Contention for international connectivity is forcing content publishing companies to take drastic measures to ensure timely delivery, according to analysts.
Some companies like Apple are creating their own content delivery networks, while others are paying service providers to give their traffic priority.
Apple has now built and is using its own content delivery network so it can deliver its content direct to consumers.
It has also made interconnection deals with Internet Service Provider (ISPs), giving it direct access to their networks.
Apple is paying Comcast and other big ISPs to move hardware into their data center and build direct interconnects to their networks.
“Apple has put a massive amount of capacity in place,” said Dan Rayburn, principal analyst for streaming media at Frost and Sullivan, “over ten times the capacity it is using today, all ready to go.”
Some capacity will be used to support the release of new desktop operating software (Yosemite 10.10) and iOS 8 but over time the traffic currently going over third party CDNs from Akamai and Level 3 (such as iTunes and app downloads) will run over own Apple’s CDN.
“It’s too early to know how much traffic will come over and when, but Apple’s already started using their own CDN much faster than I expected,” Rayburn said, writing in his Frost & Sullivan blog.
“The pace of their build out and amount of money they are spending on infrastructure is incredible.”
According to Rayburn, Apple has multiple TBps of capacity and will have invested well more than US$100m in its CDN build out.
Dedicated content delivery network vendors such as Akamai stand to suffer most, he said, since a significant chunk of their revenue comes from content providers.
“I’m not predicting doom and gloom for Akamai overnight, make no mistake, it will have a negative impact on their business at some point,” Rayburn said.
As with other industries, the new middlemen like Akamai and Edgecast are being squeezed out, according to Kosten Metreweli OnApp’s chief commercial officer.
“Service providers are realizing the revenue potential around effective content delivery - unreasonable interconnection fees are the ugly side of this,” Metreweli said.
“But who other than Apple and Netflix have $100m burning a hole in their pockets to spend on building their own CDN, and with the clout to negotiate their own interconnect agreements with the carriers?”
There may be some benefit to the data center industry, however, according to Metreweli.
“Hopefully this will give others - that need to deliver content to their customers - a better service at a better price,” Metreweli said.
In June trade group the Internet Association – which represents giants like Google, Facebook and Netflix - asked regulator The Federal Communications Commission (FCC) to stop internet providers abusing interconnection deals.
They claimed that fears over congestion were being exploited to forced content providers to pay extra to ensure timely delivery.
“Interconnection should not be used as a choke point to artificially slow traffic or extract unreasonable tolls from clients,” said a statement from the association.
Interconnection deals have become a subject of contention in the data center industry since Internet Association member Netflix claimed it was forced by circumstances to pay Comcast and Verizon to directly connect to their servers.
Netflix CEO Reed Hastings accused Comcast of slowing traffic so the Internet video company would be forced to pay an ‘arbitrary tax’ to provide quality streaming to its users.
We're increasingly seeing carriers and telcos turning their backs on traditional CDN providers and starting to monetize their own infrastructure by building out their own CDNs - and taking the positive move of federating capacity in regions where they have no footprint.
This gives them access to far better margins, and allows them to control what is a critical service to their customers.
Hopefully this will give other organizations that need to deliver downloads, videos, music and so on to their customers a better service at a better price.