Pyramid Points - CDNs Offer New OTT Revenue Hope
  Pyramid Points
M2M cloud platforms accelerate MNO's time to market for valued added services
October 15, 2014
Apple Watch Overcomes Design Challenges, Sets New Standard for Functionality
September 16, 2014
The Swiss army knife framework for CapEx optimization
February 15, 2014
Implications of the Google-Lenovo Deal
February 12, 2014
Cisco and NEC optimize telco cloud delivery for small and midsize businesses
January 16, 2014
4G unveiled in China, but China Mobile still has work to do
December 11, 2013
Orange Dominicana by the numbers
October 25, 2013
Colombian Reversal Clause Unlikely to Slow 4G Buildout
September 19, 2013
Microsoft - Nokia & iPhone 5c: What Do They Mean for Smartphone Trends in Emerging Markets?
September 17, 2013
Is the Arab World Ready for OTT Video?
September 13, 2013
Turk Telekom bid for Digiturk is a strategic gamble
August 2, 2013
Before and After the App Store: The Changing Fortunes of Mobile Operators
July 24, 2013
In 4G Auction in Colombia, New Entrants Responded to Government Efforts to Foster Competition
July 15, 2013
Telefonica sale in Central America does not point to regional repositioning
June 5, 2013
Emerging markets to drive cellular M2M
May 22, 2013
Orange plans MVNOs to address new markets
May 9, 2013
What Apple needs to do to make China its No. 1 market
April 24, 2013
Chinese Regulator Opens Up to MVNOs
March 15, 2013
CDNs Offer New OTT Revenue Hope
February 20, 2013
Airtel Rethinks Its African Approach
February 12, 2013

          Print        Email         Bookmark and Share

CDNs Offer New OTT Revenue Hope

February 20, 2013

Ahead of Mobile World Congress, Ericsson presented to industry analysts the key new products that it will showcase in Barcelona. Among these is the Media Delivery Network, an enhanced content delivery network (CDN) offering for managed (IPTV) as well as unmanaged (over-the-top) content running over fixed and mobile networks.

The announcement is significant in many ways. It highlights the continuous expansion of the CDN market beyond established providers such as Limelight and Akamai, the latter of which partnered with Ericsson in 2011. It also underlines how the business function of CDNs is rapidly evolving from pure network management to network monetization, a key focus for vendors at the Barcelona show.

As explained by Ericsson, one of the key assets of the Media Delivery Network is the ability to maximize operator content sales by enabling them to deliver both on-demand and linear content. The fact that such content is increasingly over-the-top simply means that the operator approach to OTT video is also evolving. OTT is no longer seen only as a menace — a way of delivering content directly to end-users and filling up operators’ network pipes while bypassing their billing systems. It now is being seen as a potential opportunity for fixed and mobile operators to distribute content over the open Internet and generate revenue from it. CDNs are helping operators to maximize this potential.

Exhibit: Intelligent content delivery: Network management and network monetization opportunities for operators

Intelligent content delivery

Sources: Pyramid Research

The cost-reduction benefits of using CDN technology for network management are clear. With CDNs, operators regain visibility over the delivery of OTT video and reduce the cost of video delivery by intelligently caching content closer to the end-user. This gives them some measure of control over the burgeoning costs of supporting online video. According to Pyramid Research sister company Heavy Reading, by caching content inside their networks, operators can reduce bandwidth requirements by 30-40%. CDN vendor NetDNA says CDNs can help operators generate up to 75% savings on their bandwidth costs.

The revenue-generation benefits of CDNs are not always as obvious, but they are potentially compelling. When operators use CDNs to manage their own content delivery (on-net CDNs), they have full visibility and control over video traffic and are able to place caches much closer to the end-user, thus improving quality of service (QoS) and quality of experience (QoE). This enables them to potentially offer premium content services with differentiated QoS, which can be attractive to content owners and advertisers, opening up additional revenue-generation opportunities.

But operators can also become providers of CDNs by selling them as a service (off-net CDNs) directly to third-party OTT service providers (online distributors, broadcasters, etc.) or to other operators (wholesale CDNs). The main advantage to an operator of having its own CDN over using a traditional CDN is the built-in cost advantage. While third-party providers must lease bandwidth from operators and build operators’ margins into their own cost structures, the operators are in a position to leverage their existing network assets more efficiently.

There are certainly several challenges for operators entering the CDN market. From a regulatory point of view, it can be argued that CDNs inherently violate the principles of net neutrality when operators consider offering paid prioritization to deliver certain content. Furthermore, when it comes to scale, to offer CDN services outside their geographic coverage area operators will need to partner and interconnect with one another and with established CDN providers like Akamai, which already has a global reach.

All in all, by leveraging network intelligence and intelligent content delivery via CDNs, operators are in a better position to generate new revenue streams from the plethora of services that can be delivered over the open Internet. It’s an opportunity that may well be worth exploring.

— Daniele Tricarico, Analyst

Related resources:

OTT Growth Sparks Innovative Multiscreen Video Business Models
Telecom Insider published November 2012
This report examines the growth of OTT video services and the impact on the traditional pay-TV market. We discuss the opportunities for pay-TV providers and telcos to monetize the growth of multiscreen video and how telcos can adapt their network and service strategies to the multiscreen world. Five multiscreen business models are presented, and we detail the advantages and disadvantages of each. This report presents case studies from BT, Sky, AT&T, Turk Telekom and TotalPlay and examines how these different operators seek to develop successful business models for multiscreen video. We conclude with some recommendations.

Pyramid Research Media Forecast
Forecast published bi-annually
With telcos and mobile operators increasingly offering TV and video services, Pyramid Research’s Media Forecasts are designed to provide competitive intelligence on the pay-TV and mobile TV dynamics for over 52 countries as well as regionally and globally. The Media Forecasts track demand patterns for free and pay-TV services over terrestrial, satellite and mobile platforms worldwide, providing market share information at both the technology and operator levels as well as five-year adoption and revenue projections.


 Latest Research
Thematic Reports
  FTTH/B Deployments in Asia Pacific
  Devices for the Wrist
  Mobile Data Pricing: Innovative Practices to Drive Adoption and Traffic
  LTE Business Models: Best Practices in Network Deployment, Positioning and Service Pricing
  The Personal Cloud: A Strategic Imperative for Operators
  More Reports
 Telecom Insiders
  Cellular M2M Services in Africa & the Middle East: Market Sizing, Forecasts and Case Studies
  M-Commerce in Sub-Saharan Africa: Making Sense of a Growing Mobile Business
  Cellular M2M Services in Latin America: Redefining the Role of Mobile Operators
  Mobile Broadband in Africa and the Middle East: LTE Profit Drivers and Outlook
  Market Opportunities and the Evolution of MVNO Business Models in Western Europe
  More Insiders
 Country Intelligence Reports
  Romania: Network Improvements Enable Multiplay and Multiplatform Services to Drive Telecom Market
  Canada: Data Segment to Boom after LTE Spectrum Allocation
  Italy: Mobile Broadband Drives Telecom Market Growth as M&A Activity Intensifies
  Paraguay: LTE Deployments and Nationwide Fiber-Optic Backbone Rollout Will Boost Data Consumption
  Finland: Growing Demand for New and Innovative Data Services Drives Operator Transformation to All-IP
  More CIRs
 Market Forecasts
  Fixed Communications Forecast
  Fixed Operator Marketshare
  Mobile Operator KPI
  Mobile Data
  More Forecasts
  Terms and Conditions      |      Privacy Policy      |      Copyright © 2014 Pyramid Research. All rights reserved.