every opportunity to own as much of its infrastructure as it can is courting trouble. In the case of Netflix, it is particularly important as the company seeks to rebound from a rough period.

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