Abstract
Presentation
The Internet was built over the years by “assembling” networks run
by various operators. Interconnection nodes, also called GIX (Global Internet
eXchanges), perform traffic exchanges between these various networks. These
exchanges are most often done through peering agreements, which are
symmetrical and free.
Usage has changed greatly and, just like other communication technologies, no
one ever imagined the Internet' s success, with P2P exchanges, blogs, video
content sites like YouTube, etc.
The emergence of new uses, the increase in content, the success of some
applications progressively puts into question the role played by a handful of
players and agreements governing traffic exchanges, which have become
asymmetrical. In particular, operators feel that other types of players are
now taking advantage of a network in which they never invested. In addition,
the changes required to provide increasingly better performance are costly,
and the potential for changes in usage portend even greater investment in
infrastructure. In the eyes of operators, the question of sharing the costs
has become essential.
The objective of this study is to identify the actual risk of Internet network
saturation. What is the outlook for Internet traffic changes and what are the
consequences on infrastructure? What players will be the most involved? This
report presents the strategic options that could be implemented by operators.
Key Questions
- What bandwidth for what types of consumer applications?
- Who will benefit from Internet traffic changes in the data transmission
market?
- Is CDN the best solution for increasing video flow?
- How can congestion risk be avoided at the interconnection nodes?
- Are new negotiations on peering agreements inevitable?
- Will technical changes compensate for network saturation risks?
- Who should pay for the cost of additional Internet traffic?
- Will network infrastructure investment allow for monetizing content?
Who should read this report?
- Telecom Operators
- Identify the impact of network infrastructure congestion on the operator
model
- Analyse the consequences of a diversification policy towards content
distribution
- Understand the remaining room to manoeuvre in terms of investment
- Content providers
- Analyse the implications of rate setting by network operators on traffic
- Understand the impact of operator diversification on CDN
- Technical solution providers (hosting, collocation, etc.)
- Understand changes in the needs of network operators
- Anticipate new commercial outlets
- Investors and analysts
- Understand players' positioning in the value chain and their level of
future investment
- Anticipate the next moves in the telecom network ecosystem
Table of Contents
1. Introduction
2. Players involved
- 2.1. value chain
- 2.2. Categories of players and market trends
- 2.2.1. Data transport players
- Access
- Metropolitan Area Networks (MAN)
- National/regional transport
- International transport
- Submarine cable operators
- 2.2.2. Interconnection players
- Collocation providers
- Global Internet eXchanges (GIX)
- Service platform hosts
- 2.2.3. Content broadcasting optimisation
- 2.2.4. Primary players by service category
3. Headed for network saturation?
- 3.1. Change in usage
- 3.1.1. P2P (Peer-to-Peer)
- 3.1.2. On-line gaming
- 3.1.3. On-line video
- 3.1.4. Other applications
- 3.2. Effect on networks?
- 3.2.1. Impact of usages on Internet traffic
- 3.2.2. Physical saturation more likely at the network nodes
- 3.2.3. Technical progress to compensate for saturation risks
- 3.2.4. Impact on players in the value chain
4. Impact on current models
- 4.1. Migration of transport network value and broadcasting to distributed
content
- 4.2. Telecom operators positioning options
- 4.2.1. Refocus on being an operator
- 4.2.2. Vertical integration targeting publishing content and services
- 4.2.3. Diversification and expansion into the CDN business.....
- 4.2.4. ..... and capturing control of distribution and revenue sharing
- 4.3. Conclusion
Summary of Tables and Figures
- Table 1: Metropolitan Area Network Integration
- Table 2: Change in Completel' s indicators
- Table 3: Change in AMS-IX indicators
- Table 4: AMS-IX top 10 by aggregated port speed
- Table 5: Change in Akamai' s indicators
- Table 6: Examples of service providers by service category
- Table 7: Examples of interconnection players
- Table 8: Market for massively multiplayer video games (millions USD)
- Table 9: Impact of the growth in Internet traffic by category of player
- Figure 1: Internet data transport value chain
- Figure 2: Interoute' s pan-European network
- Figure 3: FLAG Telecom' s worldwide network
- Figure 4: Exchange at level 2
- Figure 5: Exchange at layer 3
- Figure 6: Status of OVH' s Paris network - 9/10/07/4:00 pm
- Figure 7: Estimate of the need for speed for consumer applications
- Figure 8: Comparison of the type of content downloaded during one quarter
in France, the United Kingdom and the United States
- Figure 9: Internet traffic by type of protocol, 1993 - 2004 (in %)
- Figure 10: Distribution of Internet traffic by type of protocol at the end
of 2006
- Figure 11: Expansion in the number of IPTV subscribers to telecom
operators by region (mid-2005 to mid-2007)
- Figure 12: Change in bandwidth needs per household for video
- Figure 13: Change in the number of unique video viewers on YouTube
- Figure 14: Growth and outlook for changes in Internet traffic
- Figure 15: Change in backbone capacity
- Figure 16: Change in cumulative traffic in the primary European GIX (in
Gbps)
- Figure 17: Change in the number of neutral and commercial GIX in Europe
