Content from California

By Paris Burstyn - Capacity Magazine

CONTENT CREATED ON THE US WEST COAST IS SPARKING GLOBAL DEMAND FOR BIG PIPES, PARIS BURSTYN FINDS WHOLESALE BOUNDARIES ON THE WEST COAST BLURRED BY ENTERPRISE NEEDS FOR CDNS

Geography and demography come together in a nexus of content creation on the west coast of America. Concentrations of education, entertainment, healthcare, manufacturing and technology enterprises line the shore of the Pacific Ocean, which is roughly halfway between Asia and Europe. Their activity blurs the lines between wholesale and retail bandwidth demand. They lease metro and long distance broadband capacity in the same way that carriers do. But they don't resell the capacity; they use it to distribute their content to servers close to their customers who demand low latency access to games, software and video downloads.

Three states, namely California, Oregon and Washington, make up the US west coast. Companies in these states currently originate a disproportionate amount of the content that both US and international customers access via the internet. Market analysts and communications service providers see these companies acquiring high-bandwidth pipes to link the points of content creation to the points of consumption.

Content creators -- especially on the west coast -- now negotiate with carriers, co-location providers and other vendors for wholesale capacity as if they were carriers themselves. These "pseudo carriers," as Mike Holliday, a Global Crossing senior product manager, calls them, have the scale and scope in the market so they can get carrier-like deals from their network service providers. Large-scale carrier arrangements allow these companies to provide low-latency and efficient experiences for customers, employees, and partners. Content traverses these networks for distribution to server farms, carrier hotels and co-location facilities near concentrations of users.

Regional Ethernet provider. IP Networks (IPN) In San Francisco sees the same dynamic. "Enterprises can demand the economic efficiencies of the wholesale play," says Gary George, the carrier's president. "They can negotiate and can take on the technical responsibilities. We're a purely Layer 2 transport provider. We can provide reports on latency and jitter, but we deliver a big pipe and that's what our customers want."

Level 3 considers wholesale as the home for large amounts of bandwidth "There's not much difference between a Yahoo and large PTT," says Grant van Rooyen, SVP of products for content markets. "The differences between media companies and mega-portals and carriers are blurred."

The bandwidth demand associated with DSL in California is one of the indicators of the likely demand that will arise across the country, says Ken Raley, VP of network planning at AT&T. His responsibilities include local and long-distance IP services, giving him a broad perspective of the market. "Over the last couple of years we have seen west coast DSL consumers have higher usage per customer on average than what we had seen in the rest of our domestic footprint," he says, characterising these customers as 'an early leading indicator' to overall DSL usage Increase. The DSL traffic IS one of the areas that generates growth across AT&T's core IP network services, he says.

Level 3 doesn't experience any difference in demand for base distribution, says van Rooyen. "The west coast is not far bigger than the east coast, Europe or other parts of the network."

EYEBALLS DRIVE DEMAND
Other carriers agree that west coast enterprises tend to generate content that customers want. Demand from those consumers drives content distribution across the US or the Pacific to data centres close to those users. The consensus among providers of data centres, regional networks and international carriers is that "eyeballs" drive demand. The millions of pairs of eyeballs that want to watch movies, stream music and television shows, access corporate documents and employ hosted applications create tremendous demand for high bandwidth services.

"The companies with the content use their own network or Akamai or Limelight to distribute the content closer to the eyeballs," says Mark Taylor, Level 3's SVP for emerging opportunities in its content markets group. "The concentration comes about where the eyeballs are, not where the content is generated." Copies of content go to data centres around the world where they can reside close to viewers, listeners and users.

"As the demand for the content increases our customer network requirements have expanded exponentially into the west coast," says Derek Koecher, director of channel strategy for wholesale markets at Qwest. He serves a number of European carriers that want to access data and hosting centres in the US.

Such customers demand at least 10Gbps transport. AT&T has already deployed a 40Gbps backbone and most of the other carriers are moving in this direction. Analysts suggest that 100Gbps will be necessary within the next few years.

CONTENT PROVIDERS
Google, Microsoft, Yahoo and others are very good at moving data around as fast as possible, according to Judy Reed Smith, president of Atlantic-ACM, the Boston research firm that specialises in wholesale communications. These companies upgrade very quickly, which drives the carriers to keep pace, she says.

According to Global Crossing, content providers on the west coast were among its large customers in October 2006. Since then it has added numerous cable television companies, music and video distribution firms as well as social networking companies. That increase has lifted Los Angeles and other west coast cities into the top four or five areas it serves. "A few years ago our biggest capacity customers were carriers and ISPs," says Holliday, "but now media and software companies, the pseudo carriers, are on our list of top 20 customers, having displaced some of our more traditional customers."

Atlantic-ACM analyst Aaron Blazer says demand for Internet access content will shift to Asia and Europe because of user concentrations. "Demand for content will shift across tile Pacific," he says, "as will the broadband and hosting facilities needed to support those users. Content tends to shift to follow the users and their requirements, so Europe and Asia will pull content across the States and the oceans."

"It used to be that bandwidth was very available at night, but demand now is pretty steady," says Richard Eller, general manager of WV Fiber. "Night-time bandwidth is available on our network because we recently increased bandwidth by four times and will double it again in the near future."

San Francisco's IP Networks addresses the needs of a cross section of every type of industry and application, including healthcare, gaming, research, and manufacturing. "There's no single vertical pushing more than the other," says George. He also counts producers of multimedia and movies among IP Network's customers.

SOUTHERN CALIFORNIA
Drive along the Hollywood Freeway in Los Angeles and studios like Warner Brothers, NBC Unlversa1 Studios and Vivid Entertainment whiz by. This heavy concentration of movie and television production uses digital technologies to create audio and video products. Studios rely on a distributed network of talent and public relations agencies, animation and special effects specialists, as well as other specialists spread throughout the region -- from the San Fernando Valley, into downtown Los Angeles, Beverly Hills and Santa Monica, as well as northern California.

"There's a large community of interest," says John Savageau, MD of CRG West the owner of One Wilshire, a carrier-neutral data centre and carrier hotel in Los Angeles. "People are scattered all over the area [with production tasks] taking place in a distributed manner -- studio to studio and with animators and special effects production -- via IP private network interconnects or public exchanges."

Establishing distribution networks for their in-process and finished products requires creativity from the studios. They want the same high levels of performance from their technology as they get from their talent. They also maintain tight security on links between their partners (e.g. editors, special effects and advertising agencies) to limit piracy. To meet specific objectives, producers can use a number of different communications solutions including leased lines, carrier hotels, metro Ethernet, fixed wireless and "sneaker net" -- putting content on memory devices and couriering them to their destination. For example, satellite communications provider Easynet (which is part of BSkyB) terminates at One Wilshire so it can distribute Sky TV and News Corp content across America, says Savageau.

Qwest sees the same trend. "It seems that every single bid has some element coming into the west coast," says Koecher. "That's the predominant emphasis: tying together hosting centres and providing intra- and intercampus links."

CONTENT BALANCING
Koecher points out that latency is a big issue for Qwest's customers. "We work with our customers to minimise latency to maximise end-users' experiences."

Massively multiplayer online games (MMOG) provide a dramatic illustration of the need for low latency links. MMOG players rely on fast connections to game servers to avoid death and destruction, while wreaking death and destruction on their adversaries. The fastest gamers can't outgun enemies when their network connection slows the speed of their bullets.

Of course, gaming companies distribute their games to servers around the country, but that's not enough. Gamers buy software for their PCs, register via the Internet and begin playing. But connecting via the Internet involves unpredictable latency as the number of hops necessary to reach the game server varies depending on traffic at the time gamers initiate play. Gamers need a reliable and low-latency connection to their game server every time they play.

Recognising this target market's requirement, Gamerail has developed specific routing algorithms, leased backbone facilities from XO and others and created a massive peering broadband network that links gamers with the closest game server. A monthly service charge covers network connectivity, as well as a software client "that punches a hole through tile local carrier and routes them to us," according to John Alden, Gamerail's VP of business development.

"We don't host the games," he says, "we peer with data centres with high densities of game servers. At the point where a carrier would transit to other networks, we pick it up and hot-rod the traffic straight to the data centre where the game server is and then cross connect."

Alden says that other companies have expressed interest in Gamerail's technology. "We have a good model for any latency-sensitive application that requires low latency transport," he says.

Despite areas of specialised product creativity, content and applications can't be geographically focused, according to Don MacNeil, VP of carrier services at XO Communications. Enterprises as "pseudo carriers" merely represents the first round of innovation aimed at improving end users' online experiences.