Matthias Maurer is Head of Product Management Internet & Content at Deutsche Telekom International Carrier Sales & Solutions (ICSS). In the following thorough and thoughtful interview, given ahead of his January appearance at CDN Asia, Matthias delves deep into the fascinating relationship between Telcos and CDNs.
IP&TV: Why do Telcos try to enter the CDN market?
Matthias Maurer: To increase their own revenue with content owners – especially in the video market – and to reduce their cost base on own infrastructure by controlling the way the content enters the network and comes to the edge. Also to secure a high quality of experience for own Telco-end-customers by bringing the content to the edge and reducing the number of hops in the network.
Why is it Telcos are not able to gain market shares in the CDN market?
For the last five years a lot of Telcos like us entered the CDN market, based on a reselling agreement, based on licensing agreements with pure play CDNs, based on own or bought technology.
Many of us simply underestimated the complexity of selling CDN services to customers, the complexity of setting up a decent Sales team and Sales engineers, the dynamics in price and portfolio development of CDN, and the complexity in publishing the relevant data over quality, logfiles etc. towards the customers.
What are the options for enabling Telcos to achieve at least some of their objectives?
You can secure cost savings. Some telcos/eyeball carriers open their network to CDN players or other content aggregators (e.g. Google, Amazon…) to build their caches/servers into these networks to at least have cost benefits in the national network and save either peering costs or cost for upstream in the transit case
Or, you can save costs and gain revenues. By investing in servers on a licensing model and a co-opetition with the CDN player, some Telcos try to save costs on the peerings/transit connections. Based on the license model CDNs sometimes offer a revenue share for traffic to be terminated in the respective eyeball network from the CDN licensing partner.
Both models have strengths (immediate cost savings) and weaknesses (loss of control, third party servers in own network).
What about infrastructure cloud as an option for Telcos?
Infrastructure cloud and network function virtualization (NFV) is seen by Deutsche Telekom ICSS as a natural next step for Telcos in the industry, for instance into IP-based networks.
The setup of virtual machines integrated into the core of the network enables Telcos to centralize the service creation and to reduce equipment costs; increase speed of Time to Market; and improve service introduction based on geography or customer sets.
Network function virtualization (NFV) based on Datacenter infrastructure opens the virtual appliance market to pure software entrants, small players and academia, encouraging more innovation. And this new infrastructure approach opens new ways for us to re-enter the CDN market, either on a pure wholesale basis or as a basis to partner with a CDN technology provider to resell the service, created on its own virtual machines.
This also gains scale on virtual machines by using the datacenter infrastructure not only for our own service creation but to open it for third party services like CDN, too. By opening an infra cloud to CDNs both parties – Telco and CDN – can benefit. CDN with less invest in servers, network equipment (ports & routers), housing, power, Telco with less invest in backbone network, peerings and “guaranteed” QoE towards own end-user base.
Is that a model that can apply to Asia, too?
From our point of view the use of infrastructure cloud as a means to partner with a CDN player applies to every Telco that manages a big end-user base, both for fixed-line and mobile broadband. The bigger the country the higher the end-user base, the higher the cost saving in the network by bringing the content closer to the end-user.
Matthias Maurer will be appearing at CDN Asia (21-22 January), for booking and more info go here.