Contentinople - Ryan Lawler - ISPs: Video Flood Will Drive Tiered Broadband Pricing

Written by Ryan Lawler

Wednesday, September 24. 2008 at 10:45 AM EDT 1 comment

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SAN JOSE, Calif. -- Streaming Media West -- Due to poor capacity planning on the part of ISPs, some executives say that service providers may have to implement tiered pricing to deal with the massive explosion in streaming video.

In a panel here yesterday, execs from service providers AT&T Inc. (NYSE: T), Level 3 Communications Inc. (Nasdaq: LVLT), Verizon Communications Inc. (NYSE: VZ), and peer-to-peer (P2P) firm PPLive discussed how ISPs will handle the strain that online video will soon be putting on their networks.

Part of the issue is that video might be growing even faster than most project, according to Level 3 vice president of CDN services Lisa Guillaume. As an example, Guillaume cites her company's delivery of video for the Democratic National Convention, which saw average bit rates of 1.2 Mbit/s for those streams -- compared to average bit rates of 300 kbit/s in most video streams a year ago. Higher bit rates and higher quality also drove longer viewing times -- in this case to an average of 80 minutes per stream.

All that leads her to believe that the coming flood of video traffic may be even greater than originally expected. "We believe that studies and forecasts have not taken into consideration the [effect that] increased bit rates and longer viewing times would have on usage," Guillaume said.

John Furrier, vice president of U.S. operations for China-based PPLive, blamed poor planning on the part of ISPs in the U.S. While the amount of traffic grew on their networks, those service providers relied on oversubscription to see them through. "The real issue is capacity planning among the ISPs," he said.

Notably, Verizon senior technologist Doug Pasko tried to separate his company from some of the others in its approach to network management and capacity planning.

Starting off the discussion by pointing out that Verizon "does not have any of the capping or choking or throttling, nor do we have any current plans to do so," Pasko went on to talk up the company's foresight in laying fiber to the home.

"There are choices that can be made in the home broadband market. It's not like video is a surprise -- we all saw it coming. Verizon's decision was FiOS. It's a big deal and it's not easy, but we decided to roll fiber out to the home," Pasko said.

While Verizon may feel confident in its pipes, other service providers have significant investments to make in their metro networks to deliver the quality of video their customers will expect. One solution is to introduce tiered pricing.

"Customer expectations for broadband went out of the gate with flat-rate pricing," Guillaume said. "But the fact of the matter is that for many ISPs and telcos out there, the cost of the metro plant is just too high to upgrade and they will have to adjust customer expectations to a tiered pricing model."

Another solution could be more efficient delivery methods, such as peer-to-peer technology. But Doug Pasko warned that P2P isn't a perfect solution to all problems.

"Peer-to-peer is a tool in the toolbox. It's not going to solve everything. It works really well in high-volume applications, and it works in the enterprise," Pasko said. But, he noted, "You really need to use a hybrid approach with a CDN to ensure quality. You can't just throw it out there and hope for the best."

Tags: AT&T, Business, Content Delivery Network (CDN), Level 3, Technology, Video, Video

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Cost of bandwidth
Pierre
Rank: Pasha
Wednesday September 24, 2008 12:48:04 PM

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Hello all,

I'm a bit puzzled by the economic rationale behind potential broadband pricing rise. My understanding is that if a Web portal wants to provide a video streaming service with the minimum quality to make it successful (YouTube, Dailymotion, anything else), it needs to rely (i.e. to pay) on a CDN service provider. For now, this is the only way to ensure decent quality to the end-user. The CDN service provider maintain direct interconnections with major ISPs worldwide and/or regionwide (peering links) to bypass poor-quality internet backbones. These interconnections, which in some cases used to be for free (at least between ISPs, because they were considered as mutually convenient bi-directionnal shortcut pipes), now tend to be charged, for the trafic is massively uni-directionnal (from the CDN to the ISP), mainly benefiting to the CDN provider - even if it's of course a matter of mutual benefit as the ISP can advocates good quality of experience in its Internet Service. So the CDN provider is asked to pay for the interconnection, and the bill, based I think on the size of the interconnection pipe, should be as such proportionate to the amount of content, and as so the average amount of users using the service. So at the end, the ISP should generate revenues more or less based on the amount of unicast video trafic used by its end customers on its network, should'nt he ? Of course, this doesn't solve the issue of P2P, whose innerent volatility makes it way much more difficult to control.

Would I have miss something ? Anyone to give further insights on this question ?

thank you

Pierre

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