Netflix Launches Its Own Content Delivery Network

1sockchuck writes "Netflix has launched its own content delivery network to manage data delivery for its streaming video service. ISPs can choose to host caching appliances in their data centers, or peer with Netflix at Internet Exchanges. 'Netflix will provide either form of access at no cost to the ISP,' it said. As part of Open Connect, Netflix is sharing its hardware appliance design and the open source software components of the server. Does this mean Armageddon for the CDNs currently serving Akamai? Not really, according to analysts, citing the leverage Netflix had in dealing with providers."

Comments

What about Comcast?

[Anonymous Coward]

So Comcast is going to roll over for this? Comcast is an integrated Cable TV/ISP, which wants to favor their own delivery mechanism and content relationships. Only Common Carrier status for Internet delivery will break that stranglehold - lots of luck for achieving that in the USA!

- Leonard

Re:What about Comcast?

[TubeSteak]

If Netflix can get its hardware inside Comcast's network, does that mean Comcast won't count it against their data caps?

Re:What about Comcast?

[dgatwood]

I think we can safely say what would have happened. Almost nothing. In the U.S., somewhere around a quarter to one fifth of the people are spread out across approximately 97% of the land mass, and the other 70-75% are concentrated in the remaining 3% of our land mass. Even with the best wireless technology we have at our disposal, covering much of the U.S. is infeasible because of geography (mountains, etc.). And the cellular phone industry has doubtless poured more money into wireless research than the total spending on ISPs nationwide.

Let's take my hometown in Tennessee as an example. Many of my friends did not have cable service because even with subsidies, it was not profitable. It costs about $30,000 to run a mile of coax or fiber, and in many places, that would serve only one or two households. Even if they stood to make $30 profit per month (unlikely), it would take over 40 years to break even, without factoring in such pesky things as interest.

So what about wireless? Realistically, most wireless Internet services cap out at somewhere on the order of ten miles or so. Assuming you placed a cellular tower ($150,000 or so) in a location where it could serve the areas between towns, there are many areas where a tower with a ten mile radius would serve only a low four-digit number of households). Many of these areas do not even have basic cellular phone service today from any carrier.

Given that probably 90% of those four-digits worth of people live in a town (and thus would likely already be served by a wired Internet provider because it would be profitable to do so, subsidies or not), you're talking about almost half a grand per household served. And that's just for the initial tower construction costs. On top of that, you have to add the cost of a trunk line out to the middle of nowhere (at $30,000 per mile times 10+ miles to the nearest town), plus hundreds of dollars in customer premises equipment costs for each household (that many of those households could not realistically afford). Granted, $2,000 per customer is a far cry from $15,000, but it is still something that no sane person would invest in.

Even if you could miraculously crank up the radius up to 30 miles, it would barely be profitable, and short of insanely tall towers, that's about where the curvature of the earth itself will bite you in the you-know-what.

And the bigger problem is that all this proposed infrastructure is unlikely to pay for itself before the technology becomes obsolete.

In short, there is just no feasible way to solve the last-mile problem except for either A. the government forcing private enterprise to build out the wired infrastructure in exchange for the right to serve other, more profitable areas or B. the government building the infrastructure itself. Your viable choices are basically the system we have now or socialism. Take your pick.