Netflix to drive Australian ISP spending: Juniper Networks

Juniper Networks eager to help telcos face threat of over-the-top providers
Juniper Networks senior vice president of strategy, Mike Marcellin, in Singapore. Credit: Juniper

Juniper Networks senior vice president of strategy, Mike Marcellin, in Singapore. Credit: Juniper

Juniper Networks stands to gain from the entrance of Netflix into Australia, according to executives at the networking equipment supplier.

The networking company is helping telcos around the world face Netflix and other challenges created by over-the-top (OTT) providers, executives said this week at a Juniper APAC event in Singapore.

Telco customers of Juniper in Australia include Telstra and Optus.

Netflix announced last month that it would bring its video streaming service to Australia and New Zealand in March 2015.

The expected increase in traffic resulting from the popular streaming service could require major investment by ISPs in their networks. That could drive business to Juniper and other companies that sell services to increase network capacity and manage high levels of traffic.

“What we’ve seen consistently from a global perspective is once Netflix joins the network, it takes up something like 30 per cent of the available bandwidth on average,” said Russell Skingsley, vice president APAC for Juniper’s Centre of Excellence. “In peak viewing times, it’s even greater.”

The Netflix impact could become even greater as the ISP provides more 4K, super high-definition video, said Steve Shaw, director of service provider marketing at Juniper Networks. Netflix has promised 4K content for the Australian market.

Juniper Networks senior vice president of strategy, Mike Marcellin, said Netflix has ratcheted up traffic on networks in every market it’s entered due to a combination of strong content and a low monthly price. The service costs $7.99 per month in the US.

“I talk to lots of customers around the world, and basically, the amount of traffic growth on the network is directly proportional to whether Netflix is in their country or not,” he said.

Preparing for this traffic growth requires ISPs to make a major investment in network technologies, he said.

“You have to solve that with technology innovation … If your network’s been growing 20 per cent and suddenly it’s growing 40 to 60 per cent,” the required response will be more than “little tweaks,” he said.

Telcos must look for ways to both provide more bandwidth and simultaneously alleviate bandwidth issues on the edge, said Skingsley. This includes content delivery systems and bandwidth management techniques, he said.

That’s where Juniper seeks to come in, he said. “Juniper has built its business on the idea of bandwidth growth.”

The OTT threat

Service providers want to be more like cloud providers, says Juniper Networks senior vice president APAC, Wendy Koh. Credit: Juniper
Service providers want to be more like cloud providers, says Juniper Networks senior vice president APAC, Wendy Koh. Credit: Juniper

Netflix is just one example of the challenge telcos are facing from the rise of OTT providers, and a major way telcos are meeting this threat is by providing services beyond connectivity and bandwidth, said Juniper executives.

“For service providers, it’s really about [aspiring] to become the next cloud providers,” said Wendy Koh, Juniper Networks senior vice president APAC.

“We are partnering with service providers to automate, scale and create new services for them, so they are able to be very different in the marketplace” and acquire “more customers through the new services that they have launched.”

A recent report by the Australian Communications and Media Authority (ACMA) found that the mobile market has reached a saturation point, with the number of mobile services declining for the first time in 2013-14. The ACMA also noted the rise in popularity of OTT services, which ride on telecom networks without paying any toll to the network operator.

Telcos see over-the-top providers as “just taking a free ride” on all their hard work building communications networks, Skingsley said. “They want to get in on that, and are looking for ways to do that.”

In response, Juniper’s service provider customers in Australia are “looking at how they move their connectivity platforms more towards a high-value services platform,” said Skingsley.

“That’s a challenge for them.”

Shaw highlighted the same trend. “Providing connectivity services for enterprise customers is extremely profitable, but at the end of the day it’s a pipe.”

Compared with other global service providers, Telstra “is really out in front,” said Marcellin. Telstra is working with Juniper to deploy software-defined networking (SDN) and network functions virtualization (NFV), he said.

“They’re not doing it just for technology’s sake,” he said. “They’re actually doing it for real business value.”

In owning the network and already having an established relationship with the customer, telcos should have a major advantage over OTT companies, he said.

“These over-the-top guys have to essentially earn their customers every single day,” he said. “The more forward-thinking service providers are trying to figure out how they can provide a set of capabilities that are just going to be really compelling and sticky to their customers.”

Doing NFV and SDN is a “matter of survival” for telcos, said Shaw. However, it won’t happen overnight, he said.

“To really get there, it’s probably a couple years, honestly. I don’t think it’s 10 years, but we’ve got a ways to go.”

NFV will likely come before SDN for many service providers, he said. “They’re looking to virtualize functions, but then that whole singing-and-dancing, fully automated system where I have SDN and get all that connectivity … It’s going to take a long time to build all those connections.”

Adam Bender travelled to Singapore as a guest of Juniper Networks.

Adam Bender covers telco and enterprise tech issues for Computerworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia