If you are a small Internet service provider and would like to make a buck in content distribution, your opportunity is knocking. Ignore it and risk losing your place at the content peering table.
Akamai Technologies, one of the original content distribution players, has opened up its network for small players to tap. Called Global Content Exchange Initiative, the new partner program makes it possible for relatively small players to resell Akamai services. It also lays the foundation for ISPs to get compensated for content transiting their networks -- Akamai-style.
The setup works like this:
An ISP or a Web hoster commits to a certain level of bandwidth sent into Akamai virtual network for content distribution on a monthly basis.
In return, Akamai sets up a wholesale price based on a number of factors including volume, which enables wholesalers to extract margin by reselling Akamai's US$2,000 per megabit-per-second virtual pipe.
Akamai views the small ISP program as a milestone, since it creates an economic model for the maximum number of networks to make money by participating in Akamai-powered content distribution.
Reseller programs are the closest Akamai would get to participating in content peering, if content peering could be defined as participating in the economics of content that sources on one network and is delivered to another. Akamai executives say whatever you call it, their system of compensating carriers based on content works.
Hypothetically, if a customer accessing the Internet through PSINet's network hits a Web site of BBC, hosted by Akamai reseller Digex, that content is served through an Akamai server on a PSINet network. And Digex makes money on delivery of that content though an Akamai reseller agreement. If PSINet had a reseller agreement with Akamai, it would make money the next time a Digex customer would access a site hosted by PSINet.
Given that Akamai has its servers in 160 networks, the content provider could theoretically become a standard for content exchange and a clearinghouse for content peering dollars.
Analysts interested in the issue of content peering acknowledged that while this model does offer compensation based on content served, it couldn't be called content peering because the financial exchange is going in the wrong direction.
"If PSINet in the above example got paid by Akamai for the act of receiving content from an Akamai server by a user on a PSINet network, that would be true peering," says Rebecca Wetzel, a principal at Wetzel Consulting. "I believe content peering has to be reciprocal."
In the above example, PSINet gets paid only if it hosts a content provider that pushes content to another network on request. Analysts like Wetzel believe Akamai should pay PSINet for letting "Akamaized" content enter PSINet's network.
Unfortunately, no technology or economic platform has been demonstrated to the marketplace that would support the reciprocal content peering she described, Wetzel says.
For now, though, content peering is not at the top of Akamai agenda. Calming different groups of resellers concerned about the economics of their reseller programs being fair is.
In itself, Akamai's move to open up its network to small ISPs is a big shift from its earlier reseller program, which was accessible only to heavyweights - the likes of Genuity and GlobalCenter.
Not surprisingly, the moment the news of the small ISP program broke, controversy began to stir with large players.
Resellers like Digex and NaviSite began wondering why small ISPs all of a sudden were making as much money on reselling Akamai content distribution as the big players, which have paid entry fees in excess of US$100,000 and committed to amounts of traffic to the Akamai virtual network measured in tens of thousands of dollars per month - all to join Akamai's original reseller program.
At the heart of the controversy is the wholesale price of the Akamai content distribution. Resellers filled up the voice-mail of Earl Galleher, Akamai's executive vice president in charge of reseller programs, with messages inquiring if small players are now able to instantly get the same margins with this new program, a fact that Galleher categorically denies.
Galleher declined to name margins that individual resellers enjoy, but indicated margins for volume resellers are much higher than for the smaller ones, and that correlation has not changed with the new small ISP program. Carriers that commit to less traffic make less on resale.
It is not clear if large networks get large reseller margins right away because of the size of their customer base and the network. Galleher says that is the case, but there is no way to compare margins between different resellers because of nondisclosure agreements Akamai made them sign.
Resellers like Genuity say that while they have started with low bandwidth requirements - at the 1 megabit per second per month level, to be exact - there was a mutual understanding that as the volume of the traffic that Genuity sent into Akamai grew, the wholesale price that Akamai charged Genuity for this traffic dropped. Genuity executives refused to divulge their margin percentage, and claimed no knowledge of how that number compared with that of other resellers.
