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China’s Ministry of Industry & IT: “Upgraded CDN providers can live a good life for a long time!”

Jonathan Ding, China's Ministry of Industry & IT

Jonathan Ding, China's Ministry of Industry & IT

Jonathan Ding, a high-ranking official from China’s Ministry of Industry and IT (MIIT) who holds a number of positions including Chief of Industry Applications Group of Interactive Media Industry Alliance and Chair of Video Device Internet Access Standard Work Group, on upgrading CDN providers into becoming virtual network operators, and the benefits this will bring end-users.

Jonathan will be speaking at the CDN Asia 2013 event taking place in Singapore on 29-30 January. For more information and to register, please visit http://cdnworldsummitasia.com

Hi Jonathan! In your talk at this year’s CDN Asia event, you will discuss strategies for upgrading CDN providers to become virtual network operators. Can you firstly tell us why you think this will happen?

While most CDN providers are not yet doing this, a few have already started pursuing this, such as 21Vianet in Beijing in partnership with CNTV, a CCTV-owned Internet TV integration and distribution operator.

Akamai and a few others are already building and enhancing their systems toward the direction of a potential virtual network operator, adding DRM solutions and other functions and making their current CDN systems smarter, i.e., more manageable and controllable.

The key criteria of a virtual network operator is to gain manageability and controllability of user devices, which nowadays means multi-screen video equipment connected to the Internet.

Once this capability is in place, a CDN provider will be able to offer more value to its current customers -  with or without the name “virtual network operator” – and convince more content and service providers to utilise their upgraded CDN platform to quickly build up their businesses.

Notwithstanding the above, the real decision for such strategic upgrading of a CDN provider is not an easy one, because this will impact its present business model and change its existing industry value chain relationships.

What benefits does this bring to end-users?

End-users will get more customised content and better services, and hopefully less money out of their pockets, as there are going to be more operators emerging in the coming years and increased competition in the market.

The upgrading of CDN providers to become virtual network operators will intensify the current competition already there involving traditional telecom operators and content and/or service providers. Further upgrading will increase fragmentationof the present industry value chain structure.

Will this become a general shift for the CDN industry?

Being “channelised” has become a trend already in recent years on a global basis, as the least desire for every traditional telecom operator. The major driving force of this is the trend of virtualisation of network operations.

The potential beneficiaries of such trends include CDN providers, end-user device manufacturers, content and service providers, and existing Internet portals and service operators, as the end-user groups are expanding from PC users to mobile phone users, tablet users and TV viewers. Sometimes people call them multi-screen end-users.

More end-user groups mean larger markets and more opportunities, and in turn, more players come in to try to grab a piece of the pie. Behind all these changes is the freedom of Internet, making all the above possible.

So the decision is with any one of the potential beneficiaries; to be or not to be? I feel the current CDN providers have their advantages already in place, their existing establishment of systems in a cloud structure, and they are actually already operating this “virtual” cloud platform to deliver content for their customers.

Only one step further will pull them out of the present sandwich embarrassment and lift them into a higher position in the industry value chains; namely to gain the manageability and controllability of the end-user devices.

They can try to do this by themselves, or better yet they can partner with device manufacturers to do this jointly. I believe the market is big enough and upgraded CDN providers can easily find very lucrative niches and live a good life for a fairly long time!

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