Enabling application-aware networks Jon Alexander, Product Director Conversant This document contains proprietary information of Conversant and may not be reproduced in any form or disclosed to any third party without the expressed written permission of a duly authorized representative from Conversant

Agenda About Conversant Overview of Internet Economy in 2010 Securing a position in the content value chain A complete delivery solution

Company Introduction

About Conversant Founded in 2002 Conversant is a Singapore based company with a development team based in Cambridge (UK) Company focuses on developing products & software services for the telecommunication industry Conversant has managed to secure leading operators as initial reference customers for our products & services Conversant is a privately owned company – profitable since our inception and growing rapidly DP Information Group is Singapore's leading credit & business information bureau.

Team of entrepreneurs based in Cambridge, UK UK Development Team Team of entrepreneurs based in Cambridge, UK 15 years developing products and solutions for the telecommunications industry: Zeus CacheLogic Velocix

Competencies High performance Internet Infrastructure Innovative solutions to complex technical problems Disruptive technologies to address emerging challenges

Internet Economy in 2010

Internet growth Internet is growing fast and growth is driven by video. P2P continues to grow slowly, but becomes a minor percentage of the overall

Internet Video Maturing “…YouTube to be profitable in 2010…” Patrick Walker, Google Director Partnerships, 5th March 2010 Case study of two of the most innovative video companies behind this growth in video traffic. Examples are US-centric as business model innovation is occurring faster in US than RoW – although global audiences are quick to follow. YouTube has for a long time been held up as an example of a company with no path to monetisation, having successfully captured eyeballs However in spite of the massive ongoing litigation with Viacom, Youtube has been able to create deals with major studios and broadcasters, such that according to the NY Times 16% of their content is currently monetised Forecast revenue in 2010 $1bn – expected to break even.

Internet Video Maturing II “…by every measure, we are now primarily a streaming company that also offers DVD-by-mail.” Reed Hastings, Netflix CEO, 20th October 2010 Recently Blockbuster the largest video rental company in the US filed for chapter 11, blamed largely on pressure from no.2 Netflix and their failure to capitalise on the opportunity brought about by the Internet. Netflix is currently generating over 500Gbps of traffic in US, with over 60% of their 18million US subscribers using the streaming service. At peak times Netflix is consuming over 20% of bandwidth in the US – double that used by Google. These two examples show traditional media being complemented or even replaced by Internet video.

Online Advertising Online advertising remains the fastest growing segment of a flat to declining global advertising industry. Advertisers are more than happy to spend more money online at a time when their ad budgets are under pressure in traditional print and broadcast media. Source: IAB/PWC

Internet video is big business What does this tell us? Back in 2006 the Internet was about low quality home movies that just happened to go viral – 142million views is phenomenal but can not be monetised. Today Hollywood Majors are using multiple channels on the Internet to promote their big budget ($250m+) pre-release blockbuster films. People are no longer chasing eyeballs they are focused on monetising the eyeballs that they have now. Internet Video has grown into a multi-billion dollar industry. The CDN market alone is estimated to be in excess of $2bn. …. And we are still at the tip of the iceberg!! Internet video is big business

The network economy Where are the telcos? Who are the new players in this “Web2.0” landscape? Cloud services, device/pc manufacturers, social networks, search providers, content sites and advertising are all present. This is a pretty good representation of the “public” perception of the Internet in 2010. Even allowing for the US-centric nature of this diagram there is an obvious component of the jigsaw missing – the network operators that carry this data across thousands of miles of fibre and copper. Source: http://map.web2summit.com/

Video Value Chain Two sided business model Content Producer e.g. English Premier League Two sided business model Content Distributor e.g. Canal+ Content Delivery Network e.g. Limelight Networks Flat revenues, growing costs Tier 1 ISP e.g. Global Crossing Regional ISP e.g. Free Content value chain follows a fairly linear path for most content: Content producer owns the rights but does not monetise them in most cases, they go to a distribution partner The Content Distributor might be a broadcaster, online retailer or other content portal. The distributor uses a CDN to deliver the content on their behalf as the CDN can not only guarantee a decent quality at a reasonable price, but equally important they can provide the security/management functions that are required to comply with rights restrictions e.g. windows or geo-block The CDN typically buys bandwidth from a few major Tier 1 networks in addition to some local peering relationships that they may have established in their major markets. The Tier 1 provides the benefit of aggregating eyeballs from multiple access networks and can provide very aggressive wholesale pricing Regional ISPs connect the eyeballs but need to go through Tier 1 networks to get access to the content, except for the peering relationships that they have been able to establish Finally the end user typically pays a flat monthly fee to their ISP for Internet access Two areas of concern are exposed in this value chain: Firstly the Tier 1 network is getting paid on both sides. They get paid to deliver and the ISP pays to receive the content. Secondly the ISP receives a flat subscription revenue from their subscribers whilst traffic is growing 36% CAGR End User

Where are things heading? Content Distributor e.g. Yahoo Content Delivery Network e.g. Akamai Tier 1 ISP e.g. Global Crossing Regional ISP e.g. Free End User Content Creator e.g. end users Reduced IX costs, Increased OPEX, Revenue flat Large CDNs like Google and Akamai are asking ISPs to host their caches for them. This allows them (and the ISP) to bypass the Tier1 networks. The CDN saves the money that it would have previously paid to the Tier 1 and also gets a better quality of service. The ISP also gets some benefit as it reduces its IX costs at the expense of an increase in OPEX. Overall though this is a good reduction in costs – caching is a very beneficial technology with a very short ROI. But this is only addressing a small percentage of the costs. Don’t forget that about 95% of the costs are internal to the network and not affected at all. Most importantly the ISP revenues have not changed whilst the ISP has been “dumbed” down into providing a hosting service to allow the CDN to extract more value from their subscribers. Even worse, with language/cultural/religious barriers, content is becoming increasingly “local”. Even on ‘platforms’ like Youtube the Top 10 most watched videos from one region to another vary hugely. The majority of content is created and consumed within the same country and often the same network – there is no need for a “global” CDN in this case. Over 80% of video content originates ‘locally’

Telco Response “Traffic is growing,” said the [BT] spokesperson. “The idea that ISPs will continue to pick up the bill is unsustainable. We want to work this out with the BBC and other content owners to come to some real-world compromise.” ZDNet, June 2009

Participation in the content value chain Telco Response Participation in the content value chain Many different approaches amongst these global telcos. But single unifying trend is that they are seeking to establish their position in the content value chain by developing an offering that will allow them to increase their value.

“Application-Aware” Network

Network is the enabler of the Internet Economy Our Beliefs Network is the enabler of the Internet Economy Traditional architectures are inefficient, capital intensive and limit innovation Existing content value chain does not fairly reflect contribution of each participant

Our Mission To evolve today’s networks to deal with the wave of traffic growth and support the demands of emerging technologies and services

Layer 7 Revenue Growth L7: Application L6: Presentation L5: Session L4: Transport Cost Growth L3: Network Network operators will continue to face increasing costs from growing their network. Traffic will continue to rise and new technologies will place new demands on the network. Building a better, faster, more efficient network can help an operator control a portion of this cost. But it does not solve the problem. Revenue from internet access is largely is fixed due to the competitive nature of the industry – it is difficult for a provider to command a premium for “better” access as most users can not differentiate and don’t care. Innovation is occuring at layer 7. Users interact with the network at layer 7 and spend incremenal revenue on layer 7 application services. Layer 7 provides an opportunity for network operators to join the new “network economy”. L2: Data Link L1: Physical

Network Operator Opportunity Services that currently run on top of network can be integrated into the network natively Content Delivery Services Web Security Personalisation We are not suggesting that network operators should build their own applications, but that they can provide a platform of services that will enable these applications within the “network cloud” By focussing on enabling layer 7 technologies in their network an operator has the ability to increase the relevance of their network in today’s network economy and generate incremental revenue on top of the Internet access fees that their subscribers pay. “Local” cloud services

A complete delivery solution

Conversant Approach Fundamentally different from other solutions… A holistic solution for managing all web traffic: CDN + OTT Local platform, controlled and operated by the service provider

SwiftServe is a Telco CDN solution Built from ground up for telco market Provides end to end control, management and security Local infrastructure deployed in network controlled by operator Complete solution for CDN and OTT traffic

SwiftServe EDGE Carrier-grade CDN Web2.0 Media Caching Microsoft Smooth Streaming Apple HTTP Dynamic Streaming (iPhone/iPad) Adobe HTTP Dynamic Streaming Whole site delivery (HTTP) Large file delivery (HTTP) Geo blocking Content security Advanced reporting Cluster Management Alert Management Dynamic Filtering Safe Search Dynamic Sites Video seek GZIP compression Full Transparent Deployment

Telecommunications Organisation SingTel IPTV CDN Requirements Live streaming & Video On Demand Description Delivering high premium content

National Broadcaster Organisation MediaCorp CDN Requirements Live streaming for National Day Rally 2010 Description Delivering live event for audiences worldwide 28

Network Traffic Flow Excessive interconnect traffic Congestion in core network Content Owner 1 Content Owner 4 Content Owner 2 Content Owner 3

>95% Cache efficiency on CDN traffic SwiftEdge CDN SwiftServe >95% Cache efficiency on CDN traffic Core network bypassed Content Owner 1 Content Owner 4 SwiftServe EDGE appliances deployed into the network and Content Owner 4 becomes a CDN customer. Moves premium content closer to end users, bypassing the congested portions of the network. This provides a better QoE to the content owner (there is a strong benefit for local content owners to move their traffic onto the CDN). Additionally traffic from Content Owner 4 does not generate interconnect costs as ~95% cache efficiency is achieved. Costs are reduced for the content owner. Content Owner 2 Content Owner 3

SwiftServe CDN + OTT 30-60% savings on general web traffic SwiftEdge can prioritise outbound traffic Content Owner 1 Content Owner 4 The same infrastructure can also be used to cache OTT traffic with any spare resources. This means that the ROI can be maximised by making use of any spare capacity on the Edge platform. Traffic can be DSCP marked to identify CDN traffic vs “best efforts” to allow downstream devices to decide how to handle the traffic appropriately. Additionally overload bypass prefers CDN traffic to “best efforts”. This means that the Edge infrastructure will always attempt to deliver all traffic with the highest QoE unless resources are constrained, in which case it will prioritise the CDN traffic Content Owner 2 Content Owner 3

SwiftServe SwiftServe is a fully featured CDN solution that enables new revenue generation opportunities Operator may deliver their own services e.g. Internet TV Operator may sell delivery services to content partners Operator may deliver traffic on behalf of CDN partners in return for revenue share

CDN Federation Content Owner Telco can chose whether to enable federation on their CDN. It allows operator to receive a revenue share for content that would otherwise have appeared as “OTT” and hence a cost to the telco.

SwiftServe Portal: Usage

SwiftServe Portal: Geographical Spread

SwiftServe Portal: Object Management

SwiftServe Edge Configuration

Traffic Report

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