Velocix Launches New CDN Offering For ISPs With Support From Adobe and Microsoft

Velocix has launched a new product named Velocix Metro that enables ISPs to deploy servers within their access network, providing them with their own content delivery network for video and other rich media content. (press release)

While Verizon was the first to announce they would deploy Velocix servers to deliver content to their last mile customers with FiOS, this announcement now takes that offering and makes it available as a product to any ISP looking to cut their costs, manage traffic more effectively and generate a new business model. Besides being a unique offering in the market where a CDN is looking to license their distribution technology to other providers, Velocix also announced that Metro comes pre-bundled with server software from Adobe and Microsoft to support Flash, Windows Media and Silverlight and is working with Sun as the preferred equipment provider.

For Velocix and ISPs, this is a very different approach to the market and one to watch very closely. Most ISPs let CDN providers come into their network and deploy caching boxes to allow the ISP to pass traffic directly to the CDN which helps to reduce their transit costs. This new approach by Velocix lets ISPs build what is essentially their own private CDN enabling them to control costs and potentially add additional revenue if the ISP has good peering and wants to deliver content to users outside of their last end mile. Something Verizon is not doing today but is expected to utilize down the road due to their extensive peering arrangements. In addition to the cost savings, Velocix Metro enabled ISP's receive a revenue share based on traffic delivered via their networks from Velocix.

While this won't put any of the CDNs out of business anytime soon, it is something they have to closely watch. As the press release says, "Traditional CDN providers charge video broadcasters for premium delivery services but ignore the fundamental role that ISPs play in the end-to end delivery process. Rather than including ISPs in the value chain, CDN providers simply pump video traffic into their networks, leaving the ISPs to bear the cost of distribution on to their subscribers". As more video gets delivered at higher bitrates, the burden to ISPs is only going to increase and many will be put in a tight situation trying to manage the costs on their network. We are already starting to see this happen with the major players, but think about how this affects the smaller ISPs to even a larger degree.

For now, the Velocix Metro solution is completely managed by Velocix and over time, Velocix plans to allow the ISP to take full control of the solution and turn the management of the boxes over to the ISP directly. While the fact that Velocix manages the boxes worried me at first, it does make sense for Velocix to get it up and running with the ISP and do the majority of the work before the ISP resumes control.

There are a lot of really interesting things that could come from this solution and the more I think about how Verizon might use it down the road, it leads to some very interesting possibilities that could have a big impact on how video bits are delivered and how some of the current issues that ISPs have with video may be solved.

Look for my follow up post this week on how the Verizon and Velocix deal might evolve into something that's very important for the rest of the industry.

Comments

[Jon]

Nice idea, although the effectiveness of the service would seem to depend on how much control the ISP has of their access network and how deep into their network they can locate these boxes. In the UK many consumer ISPs use BT for the access network and therefore are unlikely to be able to take advantage.

[shaun]

very interesting....

looking forward to your follow up for your take on this Dan

[TJ]

This is interesting. It's potentially a good step along the path to solving the last-mile problem. Beyond this, I can see a model where the communications carrier makes a deal with on-demand providers to preemptively cache popular content as the VOD model takes off. It won't fix the long tail, but it could really take the edge off of the big bursts. Makes sense to me.

[Angelica]

That is exactly the same model that was introduced by Jet Stream with VDO-X. IMHO VDO-X is much more advanced than the Velocix solution.

[Igor Bejinski]

Dan, apparently you missed this 'exciting news' a few years ago. See http://www.vdo-x.net for example as Angelica wrote.

[Dan Rayburn]

This is not "exactly the same model" that was introduced by JetStream. The VDO-X solution is not based on P2P technology and has no support for that functionality. It also did not work directly with Microsoft or Adobe to develop the solution. To date, I don't know of any ISP the size of Verizon that is using the VDO-X solution. Maybe they have a bunch of ISPs using it, but their website does not list any customers or say what kind of footprint those customers have.

[Christopher Levy]

How is Velocix going to compete with Akamai, LLNW, HighWinds, Level 3, EdgeCast, Streaming Media Hosting, PowerStream or any other CDN using this approach. ISPs are not in the CDN business although they do provide services to their CDN customers.

Haven't we seen this approach before and watched it fail?

[Gerben]

Dan: Is the Velocix solution P2P based? That is an awful, really terrible choice. I agree with Angelica that the Velocix model is exactly the same as the Jetstream model, aside from the technical implementation. Not so unique as stated here, been before. It does not matter how big (one) or multiple customers are, or who are backing it, it is the 'claimed uniqueness' of the model that is not unique at all, it has been done and proven before, period.

Christopher: Don't forget that there are many network owners across the world who see operational costs rise due to video and they see that the money is going to CDN's. It is a logical step to have a on-net CDN to help customers and to cut backbone costs.

[Dan Rayburn]

Simply saying other vendors have the same kind of licensing or revenue sharing "model" does not mean you can compare the solutions to one another. That's like saying that eMusic and others have the same model as iTunes so the solutions must be the same.

Please give me an example of a ISP based solution that is a hybrid and can do traditional CDN delivery as well as supporting P2P functionality and was designed in conjunction with both Adobe and Microsoft and has their support. I'd also like to see an example of a major ISP in the U.S. who has already adopted such a solution.

[Rico]

Come on Dan, read your own text: "Besides being a unique offering in the market where a CDN is looking to license their distribution technology to other providers"

Not unique, done before... give the VDO-X people the credits they deserve...

[Rico]

By the way "major ISP in the U.S.". Why should it always be the US? Because you are not focussed on Europe, Russia, South America or Asia?

[Dan Rayburn]

Rico, you can try to make your case all you want but I am not buying it. I have already shown by many examples how the solutions are very different. You say another company has the same licensing model yet the solution is different, the technology is different and the partners are different. It's not the same thing.

You suggestion that I am not focused outside the U.S. is also incorrect. Most of Velocix's business is from Europe, not the U.S. and when I broke out video delivery revenue in from my Frost & Sullivan report, I broke out the revenue based on region of the world, including Europe and Asia. And if you look at my list of CDNs that I track at CDNlist.com, you will see that many of them are only doing business in Asia.

[Shalini]

How true is this statement:
'Rather than including ISPs in the value chain, CDN providers simply pump video traffic into their networks, leaving the ISPs to bear the cost of distribution on to their subscribers'

Dont CDNs pay ISPs transit or peering charges for distributing the traffic?