Snatching the CDN market telecom giants join forces to “de-telecom”

The so-called CDN (Content Delivery Network) is a content distribution network. It adds a layer of intelligent virtual networks to existing networks to solve network traffic congestion and achieve cloud acceleration. The matter was originally settled in June this year, but the final structure was not confirmed until mid-October because of the ownership structure design. Previously, the cooperation has been discussed for half a year. Both parties will jointly fund the establishment of the company and will be listed in the near future.

Design Bureau

Historically, as China's telecommunications industry has long formed the pattern of “Southern Telecom and North Unicom” (ie, the foundation of China Unicom is in the northern market and the foundation of China Telecom is in the southern market), a batch of CDN service providers have been spawned, after a round of rounds. Reshuffle, the current CDN market has basically formed the situation of the "double oligopoly" of the network and the blue 汛. The market share of the two sides together accounts for 80% of the entire Chinese CDN market. However, this situation may be broken due to the establishment of a joint venture subsidiary of China Telecom and China Unicom's CDN.

It is worth noting that with the influx of operators, the Internet giants have flocked. In April of this year, while China Telecom ranked 31 provinces in the national CDN market, Alibaba also announced the commercialization of the CDN platform.

Previously, China Telecom Cloud Corporation, which was responsible for the operator's CDN joint venture operation company, was established in March 2012. This company is currently the largest cloud computing service provider in China, and is a further attempt of China Telecom’s “de-telecomization” reform, in China. Within the telecommunication group, cloud computing companies are positioned as an Internet company.

When Wang Xiaochu, Chairman of China Telecom, said during his investigation in Guangdong that China Telecom’s broadband traffic is the largest, China Telecom’s CDN adjustment of network quality on the main network is much larger than that of other operators. This time, China Telecom and China Unicom jointly established the CDN company to improve the information highway for the expansion of the two basic operators.

In fact, the real intention of operators to enter the CDN is to seize the cloud service portal, which is an important fulcrum for their transformational Internet companies. In 2013, the overall size of China’s CDN market was 2.2 billion yuan. Although it increased by 50% year-on-year, it was still a small sum of money for operators. However, China Telecom and China Unicom’s marriage took up the CDN market. In the view of the industry, Significant. An insider of the operator told the Economic Observer that "The most serious challenge from the reality is that if the operator does not grasp the content, it will become a pipeline operator completely. This is the last thing that everyone wants to see."

From the Internet company OTT (the abbreviation of “OverTheTop, which provides users with various applications via the Internet”) services such as killer applications such as WeChat have caused operators to suffer from difficulties, then how to transform into an Internet company, to be pipelined is to operate Business strategy choices.

According to the above-mentioned operator insiders, "The operator only earns the money of the underlying bandwidth is limited, and the price war has already pushed the profit margin to the ceiling, so everyone is wondering how to transform to do service. Cut into the CDN market, is conducive to cloud services Access and business model research."

According to the latest news, the China Mobile Internet company that was planned to be established three years ago will really begin the process of formation. It will be based on the base in Guangzhou Tianhe, and will lay out China Mobile’s Internet business. According to an insider of China Mobile, "How to integrate various types of digital content previously distributed by China Mobile is an important part of this Internet company."

Operators big players

"The most important measure of CDN service is the whole network, so we set up a joint venture with China Unicom to cover the country's CDN services and completely solve the 'cross-network' problem." An insider of China Telecom Cloud Computing Corporation, " For operators, the harvest of the CDN market is only superficial. The deeper meaning is that the cooperation between the two sides at the level of network resources can help their Internet business to open up a broader market.” China Telecom proposed to recreate a “new China” in five years time. Telecommunication, and cloud computing is one of the key players in building "New China Telecom." On August 31, 2011, China Telecom announced the cloud computing strategy for the first time as an important direction for transformation. On March 30, 2012, China Telecom Cloud Computing Corporation was established, responsible for the intensive operation of all China's telecommunications cloud computing-related Business, such as CDN, cloud storage, cloud hosting, and so on.

With the transition to “de-telecomization”, the operating model of China Telecom Cloud Corporation has also been quietly changed. In fact, the influx of operators into the CDN market is the entrance to the cloud computing business. According to Xu Shoufeng, deputy general manager of China Telecom Cloud Corporation, the company’s initial positioning is semi-telecom and semi-internetization. It will be a good thing in the telecommunications industry. The good things from the Internet will be used to maintain product R&D, project implementation, and operational reserves. Walk on two legs. Instead of simply following the basic practice of the traditional telecommunication project system, one project will be completed and one project will be completed. However, the product and operating system will be adjusted spontaneously according to market demand at any time. ”

In order to avoid becoming a “pipeline” in the era of mobile internet, telecom operators are accelerating their transformation. Incubation bases such as China Telecom Tianyi Video, Love Games, and Tianyi Reading are regarded as one of the core innovations of China Telecom.

In March of this year, China Telecom Incubation Base was listed in Shanghai. In the same month, 14 entrepreneurial teams were selected from 382 entrepreneurial projects within the China Telecom Group to introduce an incubation base. These projects are divided according to maturity, and it is recommended to enter 10 incubate projects and recommend 4 enteral projects. Divided by professional dimensions, there are 6 mobile internets, 3 e-commerce, 2 cloud computing, and 3 internet of things. There are currently 3 teams that are about to enter the corporatization stage.

While making great strides in the mobile Internet, China Telecom has also stepped up its efforts in cloud computing. According to Xu Shoufeng, this year will focus on building five major industry cloud solutions, including government affairs, education, medical care, finance, and parks. At the resource level, China Telecom has built a “4+2” resource layout that covers the entire country and backs up each other, namely two large green cloud bases in Inner Mongolia and Guizhou, and four large-scale clouds in Beijing, Shanghai, Guangdong, and Sichuan. Resource pool.

Against these backgrounds, for China Telecom and China Unicom, the CDN is a basic requirement for triple play (telecommunications network, broadcast television network, and Internet convergence). The integration of these super players into the infrastructure of the CDN will not only solve the cross-network problems within the fixed network, but will even affect the future of triple play.

Co-opetition

“In the past, when people talked about operators entering the market, the most common problem was cross-network and system issues. The combination of China Telecom and China Unicom solved these two problems together. However, CDN is different from network construction and is a heavy-duty business. In particular, the diversity and complexity of the domestic Internet industry is much higher than that of infrastructure construction, so how to do a good job is the key to joint ventures. On the other hand, it is worth noting that with the influx of large players, How will the competitive landscape of China's CDN change?” said Yang Kailiang, an analyst at Chi Dao Consulting.

Obviously, as players continue to enter, traditional CDN companies will face competitive pressures from multiple parties: Alibaba and other domestic cloud service providers are expanding the commercialization of their CDN; Internet giants such as video and games have also started CDN self-building to reduce the The dependence of third-party CDN service providers; on the other hand, Telecom Unicom's marriage will erode the market share of CDN; these will all impact on traditional CDN service providers in China.

“Actually, the role played by CDN service providers is to groom traffic police who are blocked by the network.” Liu Hongtao, vice president of ChinaNetCenter Technology, made a metaphor. In his opinion, the advantage of telecom operators lies in the service of pipelines. It is inevitable that the transition will become a "logistic company" in the information age. However, the problem is that after operators and Internet giants began to enter the CDN market, the relationship between operators and CDN service providers has changed, and the two sides have changed from cooperation to a co-opetition relationship. What new gameplay will be played?

Liu Hongtao thinks, “The entry of operators and Internet giants can make the whole cake bigger. For example, Alibaba Cloud entered the CDN and made the cake on the CDN platform bigger. Because Ali’s platform covers a lot of small and micro customers, these small and micro customers will come It may become a major customer or a target customer of the CDN. This complements the entire CDN market."

He cited the example of Akamai, the inventor of the CDN technology architecture, as a reference. In 2012, Akamai and U.S. operator ATT announced the establishment of a strategic alliance and expanded its business to the world within 12 months. ATT transferred existing CDN operations, customers, and services to the Akamai platform and embeds Akamai's technology in ATT's IP network to circumvent the momentum of explosive media growth in the media and retail industries. “In general, global large-scale Internet companies will have a certain amount of CDN self-built, but they will be based on the basic technology level. Technical thresholds for high CDN services will still be outsourced, such as covering their main business with Baidu’s own CDN coverage nodes. District, and what Netbank needs to do is to help it improve the coverage of the border areas.” “Compared to the domestic CDN market with only 2 billion in volume in 2013, operators such as Alibaba and other Internet companies are not looking at the current market size. It's the huge prospect of this market.” Analyst Yang Kailiang of Informatics Consulting made an analogy. “The CDN is equivalent to a smart hub, which eases Internet traffic and tells you where the roads are open. More than half of Internet traffic in North America is distributed through the CDN. of."

Obviously, the Internet is accelerating its penetration into traditional industries. The rapid growth of smart cars, smart homes, and wearable devices has led to explosive growth in Internet traffic. The bandwidth of mobile phone networks has doubled and the backbone network has increased by tens or even hundreds of times. . With the advent of 4G or even 5G markets, the demand for CDN in the communications market will be even stronger.

As for the development trend of CDN, Liu Hongtao believes that big data will inevitably become the future of CDN. “No industry has such a total amount of data as CDN.” Then the next question is, when operators and Internet companies, CDN service providers As the information superhighway continues to expand, the next step in how to make fun of the CDN and establish new business models will be a common challenge for these CDN players.