A South Korean music video serves as one of the most radical examples of how content viewing habits have transformed over the last three years. Released in 2012, Psy’s Gangnam Style prompted YouTube to upgrade its counter at the end of 2014 so that the maximum view limit is more than nine quintillion. It had once never envisioned a world where a single video could be viewed over two billion times. Let alone one produced by a South Korean pop star of questionable talent.
The impact of this change in viewing trends on transport costs has been dramatic, and in particular has driven the need to localise content. Sensing a shift in the market, EdgeConnex entered operations in the US in late 2012 with a fresh data centre model that aims to localise content for broadband and content providers – a bold attempt to move away from the traditional regional data centre model. Targeting local markets where there is a need to improve internet performance, EdgeConneX has gone on to launch 20 Edge Data Centres (EDC) in Tier 2 markets across the US. This includes Portland in Oregon, San Diego in California and Houston in Texas.
The concept of EDC is simple but effective. It aims to bring bandwidth-intensive content and latency-sensitive applications closer to the end user, in an attempt to lower network transport costs and improve customer experience.
“We have quietly established new exchange points deeper in the network, thereby moving the edge of the internet. Now that we have developed a solid business model that is scaling, it is our objective to market and educate those in our internet ecosystem, both domestic and internationally,” says EdgeConneX’s CCO Clint Heiden.
Studying the edge
To promote its localised data centre model, the company has recently commissioned ACG Research to conduct a study into how backbone transport costs with and without localised content compare for a fixed broadband service provider.
In it is a case study on the Phoenix metro area and how traffic patterns changed pre and post EdgeConnex.
Until recently, the Phoenix metro area’s MSO internet content was hosted in a regional data centre located in Los Angeles. As a result, each internet video request made by its 1.5 million households was streamed over the backbone transport link between Los Angeles and Phoenix. So if a request to view a particular 2MB video asset – let’s assume Gangnam Style – was made 500,000 times, it would require the long-haul transport of 1000GB of data in the absence of a local internet presence.
The presence of an edge data centre in the market claims to eliminate the requirement of backbone transport capacity to just a single video of 2Mb.
“Everyone has theorised on the impact of the ‘edge’ but until this study, no one had put it in to quantitative figures. I call it the Holy Grail: better experience at lower cost,” says Heiden.
“The findings related to our edge data centres show a 10-fold improvement in latency and a nine-fold improvement in download times. Furthermore, the Mean Opinion Score (MOS), which determines the quality of the video experience for the end-user, went up 30%. Perhaps the most significant study finding is the marriage between higher quality and lower total cost of ownership for all parties.”
Heiden describes the ‘edge’ as taking a “slither of Google and a slither of the top 10 content companies” and placing it in the closest physical spot to end users.
Besides reducing transport costs, Heiden claims the ‘edge’ brings additional benefits to consumers and businesses.
A family man with “four children, a wonderful wife, a loyal dog and a goldfish that has lived too long”, Heiden has seen first-hand how today’s generation consume content.
“My kids demand an instantaneous experience. If you introduce delay, buffering or a lag on a video – they’re off. They’re loyal to performance, unlike my generation which grew up loyal to brands,” he says. “Better site performance equates to better revenues.”
As well as improving latency and internet performance, the ‘edge’ is said to also enhance security, particularly for enterprise customers. “When you move to a distributed architecture, it is far more safe and secure,” he says. “If you attack a distributed architecture, maybe you could attack one of an organisation’s site, but it won’t impact globally. The ‘edge’ is inherently more secure than a centralised core data centre model.”
A high conversion rate
In 2015, EdgeConneX plans to add at least another 10 facilities to its US footprint, bringing its total to over 30 facilities deployed in little over three years. Such a rapid roll-out is unheard of in the data centre market space, and herein lies the other side to EdgeConneX’s alternate business model. “We typically take a class C office space in a decent building. Buy it. Gut it. Then turn it into a Tier 3 data centre,” says Heiden. “We can do that process in four and a half months. Nobody else can even move a customer into an existing data centre in four and a half months.”
Each edge data centre costs up to $20 million and the company has refined its method for converting facilities: “We’ve automated so much of the process – from making sure the necessary power or grids are there, to ensuring the permitting has been approved properly. We have a propriety secret sauce on how we do that.”
In his early career, Heiden witnessed the very early commercialisation of the internet during his time with UUNET. One of the largest ISPs and early Tier 1 networks, he was with UUNET during a period of exponential growth. Heiden believes there are similarities between the early internet boom and today’s period of rapid and sustained growth.
“I believe that we are in a phase of growth that, once played out, we will not see the likes of for another 20 years. I believe growth will be exponential in size and scope of change for the next five years and then the internet will settle into its new existence for a sustained amount of time,” says Heiden. “We are truly seeing a complete change in the structure of the internet just as we did in the mid ‘90s with the creation of a few peering markets per continent. In just one year, EdgeConneX added more peering destinations in the US then previously existed worldwide.”
The cause, he suggests, is twofold – some content now cannot tolerate latency and some content requires massive bandwidth. The double edge sword is the content that is sensitive to both.
“For this reason, we have entered a new era where content is brought closer to the user versus the user being brought to the content,” he says.
“The transformation will take place for the next several years worldwide as the internet is re-architected to handle the shift. I like having been a part of that
now twice.”
Finding an edge in Europe
EdgeConneX has spent the last six months studying the European market to determine whether there could be a need for its edge data centre model.
Heiden exclusively confirmed to Capacity that it plans to launch edge data centres in 12 European locations in the next 18 months. “It will be the likes of Berlin and Edinburgh – the underserved internet markets, where it is costly to transport the content,” he adds.
The company again plans to act with speed, having already secured an anchor customer in Europe in the form of Liberty Global. One of the world’s largest cable companies, Liberty Global has also invested in EdgeConneX, with representatives joining its board of directors last February.
“Our lead investor Liberty Global will help us identify potential markets. At the same time, the content companies are coming to us and saying we have a problem – as they are constantly monitoring how their data is getting there and at what rate. They are measuring abandonment rates and what happens when a millisecond of latency hits a website,” he says.
EdgeConneX has also already begun assembling its European team, appointing Dick Theunissen as its MD and president of EMEA. Theunissen brings extensive experience of the European data centre market, having previously served as CMO for EMEA at Equinix and CMO at Interxion. Heiden claims EdgeConneX is helping to educate the industry in how to adopt a strategy geared towards localisation of content, applications, gaming, cloud, media and CDN.
Moving forward, Heiden sees IoT also driving demand for localising content. “If the infrastructure is not in place to handle latency-sensitive and bandwidth-intensive ‘things’, then the internet simply won’t work. EdgeConneX is creating the internet everywhere so that it will work for everything,” he says.
The potential for the edge data centre model to go global therefore appears poised to only increase: “EdgeConneX goes to those markets our customers and partners demand. We do not build on speculation, but instead in close partnership with our customers on site selection, making every edge data center EBITDA positive on day one,” he says. “As mentioned, that has become a global proposition for us – stay tuned.”
