Content is king, but…
who rules?
Is an open Internet @ risk?
IP Interconnection trends from a
hybrid hosting provider perspective
Bart van der Sloot Managing Director LeaseWeb Network May 19, 2016
Overview
1. Introduction – why care / why now?
2. About us
3. Quality versus costs – the art of traffic routing…
4. IP Interconnection: trends to worry about
5. Mitigation strategies
Why care? / @Home:
Why care? / @Work Content:
Can you compete?
Why Care? / @Work IX:
Will you become a niche platform
serving small ISPs and small content
providers?
@
?
@
?
Why Now?
Ziggo – Vodafone NL merger
Source:
What can we learn from the EU remedies in the LGI –
Ziggo acquisition?
Overview
1. Introduction – why care / why now?
2. About us
3. Quality versus costs – the art of traffic routing…
4. IP Interconnection: trends to worry about
5. Mitigation strategies
ABOUT LEASEWEB
• Founded in 1997 in the Netherlands
• Hybrid Infrastructure as a Service (IaaS): • Dedicated Servers & Colocation
• Public and Private Cloud services • Storage
• Content Delivery Networks
• Combined with Internet Connectivity • 16 Data Centers (EU, US, Asia)
• ~75.000 servers
• ~320 employees worldwide, ~250 in EU • Generating 2.5 Tbps of Internet traffic • 3 x 100G ports @ AMS-IX
CUSTOMERS
• PaaS and SaaS
• OTT Video and Audio content
• E-commerce
• Online gaming
• Cybersecurity
• Web analytics and intelligence
• Enterprises
Overview
1. Introduction – why care / why now?
2. About us
3. Quality versus costs – the art of traffic routing…
4. IP Interconnection: trends to worry about
5. Mitigation strategies
IP Interconnection options
1 of 5:
IP Transit
Core Routers LSW Server Rack Transit Provider 1 Transit Provider 2 Transit Provider N LSW Server Rack LSW Server Rack Transit Provider 1 Transit Provider 2 Transit Provider N Core Switches LeaseWeb NL – AS60781IP Interconnection options
2 of 5: Local
Private Peering
Core Routers LSW Server Rack Transit Provider 1 Transit Provider 2 Transit Provider N LSW Server Rack LSW Server Rack Transit Provider 1 Transit Provider 2 Transit Provider N Core Switches Local Private PeersLeaseWeb Global Network – AS16265
Peering Core Routers
IP Interconnection options
3 of 5: Local
Public Peering
Core Routers LSW Server Rack Transit Provider 1 Transit Provider 2 Transit Provider N LSW Server Rack LSW Server Rack Transit Provider 1 Transit Provider 2 Transit Provider N Core Switches Local Public Peers AMS-IX Local Private PeersLeaseWeb Global Network – AS16265
Peering Core Routers
IP Interconnection options
4 of 5:
Remote
Private Peering
Core Routers LSW Server Rack Transit Provider 1 Transit Provider 2 Transit Provider N LSW Server Rack LSW Server Rack Transit Provider 1 Transit Provider 2 Transit Provider N Core Switches Local Public Peers AMS-IX Local Private Peers Remote Private PeersLeaseWeb Global Network – AS16265
Wavelength services to other cites
Peering Core Routers
IP Interconnection options
5 of 5:
Remote
Public Peering
Core Routers LSW Server Rack Transit Provider 1 Transit Provider 2 Transit Provider N LSW Server Rack LSW Server Rack Transit Provider 1 Transit Provider 2 Transit Provider N Core Switches Local Public Peers AMS-IX Local Private Peers Remote Public Peers E.g. PLIX Remote Private PeersLeaseWeb Global Network – AS16265
Wavelength services to other cites
Peering Core Routers
Traffic routing considerations
1. Quality
• Latency, packet loss during peak hours
• Both inbound and outbound traffic
2. Cost per Mbps
3. Flexibility to cope with traffic volume swings 4. Importance of NOC-to-NOC contacts
Overview
1. Introduction – why care / why now?
2. About us
3. Quality versus costs – the art of traffic routing…
4. IP Interconnection: trends to worry about
5. Mitigation strategies
IP Interconnection in Asia
• IP Interconnection • IP Transit
• Public peering in Singapore (Equinix) and Hong Kong (HK-IX) • Various private peerings
• IP Transit pricing >4x Europe
• Challenge: Inbound traffic via US • Peering: OK if remote, not local
(so the customer suffers…), rather formal approach
• “China Direct” in HKG:
IP Interconnection in the US
• IP Interconnection • IP Transit
• Public peering in NY, Ashburn, Chicago, San Jose, LA,
Palo Alto, Atlanta
• Various private peerings
• Until early 2015: Comcast, AT&T hard to reach via Transit,
paid peering pricing > 3 x IP Transit pricing
• April 2015: FCC Open Internet Ruling– resolving peering
capacity constraints between Tier 1 networks (Cogent, Level 3) and dominant Access ISPs (Comcast, Verizon,…)
IP Interconnection in the US
204. Broadband Internet Access Service involves the exchange of traffic between a last-mile broadband provider and connecting networks. The representation to retail customers that they will be able to reach “all or substantially all Internet endpoints” necessarily includes the promise to make the interconnection arrangements necessary to allow that access. As a telecommunications service, broadband Internet access service implicitly includes an assertion that the broadband provider will make just and reasonable efforts to transmit and deliver its customers’ traffic to and from “all or substantially all Internet endpoints” under sections 201 and 202 of the Act. In any event, BIAS provider
practices with respect to such arrangements are plainly “for and in connection with” the BIAS service. Thus, disputes involving a provider of broadband Internet access service regarding Internet traffic exchange
arrangements that interfere with the delivery of a broadband Internet access service end user’s traffic are subject to our authority under Title II of the Act.
IP Interconnection in Europe
• IP Interconnection • IP Transit
• Public and private peering in Amsterdam, Frankfurt, > 15
other cities
• In many countries all ISPs support settlement free in-country
or remote private and public peering
ISP
CN TP
Settlement free peering (CDN)
Transit Services /
Content Transit/Peering Access ISP
Europe – good examples
• Allows full independence of decision for Content network
and Access ISP
• IP Transit market very competitive, keeps all others in
check.
Transit
Europe:
Dominant ISP’s in some large EU countries (DE, FR, SP):
• Don’t support local settlement free peering with content
networks, only paid peering or IP Transit
• Operate their own international IP backbones • Offer remote IP Transit or paid peering
• Enforce “traffic ratio’s” to allow settlement free peering
• Restrict peering capacity with Tier 1 networks to force payment
(…packet loss, traffic restrictions in Tier 1 IP Transit services, separate excessive pricing).
• Effective cost/Mbps for paid services
up to 4 x higher
• Behavior now spreading to other
AP CN TP Paid Peering CDN Peering Services /
Content Transit/Peering Access ISP
Europe – concerning examples
• Consumer: degraded user experience
• Content network: pushed to peering at uncompetitive pricing • Transit Providers: pushed to buy from peers or be evicted
from destination
Why – to cover capex?
“ISPs do all the investments in broadband infrastructure and content networks get a free ride”
BEREC report BoR (12) 130 (sources: WIK, ARCEP, AT Kearney, Cisco, annual reports Telecom Italia, Orange, Arthur D. Little):
“Taking together the evidence provided above BEREC considers that the expected
volume increase will not require a significant CAPEX
increase in fixed network. There is no evidence that cost are skyrocketing because of traffic increases. In fixed networks usage-based costs - accounting for 10-15 % of total costs for fixed broadband networks – are roughly stable. Thus, if technological progress leads to cost improvements (on a per unit basis) which outweigh the increase in traffic volumes then there would be no negative effect on the overall cost position of a network operator.”
Why – to cover capex?
“ISPs do all the investments in broadband infrastructure and content networks get a free ride”
“Free Ride…?”
Both content networks/hosting providers and access ISPs/ telecom companies spend 15-20% of revenues in capital expenditures to cope with growth.
Why – to compete with OTT services?
Source: annual reports
versus
Consolidation in Access ISPs
90% market share with 2 providers
Concentration in content
67% of content
Impact on competition & innovation
• IP Interconnection costs have a huge impact on the
cost to run a Content and Application Platform (>50% for Content Delivery Networks).
• IP Interconnection costs will triple if “Europe
becomes like Germany”
• IP Interconnection costs will become prohibitive
for the business case for new OTT services –
especially for broadcast grade HD/UHD services.
• Deliberate capacity restrictions in IP
Interconnections are a threat to critical real time services.
Peering dispute between a connected car platform and a mobile network?
IP Interconnection in Europe
Conclusions
• Ongoing consolidation in Access ISPs
• Some dominant ISPs tend to access to
monopolize and monetize their customer base
by charging both content networks and Tier 1
Backbones for IP Interconnection and
restricting peering capacity to enforce this
• This leads to quality degradation for the
consumer and increased costs for content and
application providers
• This represents a threat to innovation and an
Overview
1. Introduction – why care / why now?
2. About us
3. Quality versus costs – the art of traffic routing…
4. IP Interconnection: trends to worry about
5. Mitigation strategies
Options
1. Long term IP Interconnection agreements that make economical sense
2. Influence regulation
Influence Parliaments, EU DG’s, Commissioners, Ministries, Regulators…
Options
3. Create consumer awareness
…but works only if consumers have a choice in broadband ISPs….
Overview
1. Introduction – why care / why now?
2. About us
3. Quality versus costs – the art of traffic routing…
4. IP Interconnection: trends to worry about
5. Mitigation strategies
LeaseWeb position
LeaseWeb is a strong supporter of an open Internet in
which ISPs provide uncongested Internet access to their
customers and where traffic between
content/applications and eyeballs in a country is
exchanged on a settlement free basis, enabling
innovation and competition.
Policies that restrict settlement free interconnection
capacity between content/applications and eyeballs in a
country, or between Tier 1 networks and ISPs operating
international backbones, are a threat to competition,
innovation, the eyeball’s Internet experience and
realtime/critical IoT applications.
LeaseWeb actions
1. Keep negotiating IP Interconnection agreements that make economical sense – and with some that works well!
2. Influence EU regulation through partnerships and associations.
So…
@Home: >200Mbps line speeds are nice, but make sure your ISP does not restrict IP Interconnection capacity “in the back” (e.g. check speed indices of NetFlix/Google, check Tweakers, forums etc.).
@Work: if the cost or quality of content and
applications (or the underlying platforms) are at risk, step up, consider your options and take action.
Thank you!
Bart van der Sloot
b.vandersloot@network.leaseweb.com
(join us at the LeaseWeb Tech Summit,
June 2, Amsterdam, “Design for Scalability”
http://www.techsummit.io/amsterdam/,