“ott: a win win for all” conference by broadband india forum … · 2019. 4. 5. ·...

2014613-393 | Confidential

Infrastructure investment by online service

providers

“OTT: A Win-Win for all” conference by Broadband India Forum

Ashwinder Sethi, Principal, Analysys Mason (Delhi)

5 April 2019


Contents Demand drivers and infrastructure investment

Key investment trends by cluster

R&D and other initiatives

Conclusion


4

Internet infrastructure requirements are growing due to an expanding user base, popularity of rich content, and the rise of cloud services

Demand drivers and infrastructure investment

Source: ITU, UN, Cisco Visual Networking Index 2016-2021 and earlier editions, Cisco Global Cloud Index 2016-2021 and

earlier editions

57

84

136

199

262

53%

64%

75%

83%86%

Clo

ud

wo

rklo

ad

s a

nd

co

mp

ute

s (

millio

n)

2013 201620152014 2017

+46%

Cloud workloads

Cloud share of all workloads

Co

nsu

me

r in

tern

et

tra

ffic

(P

B

pe

r m

on

th)

42.4

20172013 2014 2015 2016

29.133.6

58.6

76.4

+27%

3.4

2013

1.0

2014

2.7

Ye

ar-

en

d in

tern

et

use

rs (

billio

n)

1.00.9

1.7

2.6

1.0

2.02.2

2015

1.0

2.4

2.9

2016 2017

3.2

3.6+8%

Developed countries

Developing countries

Total


Overview of clusters of infrastructure investment

5

From 2014-17, OSPs have invested over USD300 billion in total in hosting, transport, and delivery infrastructure



Average annual OSP investment (USD billion)

6

Average annual investment has more than doubled since 2011-13, with hosting accounting for the large majority of investment spend


2014–17

69.70.9

29.6

2.7

2011–13

2.23.6

75.5

33.2

+127%

TransportHosting Delivery


Average annual OSP investment by cluster (USD billion)

7

OSPs are moving facilities ever closer to end users, and have become increasingly more directly involved in investment



Average annual total investment by region (USD billion, 2014-17)

8

North America accounted for the largest regional share of OSP investment from 2014-17, followed by Asia-Pacific and Europe






Conclusion


Annualised R&D spend for nine main OSPs in 2013 and 2017

11

Large OSPs spend as much if not more each year on total R&D (an opex item) than total capex (purchase of property and equipment)


Note: OSPs for which R&D was tracked include Google, Microsoft, Apple, Facebook, Alibaba, Tencent, Baidu, eBay, and Netflix.

Facebook, Microsoft, Tencent, Alibaba, Baidu, eBay, Netflix, and Apple. Amazon has been excluded as the company does not

report R&D separately from total “technology and content” opex

Source: Company financials, Analysys Mason, 2018

USD billion

2013

2017

27.2

59.6

+119%


Google’s third generation Cloud TPU

12

Some portion of the output from R&D is eventually used in infrastructure


Source: Google Cloud, 2018


Microsoft Project Natick’s Northern Isles data-centre being prepared for deployment

13

OSPs are also investing in innovative ways to deploy infrastructure to meet demand for services and to improve connectivity


Source: Photo by Scott Eklund/Red Box Pictures, provided by Microsoft, 2018





Conclusion


▪ Investment has more than doubled to USD75 billion per year

▪ Majority is on hosting, but transport and delivery also significant

▪ OSPs spending supports investments by others in the ecosystem

▪ Benefits to technology sector, labour market, and for all users of the Internet

15

OSPs are investing substantial sums in infrastructure, providing benefits to a wide range of industry stakeholders

Conclusion

Contact details

Ashwinder Sethi

Principal

[email protected]

David Abecassis

Partner

[email protected]

New Delhi

Tel: +91 124 4501860

[email protected]

Milan

Tel: +39 02 76 31 88 34

[email protected]

Manchester

Tel: +44 (0)161 877 7808

[email protected]

Cambridge

Tel: +44 (0)1223 460600

[email protected]

Dubai

Tel: +971 (0)4 446 7473

[email protected]

Dublin

Tel: +353 (0)1 602 4755

[email protected]

Madrid

Tel: +34 91 399 5016

[email protected]

Paris

Tel: +33 (0)1 72 71 96 96

[email protected]

Singapore

Tel: +65 6493 6038

[email protected]

Boston

Tel: +1 202 331 3080

[email protected]

Hong Kong

Tel: +852 3669 7090

[email protected]

London

Tel: +44 (0)20 7395 9000

[email protected]

Oslo

Tel: +47 920 49 000

[email protected]

Stockholm

Tel: +46 709 211 719

[email protected]

0)1223 460866@AnalysysMason linkedin.com/company/analysys-mason youtube.com/AnalysysMason analysysmason.com/RSS

Kolkata

Tel: +91 33 4003 3093

[email protected]

New York

Tel: +1 212 944 5100

[email protected]

mailto:[email protected]

mailto:[email protected]


Contents Hosting

Transport

Delivery


Share of total existing data-centres operated by “hyperscale providers” as of 2017

18

As of 2017, large OSPs were using close to 400 data centres, with nearly half located in the US


Note: Synergy data is based on an analysis of 24 major cloud and internet service firms (“hyperscale providers”), including the

largest operators in SaaS, IaaS, PaaS, search, social networking, and e-commerce

Source: Synergy Research Group, 2018

0% 40%10% 20% 30% 50%

Other

Germany

US

Canada

China

Ireland

Japan

Australia

Singapore

India

Hong Kong

UK

Netherlands

Brazil

North America

Across all regions

Latin America

Europe

Asia-Pacific

Total count of facilities as of December 2017: >390

Distribution:

Source: © Synergy Research Group 2018


Aerial view of a Tencent data centre under construction in Guizhou

19

OSPs have begun constructing their own data centres, with several facilities opening in new regions


Source: Visual China Group / Getty Images


Number of cloud availability zones by region for major US- and China-based cloud providers as of August 2018

20

Large OSP cloud providers also rely extensively on colocation facilities to expand their footprint


Source: Company websites, Analysys Mason, 2018

Combined, Amazon, Microsoft

and Google has a comparable

number of cloud availability

zones in the Asia-Pacific as in

North America, in spite of the

former accounting for fewer

self-built facilities


Racks in Facebook’s Prineville Data Centre

21

Aside from building and leasing data centre space, OSPs also invest significant amounts in hardware and cooling


Source: Facebook, 2014


Google PPA locations and capacity

22

OSPs are among the largest purchasers of renewable energy, and employ a variety of methods for procurement


Source: Google LLC, 2018


Contents Hosting

Transport

Delivery


Total used international bandwidth

24

OSPs account for a growing share of international bandwidth use, which drives transport investment

Source: TeleGeography, Analysys Mason

9%

101

2014 20152012

147

Tb

ps

2011 2013 20172016

69

214

305

454

689

Content Providers OthersInternet Backbone Providers

13% 22% 29% 35% 40% 49%

Content provider share of total



Map of expected submarine cables with OSP investment by 2020

25

While most OSP transport spend is indirect, they are also directly investing more in their own submarine cables

Source: Analysys Mason based on information from TeleGeography, news articles, company press releases, 2018


Amazon Facebook Google Microsoft

Jupiter

Jupiter

HKA

PLCN

Junior

Tannat

Unity

Malbec

Bay to Bay

Express


Contents Hosting

Transport

Delivery


Evolution of public and private peering points for 10 large OSPs

27

OSPs have invested in many more public peering points, however, more traffic is exchanged via private peering


Note: The 10 OSPs comprise Google, Amazon, Facebook, Microsoft, Apple, Yahoo, Tencent, Baidu, Netflix and eBay

Source: PeeringDB, 2018

302

295

1,096

554

Number of non-unique peering points

Private

Public

+263%

+88%

2014

2018


Internet traffic by CDN use

28

OSPs have increasingly built in-house content delivery networks to optimise content and cloud services


Source: Analysys Mason based on Cisco Visual Networking Index, 2016-21

32%

48%

20%

22%

48%

30%

2016

2021

In-house CDN traffic Non-CDN traffic

Commercial CDN traffic

“ott: a win win for all” conference by broadband india forum … · 2019. 4. 5. ·...

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