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What is all about Managed CDN service agreement between KT and Akamai ?
April 01, 2013 | By Dr. Harrison J. Son (tech@netmanias.com)
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Last week (March 27, 2013), KT, No. 1 telecommunications company in Korea with annual revenue of $22.3 billion in 2012, has entered into an agreement with Akamai, the world's No. 1 CDN service provider with annual revenue of $1.37 billion in 2012, for using Akamai's Managed CDN services. Since 2012, world's leading CDN service providers including Akamai, Limelight, Edgecast, etc. have offered Managed/Licensed CDN services to many telecom operators across the world.  So, it would be worthwhile to know what these services are and what the background of launching the services was.     

 

1. Telecom operators, building On-Net CDNs to win OTT customers from global CDN service providers

 

Over the past few years, video services by OTTs (Over-the-Top, Internet video services providers) have been a huge success in the market. In response to such success, telecom operators from all around the world (e.g. Verizon, Time Warner Cable and CoX in USA, and BT, Virgin Media, Telecom Italia and Telefonica in Europe) have been building their own CDNs (Operator On-Net CDNs) on their IP networks in order to develop new profit sources through offering CDN services to CPs/OTTs, and lower the IP network costs arising from increasing CP/OTT traffic. 

 

 

 

One of the greatest advantages of an operator On-Net CDN is the fact that it can provide video quality almost as good as TV. This was made possible because operators could place the edge servers at edge of their IP networks, allowing the servers to be located much closer to users than global CDN service providers'.  

 

On the other hand, one disadvantage was that, since the IP network of each operator works only within the country that the particular operator belongs to, it is difficult for the operators to compete with global CDN service providers like Akamai (Akamai alone has 127,000 edge servers installed in the IDCs owned by many telecom operators across the world).    

 

For example, if OTT A uses CDN services offered by KT, only those who subscribe to KT in Korea can enjoy the benefits of such CDN services. So, If OTT A wishes to provide video services in Japan, it should use CDN services provided by a Japanese operator, e.g. NTT.

 

Thus, for OTTs, it is such a hassle because they have to execute a CDN services agreement with each telecom operator they are using, and collect statistics reports individually from every one of the operators. 

 

Because of such hassle, it makes much more sense for OTTs to use global CDN service providers to reach customers all around the world. 

 

Thus, in an effort to solve this issue, telecom operators are trying to standardize the CDNi (CDN Interconnection) in IETF. Using this technology, CDNs from different operators can be interconnected to be seen as one powerful CDN to their customers (CPs/OTTs). Many telecom operators and Telco vendors have been cooperating in interoperability tests to commercialize the technology. 

 

 

Then, what are telecom operators trying so hard for? What they want eventually is to compete with the global CDN service providers, and win customers (CPs/OTTs) and profits from them.    

 

We have covered the strategies used by the telecom operators. Now, let's see what strategies the global CDN service providers are using. 

 

2. Counter-strategies by global CDN service providers: Why bother when you can use our S/W  

 

As counter-strategies, the global CDN service providers, such as Akamai, Limelight, Edgecast, have introduced a concept of Licensed/Managed CDN services, aiming at telecom operators.  

 

  

 

The Licensed CDN services will allow a telecom operator to purchase a CDN S/W from a global CDN service provider, and build and operate its own CDN on its IP network. 

  

And, the Managed CDN services will allow a global CDN service provider to build a CDN in a telecom operator's IP network by using its solution, manage and operate it on behalf of the operator.    

 

So, the message is delivered loud and clear. "Why bother when you can use our S/W?"  

Egdecast first introduced this kind of service in 2011, winning customers including AT&T, DT, Telecom NewZealand, TELIN, PACNET, etc. Then in early 2012, Akamai joined, providing the same services and executing Licensed/Managed CDN services agreements with Orange, AT&T, Swisscom and KT. 

 

The global CDN service providers list the four benefits that a telecom operator can have by using these services as follows:

 

First of all, it takes a lot of works, time, money, efforts and concerns for a telecom operator to plan, test, build and operate its own CDN. And all of these problems can be taken care of at once by simply using the Licensed/Managed CDN services from one of the global CDN service providers.    

 

Second of all, for example, if KT, a telecom operator, installs CDN edge servers of Akamai, a global CDN service operator, in its IP network edges, it can significantly lower the network costs by reducing traffic from Akamai's CDN (Akamai delivers 15~30% of global Internet traffic). For operators who have already had Akamai's edge servers installed in their IDCs, it would be a good chance to reduce backbone costs. And for those who haven't, a good chance to reduce both transit and backbone costs.  

 

 

Third, a telecom operator can provide CDN services to its customers (CPs/OTTs) in its home country through the CDN network built by using CDN S/W purchased from a global CDN service provider, and make profits (CDN fees). Here, what differentiates the operator from its local CDN competitors is the fact that it has a CDN that is federated with Akamai global CDN (Actually, both CDNs are run by the same Akamai S/W), which looks very attractive to a CP looking for a CDN service provider.   

 

Fourth, a telecom operator can also provide its own video services (IPTV/VoD, N-Screen) using this CDN.

 

 

Now, for the telecom operators, one big question is whether to 

  • buy On-Net CDN solution from telecom vendors (Cisco, Alcatel or a local vendor) and build its own CDN; or
  • simply buy CDN S/W from one of the global CDN service providers. 

Probably, KT has had the same question for a long time. The agreement between KT and Akamai on the Managed CDN services last week may be a sign that KT chose to go with option b), purchasing Akamai's S/W.

 

It would be interesting to see what CDN services will be provided by KT soon.  

 

 

Internet Resources related to Akamai Licensed/Managed CDN 

2013.03.26, KT and Akamai Expand Strategic Partnership

2013.03.14, Swisscom and Akamai Enter Into a Strategic Partnership

2013.02.13, New AT&T Content Delivery Network Offer Accelerates Bits and Bytes for Business

2012.12.06, Akamai and AT&T Forge Global Strategic Alliance to Provide Content Delivery Network Solutions 

2012.11.20, Orange and Akamai form Content Delivery Strategic Alliance

2012.11.13, Akamai to Acquire Verivue

2012.02.28, Akamai Announces Aura Network Solutions for Operator Content Delivery Networks

 

Alex LaFleur 2016-01-20 16:37:28

I understand your CDN is great, but what impact will your technology have on my business and I have heard that Akamai is an expensive platform. Is it true? 

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