CDN provider Velocix has announced the launch of a new product, called Velocix Metro. (I was first briefed on Metro almost eight months ago, so the official launch has been in the works for quite a while.)
Velocix Metro is essentially a turnkey managed CDN service, deployed at locations of an Internet service provider’s choice, and potentially embedded deep into that ISP’s network. The ISP gets a revenue share based on the traffic delivered via their networks from Velocix, plus the ability to do their own delivery from the deployed CDN nodes in their network. Velocix’s flagship customer for this service is Verizon.
You might recall that Velocix is a partner CDN to MediaMelon, which I discussed in the context of CDN overlays a few weeks ago. I believe that these kinds of federated networks are going to become increasingly common, because carriers are the natural choice to provide commoditized CDN services (due to their low network costs), and broadband service providers need some way to monetize the gargantuan and growing volumes of rich content being delivered to their end-user eyeballs.
The economics of the peering ecosystem make it very hard for broadband providers to raise the price of bandwidth bought by content providers, and intermodal competition (i.e., DSL/FiOS vs. cable) creates pricing competition that makes it hard to charge end-users more. So broadband providers need to find another out, and offering up their own CDNs, and thus faster access to their eyeballs, is certainly a reasonable approach. (That means that over the long term, providers that deploy their own CDNs are probably going to be less friendly about placing gear from other CDNs deep within their networks, especially if it’s for free.)
We are entering the period of the rise of the local CDN — CDNs with deep but strictly regional penetration. For instance, if you’re a broadcaster in Italy, with Italian-language programming, you probably aren’t trying to deliver to the world and you don’t want to pay the prices necessary to do so; you want deep coverage within Italy and other Italian-speaking countries, and that’s it. An overlay or federated approach makes it possible to tie together CDNs owned by incumbent regional carriers, giving you delivery in just the places you care about. And that, in turn, creates a compelling business case for every large network provider to have a CDN of their own. Velocix, along with other vendors who can provide turnkey solutions to providers who want to build their own CDN networks, ought to benefit from that shift.
5 responses so far ↓
1 Jamie // Dec 12, 2008 at 3:30 am
Actually this is not new. VDO-X is the CDN in a Box concept for ISP’s. See http://www.vdo-x.net.
2 Lydia Leong // Dec 12, 2008 at 11:01 am
I’d consider Velocix to have beat JetStream/StreamZilla’s VDO-X to market, but broadly, CDN-enabling-for-ISPs has been around forever, and the concept of the business model around federation and revenue-sharing dates all the way back to the dot-com boom. It’s just taken this second proliferation of CDN companies to bring it back to the forefront, in an environment where there’s been a lot of ISP consolidation.
3 Larry James // Dec 19, 2008 at 4:25 am
I dont think that Veloxic beat VDOX to the market, I heard that VDOX is powering half a dozen of CDNs in Europe already.
Licensing CDN tech to ISPs is a good strategy. That is a good market, think of all the enterprise extranets.
Looks like VDOX has the edge. It can be setup within days and the customer can manage the CDN.
4 John Dilon // Feb 19, 2009 at 9:12 am
I presume Larry works for VDO-X or is their biggest fan???!!!
Velocix is already engaged with the BBC and a number of regional ISPs in the UK and Verizon recently announced that they were adopting Velocix Metro to build their own CDN capability.
A key advantage of the Velocix solution is that it can provide both enabling technology for an ISP to CDN enable their network and also provide interconnectivity beyond their access network via the globally deployed Velocix CDN.
This capability provides several advantages:
It means that the ISP doesn’t have to invest unnecessarily to to cope with traffic peaks that may occur infrequently or unexpectedly. It can instead set up fallback arrangements so that in such situations, delivery falls back from their CDN to the Velocix CDN.
It also means that they can deliver their content to subscribers on other ISP networks, either in the same region or in other geographies.
In addition, they can benefit from revenue sharing arrangements with Velocix for our traffic delivered to their customers.
Without this interconnectivity, ISP CDNs create disconnected islands and don’t allow them to benefit fully from the infrastructure investment they are making or plan to make.
John Dillon, CMO at Velocix.
5 Stef // Jul 20, 2009 at 11:24 am
Hi John,
That is how VDO-X works as well. We have built-in a feature called CDN resources sharing. Some models:
- CDNs can offer a private CDN within their CDN. That is our CDN in a Box concept.
- CDNs can overflow traffic towards each other and to our StreamZilla CDN, and vice versa.
Best
Stef
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