Video and the Disruption of the Internet Hierarchy

I was recently reminded of the genius of Bill Norton, one of the founders of Equinix and now proprietor of Bill wrote back in 2008 about how the next wave of “disruptive” traffic growth would be 10X the first wave of 2001, and he also postulated several Internet Hierarchies that might evolve, namely:

1. Simple Commodity Transit

2. Content Delivery Network (“CDN”)

3. Hybrid Transit / Peering / DIY CDN

4. Peer-to-Peer Networking

In his work, Bill quotes David Cheriton (Sun Microsystems) who poses the question, “Where does it make sense to cache video content?” Transit is caching at the seed of the tree, CDNs are caching at a mid-point in the hierarchy (at the peering points), and peer-to-peer is caching at grandma’s house.

Now bring in the ATLAS Internet Observatory, who operates the largest Internet monitoring infrastructure in the world, with near real-time traffic and routing statistics, and we have some visibility into how the Internet is changing and some insight into the winners and losers. There were three primary findings:

1. Consolidation of Content Contributors

a. Content migrated out of enterprise / edge to aggregators

b. Consolidation of large Internet properties

c. Now only 150 origin ASNs now contribute 50% of traffic

2. Consolidation of Applications

a. Browser increasingly application front end (e.g., mail, video)

b. Applications migrate to HTTP or Flash ports / protocols

c. All other ports / app groups decline (except games and VPN)

3. Evolution of Internet Core and Economic Innovation

a. Majority of traffic direct between consumer and

b. Market shifts focus to higher value services (MSSP, VPN, CDN, etc)

c. Experimentation with paid transit

d. Experimentation with paid content

ATLAS Consolidation of Content

In 2009, only 150 ASNs contributed 50% of all Internet traffic, and that consolidation is marching on. Â In fact, according to Arbor Networks, Google accounted for 6.4% of all traffic as of late 2010. While Internet traffic continues to surge overall (by an estimate of between 40 to 45 percent each year), Google continues to grow faster than the average. Â If Google was an Internet Service Provider (ISP), it would be the second largest in the world. The chart below shows Google’s share of all worldwide traffic and its growth since the beginning of 2007.

Again, according to Arbor Networks, Google’s share grows even larger (to between 8 to 12 percent) if you include estimates of traffic offloaded by Google Global Cache (GGC) and if you account for Google edge peering in consumer networks. Google now has direct peering with more than 70 percent of all providers around the world, up from between 5 and 10 percent from ‘09, which means Google websites have a direct path to ISPs.

ARBOR Google Share of Traffic

Another observation from ATLAS is the decline of Peer-to-Peer (“P2P”) traffic. According to ATLAS, P2P is being increasingly eclipsed by streaming, CDN, and direct download. That’s the same takeaway from Cisco’s latest Visual Networking Index, which found that video now accounts for more than one-quarter of all network traffic worldwide. That means video is now the largest portion of all data that runs across the Internet, topping peer-to-peer traffic for the first time in 2010. And while Adobe likes to boast that some 75 percent of all web video is Flash-based, consumption numbers tell a different story, according to Cisco. It found that of the 26 percent share of traffic belonging to online video, only 7 percent is Flash video. Another 10.5 percent is streaming video; 5 percent is streaming video via P2P technologies; 3.6 percent is audio and video over HTTP; and 0.28 percent is made up of video downloads.

And lastly, with regard to wireless video, Bytemobile, an international mobile internet strategies and solution company, released research in July of 2010 that shows a marked increase in mobile video consumption, especially during the evening. The research also shows that four of the top 10 mobile video domains are adult-related, and account for 15 percent of the total video traffic on wireless networks. YouTube continues to be the dominant source of mobile video consumption, at 36 percent of total traffic with coming in second at about 7 percent. Flash accounts for 90 percent of all wireless video traffic.

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