Netflix Delivers One-Two Punch to Video/Data Providers

There was one tidbit in Sandvine’s recently released "Fall 2010 Global Internet Phenomena Report" that caused some double takes: Netflix represents more than 20 percent of downstream traffic during peak hours on fixed-access networks. The heaviest usage is from 8 p.m to 10 p.m.

This newest update is the eighth since 2002 in an ongoing series of comprehensive traffic-analysis studies. Sandvine’s data was made possible by the voluntary participation of its customers, who provide Internet and data service to millions of subscribers worldwide. Sandvine’s network-policy-control equipment and solutions help fixed and wireless operators manage network congestion, among other things.

The study found that, in North America, Real-Time Entertainment – streamed or buffered real-time audio and video – is the largest contributor to data consumption on both fixed networks (43 percent of peak-period traffic) and mobile-access networks (41 percent of peak period traffic). Within the Real-Time Entertainment category, Netflix is a major source of content.
 
"For service providers, this is a double whammy: not only are they losing revenue to these over-the-top offerings, but they are losing network capacity delivering these services," the report stated.

Six applications appeared in the Top 10 list for both upstream and downstream traffic in North America’s fixed networks: BitTorrent, HTTP, Gnutella, Netflix, YouTube and Facebook. BitTorrent topped the upstream list with 34.31 percent of traffic on fixed networks, while HTTP topped the downstream list with 22.7 percent of traffic (followed by Netflix with its 20.61 percent).

John Astorino, assistant vice president/Product Management with Sandvine, said that of the 20 percent of downstream traffic attributed to Netflix, only 2 percent of total users were attributed to that company.

Those numbers portend a future full of network congestion as more people figure out the technology to stream their Netflix movies.

At a CTAM brunch last week in New Orleans, Craig Moffett, vice president and sales analyst with Sanford Bernstein, commented, "Netflix is still primarily a deliverer of discs through the mail."

At that same brunch, Tom Rutledge, COO at Cablevision Systems, said he sees Netflix as a competitor to VOD but "in other ways, I see it as a service that makes people use our high-speed data service."

But operators don’t want their data networks strained to the max.

"From Sandvine’s perspective," explained Astorino, "we’re trying to help figure out how to monetize more traffic differently. The mobile space is very much on board. We’re trying to figure out how the converged network will do that. All the large MSOs try to address the architecture with policy."

-Linda Hardesty