| Econ 101: all things being equal cheaper is better than more expensive. If I have a network and my customers use Netflix and aren't going to not use Netflix because I don't want them to, then part of my job is to ensure that my customers get the bandwidth I've promised them. (This isn't how it ACTUALLY works but how it's SUPPOSED to work) As an ISP I have really rather large amounts of bandwidth in the last-mile at least in aggregate. Let's say that I can reasonably offer 20Mbps to each of my 1mm customers from my POPs to their houses. That's 20Tbps in aggregate. I probably don't have 20Tbps worth of back-haul from all my POPs to all the peering stations where I actually get the customers connected to the internet at large. If network traffic is all long-tailed and the biggest use of bandwidth is 1% of capacity and it goes down from there "free hosting" doesn't make sense. But what if traffic to one company makes up 30% (or 80%) of total back-haul utilization at peak hours? I'm spending a lot of capacity for a single destination. Now what if that place offered to create a magical wormhole from their servers to my customers at my POPs such that a large fraction -- say 80% -- of my customer's traffic from/to them never hits my back-haul it just appears out of thin air at the POP. Would I consider this a good deal? Depends on how much I pay for the back-haul versus how much electricity they're going to use at the POP. All-in I would suspect that it is a good deal thinking in these terms. That's precisely what the Netflix appliance is. It's a way to give the customers Netflix without costing any bandwidth on the back-haul network that ISPs operate. The reason that ISPs aren't all jumping right on this (despite the likely cost-savings) is that they view Netflix as the competition and they're prefer an adversarial relationship that hopefully puts Netflix out of business rather than cooperating and in their minds speeding their own demise. So the rule of thumb you're looking for is that ISPs should start giving out free hosting when it's cheaper to give free hosting than to pay for the back-haul. |
It makes sense, then, that one of the few large cable companies that uses Open Connect is Cablevision, who's CEO is on the record saying "Ultimately over the long term I think that the whole video product is eventually going to go to the Internet."[1]
He's one of a few that has accepted the eventual fate of cable TV, and so his business decisions aren't biased by a need to delay the inevitable.
[1]: http://online.wsj.com/news/articles/SB1000142412788732342060...