First, there are few more expensive places to put a cache and its associated storage than in a router slot.  Intense competition has cut profit margins for servers to around 20% (e.g. Dell reported GM of 22% for Fiscal Year ending Feb 3, 2012), while gross margins at router companies run more than 3 times that amount (Juniper and Cisco GM for FYE 2011 were 64.5%  and 61.3% respectively).  Hence, the same collection of Intel processors, memory, disk drives and other components required to build a server will inherently cost you far more when assembled into a router blade versus a Commercial Off-The-Shelf (COTS) server.

In addition, the annual maintenance contract for router equipment can cost 15-20% of the net purchase price every year.  In contrast, HP servers come with a 3 year warranty covering parts, labor and onsite support at no additional charge.  While some might claim these commodity servers don’t provide “carrier grade” reliability, a strong case can be made for continuous availability provided by self healing software running on top of commodity parts (see Larry Peterson’s “Devices vs Services” blog post).

But the problem isn’t limited to initial capital and maintenance costs alone.  Finance departments typically depreciate Telecom equipment, including routers and switches, over a relatively long period—generally seven years or more.  COTS server technology, on the other hand, is depreciated over a 3 year useful life.  The paradox here is that while router blades use the same processor, memory and storage components as COTS servers, they’re somehow expected to operate over a longer lifetime just because they’re slipped into a router slot.  Despite what the accountants say, technology innovation will render that router blade obsolete before it can be fully depreciated.  The operator must then decide whether to continue using an obsolete router blade for 4+ more years, or upgrade to a new version and write-off its remaining life.

The basis for this faster depreciation is simple – rapid advances in processor and storage technology force servers into obsolescence almost immediately.  In the past 24 months, multi-core capacity of x86 CPUs grew from 4 to 12 per CPU, and processor manufacturers have announced plans to exceed 12 cores soon!  Similar innovation is also occurring on the memory side, with DRAM chip density growing from 4GB per DIMM to 8 and 16GB per DIMM and new types of storage technologies, such as solid state drives (SSD), becoming mainstream.  It’s no surprise the IT industry is keen to ride the commodity performance curve.  Why would the Telco industry do otherwise?

There is yet another paradox here that cannot be overlooked.  Proponents of the router blade solution contend that they’re just using “spare” slots, as if these slots are free!  The spare slots of a router are only “free” if you believe you will never again have to increase your IP routing capacity.  How many network operators are planning for no IP traffic growth?  Instead, they are constantly adding capacity in the form of router ports and blades and, yes, entirely new chassis when they eventually run out of those “free” slots.  This means that deploying caching on router blades will consume the very resource that future IP capacity growth depends on—available slots.  Sorry, but that doesn’t seem logical.

This leads us to the related issue of space.  A Juniper MX960 Edge Router requires 16U of rack space while offering up to 12 line card slots.  Assuming at least one slot for Ethernet ports (DPC), an operator can potentially deploy up to 11 caching blades in the MX chassis.  In contrast, 15 rack-optimized servers and an inexpensive 1U Top-of-Rack Ethernet Switch could occupy the same real estate, offering better space utilization at far lower cost.  Not to mention the list price of that MX960 can top $100,000 when equipped with redundancy.

And now the final point.  A cache/CDN strategy that’s based on a switch or router blade is vendor-specific, i.e. Juniper blades will not fit in a Cisco router or vice versa.  Since most network operators deploy router equipment from multiple vendors, the cache router blade approach forces the operator into two discrete CDN architectures.   Two CDNs, each with their own operating procedures, OSS/BSS integration, training requirements, etc, create additional operating overhead and further increases TCO.

A prominent psychology professor, Abraham Maslow, originated the phrase “if all you have is a hammer, everything looks like a nail“.  This concept, known as Maslow’s hammer, is a fitting description for the proprietary router blade approach.  Instead, the new era of cloud computing powered by thousands of low-cost, interconnected commodity servers, provides an alternative paradigm that deserves serious consideration.

 Hence, it’s no surprise that the combination of operator CDN technology and transparent caching has received particular attention lately.  For example, EdgeCast and PeerApp teamed up in September to combine EdgeCast’s licensed CDN software with PeerApp’s transparent caching platform.  Alcatel-Lucent and Blue Coat Systems also consummated a global reseller agreement to jointly market their respective CDN and transparent caching platforms to network operators.

 The goal in both these cases was a worthy one, i.e., to let operators cache all content – managed and unmanaged – that is carried across their networks.  Unfortunately, both approaches are based on discrete platforms, leaving network operators with higher capital expenses while fending for themselves in areas such as operations, management and reporting integration.

 This week, however, Verivue addressed this integration dilemma with the first and only solution that offers both carrier CDN and transparent caching in a single, unified platform.  The true integration of these two functions helps streamline network operations while reducing deployment cost.  Now intelligent caches deployed strategically throughout the CDN network can serve dual-purpose as a transparent cache, reducing the network infrastructure and bandwidth costs associated with ‘over the top’ (OTT) content.

 By adding transparent caching as a software feature atop the OneVantage Content Delivery Solution rather than as discrete infrastructure, Verivue addresses both managed and unmanaged content across a single set of devices.  Best of all, the entire platform is software-based, harnessing the advantages of industry-standard server and storage components while providing a more flexible alternative to proprietary server appliances offered by many of our competitors.

With online video showing no sign of slowing down, operators continue to seek innovative ways to optimize revenue while reducing cost.  Verivue’s holistic approach to content delivery solves both problems together, allowing operators to develop a comprehensive content distribution strategy rather than an assortment of costly, discrete solutions.

For example, Google’s answer to the traffic and congestion problems created by Google and YouTube content is to offer operators the option of deploying Google Global Cache (GGC).  GGC is a cluster of Google provided servers installed inside an operator’s network to improve performance by caching popular content locally.  Serving content from the edge of an operator’s network eases backbone congestion and relieves traffic on peering and transit links, saving cost and improving QoE.

On the surface, this concept appears to be a win-win for both Google and the network operator.  But is it really good for operators?  With GGC, Google is put in an exceedingly advantaged position relative to other content providers.  As online streaming becomes ubiquitous and the competition heats up, Netflix and other well financed companies like Apple, Microsoft, Amazon and Dish/Blockbuster may demand this same advantage.  For most operators, physical space for cabinets and cages, conditioned power (including battery backup and power generators) and adequate cooling are in scarce supply.  Hence, it may be impractical to provide a similar arrangement to a broad set of content providers, even as regulators require network operators to treat everyone equally.

To address this dilemma, operators are opting to offer multi-tenant CDN services.  Because they own the access infrastructure, they are able to strategically locate their own caching servers deep in the network, bypassing most network congestion points.  This close proximity to the user base allows them to deliver rich-media content with the lowest latency for a superior QoE.

More importantly, the multi-tenant model allows operator’s to deliver content on behalf of all parties across a single, unified infrastructure rather than deploying individual, physical caches for each content provider.   Instead of becoming real estate agents, networks operators look more like building managers collecting rent in the form of new, revenue-generating services.

For operators that offer their own content, such as Cable MSOs and Telco/IPTV Service Providers, the multi-tenant CDN provides a service delivery platform whose cost can be spread across multiple customers, including the content delivery offerings of the service provider. Economies of scale dictate this shared resource model. After all, the whole idea with cloud services is to share compute cycles and storage among multiple tenants. Why should it be any different at the customer-facing edge of the network when it comes to content caching and delivery?

It is abundantly evident from the many conversations we have with major operators that the time has come for the multi-tenant CDN model.  It’s no longer “every man for himself”, but instead, a new paradigm where content providers “ride the coattails” of network operator deployed content caching and delivery infrastructure.

Case in point, almost everyone has watched an over-the-top video, and most of the under-25 market has watched them on smartphones.  While the smartphone has made content really portable, the impact on both the consumer and the network has been contained by the small size of the screen.  Smartphone users watch short clips of highly compressed video.  Tablet users watch TV and movies on devices with display capabilities as good as a living-room TV.  The numbers prove this.  In the time the tablet has been on the market, the number of people who watch full-length TV episodes or even full-length movies has increased 60% according to a Yahoo! study.

It’s no surprise that operators are worried about the way this impacts their network costs, and it’s not just peering costs that worry them.   More, and longer, videos mean more congestion in the access network itself.  Worse yet, the places that get congested and the timing of the congestion will vary based on things like movie releases, class schedules, transportation delays, and viral video factors.  Operators will need deep caching to move video storage closer to the consumer, but they also need highly flexible caching to contend with highly variable viewing habits.

Next time you see a tablet, don’t think “iPad or Android”, think “movie or TV show”.  Then think about transparent caching and its ability to impact network operator’s costs and improve user Quality of Experience (QoE).