Confronting P2p

Trend Analysis

May 31, 2007

by David Vorhaus, Research Associate , [email protected], 617-880-0363

Confronting the Albatross of P2P The Bottom Line: Key Concepts: Who Should Read:

Accounting for approximately 60% of all internet bandwidth usage, peer-to-peer traffic is a massive hurdle for service providers. However, P2P also provides an emerging business model for traffic control and distribution. P2P, peer-to-peer, content distribution, policy management, network traffic growth, IP video Product development, business development or product marketing executive at a telecom equipment manufacturer; network management executive in charge of investing in service or policy control solutions

Practice Leader: Philip Marshall, Ph.D., Enabling Technologies Service Provider—Vice President, [email protected], 617-880-0260

The Continuing Prevalence of P2P Traffic Using peer-to-peer (P2P) methods of content storage or file sharing is certainly not a new phenomenon. Dating back to the late 1990s and the glory days of Napster, P2P has alternatively served as a blessing for greedy consumers, a scourge for possessive content owners and a bandwidth weight hanging around the necks of network operators. Yet with the fall of P2P clients and applications such as Kazaa and eDonkey, and the neutering of Napster, some of the fervor surrounding illegal file sharing over P2P and the necessity to stop it has been quieted. The question now is: How much does P2P still matter as a technology, to both content owners and network operators? The answer: It matters a great deal. The role of P2P in dictating and influencing the flow of internet traffic over public networks today is staggering. Although it has dipped from its high point of approximately 70% a few years ago, Yankee Group estimates that P2P traffic still constitutes approximately 60% of all traffic that traverses the public internet. Moreover, as the leading P2P protocol, BitTorrent alone accounts for roughly 40% of all bandwidth. Even more startling is the source of this traffic. The top 5% of users account for roughly 50% of all downstream traffic, indicating that it is these few “bandwidth hogs” that are pushing the limits of network capacity through massive P2P file transfers.

What Is the Effect of P2P and How Is It Changing? Having established the tremendous burden that a relatively modest number of P2P users place on public networks, the question becomes: How does this traffic volume affect service providers, content owners and equipment vendors? There are a number of consequences of the role of P2P traffic, both harmful and beneficial, which are critical to understanding and controlling operators’ networks and content distribution. Demand Exceeds Supply Without the availability of unlimited bandwidth, network demand will far outpace network resources in the coming years. Unless carriers are willing to endlessly increase capacity on their networks—a strategy that would be both incredibly costly and inefficient—there is a finite amount of bandwidth available to subscribers. In times of peak usage, bandwidth-hogging users sharing large files over P2P can push networks to their absolute limit. In such a situation, users of latency-sensitive applications such as VoIP, streaming video or gaming may experience network lag and poor quality of experience.

Yankee Group published this content for the sole use of Yankee Group subscribers. It may not be duplicated, reproduced or retransmitted in whole or in part without the express permission of Yankee Group, 31 St. James Ave., Boston, MA 02116. Phone: (617) 956-5000. Fax: (617) 956-5005. E-mail: [email protected]. All rights reserved. All opinions and estimates herein constitute our judgment as of this date and are subject to change without notice.

Confronting the Albatross of P2P

May 31, 2007

This problem is poised to worsen in the coming years. Factors such as increased worldwide broadband penetration and the migration of large file formats such as standard or high-definition video to IP will create a greater bandwidth crunch for network operators. Compared to HTML and voice and music traffic, video (and especially HD video) files consume a massive amount of bandwidth (see Exhibit 1). As content owners migrate more video content to IP networks, bandwidth demand will inevitably skyrocket. Telecom statistical tracking firm TeleGeography predicts that public internet traffic will double its current level of approximately 2.5 million Mbps to 5.0 million Mbps by the end of 2010, and rise to more than 7.0 million Mbps by 2012.

Exhibit 1. Approximate Size of Content Types 3.0

2.5

2.0

Size of 1 Hour of Content (in GB)

1.5

1.0

0.5

0.0

E-Mail

Voice

Music

Standard Video

HD Video

Source: Yankee Group, 2007

As Bandwidth Demands Increase, So Do Investments in Tools to Control P2P As a result of this increasing demand on scarce bandwidth, the burden of P2P traffic is driving investment among service providers and large equipment vendors in next-generation service control solutions. Technologies such as deep packet inspection (DPI) are seeing strong market growth as service providers look to solutions that can reliably identify P2P traffic and overcome port hopping or masking techniques designed to disguise traffic types (particularly in markets such as Asia-Pacific, where P2P traffic volume is of great concern). This growing investment is already evident in the recent initial public offerings by DPI vendors Allot Communications and Sandvine Incorporated, the new rounds of funding for competitive vendor Ellacoya Networks, the purchase of pure-play vendor P-Cube by Cisco, the announcement of new service control products with enhanced capabilities and scalability, and the increasing partnerships between these standalone vendors and larger equipment manufacturers such as Alcatel-Lucent and Juniper. Moreover, by folding stateful inspection technologies such as DPI into broader policy management and enforcement solutions, vendors can equip service providers with QoS controls to prioritize latency-sensitive traffic at times of peak usage and therefore maintain a high quality of experience for subscribers. The Role of P2P in Video Distribution Although video will comprise a greater percentage of internet traffic in the coming years, it is inaccurate to characterize this content as something wholly separate from P2P traffic, as some observers are prone to do. Rather, P2P has a role to play in video storage and distribution for both economic and capacity reasons. Therefore, P2P can aid operators rather than become a traffic burden. P2P technology is better equipped to handle large file formats such as video than alternatives such as a content distribution network (CDN). As network operators look to counter the increasing traffic flows that video will create, locally caching content and distributing it in a peering model is an attractive method of controlling the problem. The sheer volume of video traffic on the horizon behooves content owners and service providers to entertain P2P technology as a viable distribution mechanism.

© Copyright 2007. Yankee Group Research, Inc. All rights reserved.

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Confronting the Albatross of P2P

May 31, 2007

P2P Goes Legit P2P is gaining a measure of legitimacy, which supports the business case for using the technology as a distribution mechanism. Moving beyond the dark days of illegal file distribution in a peering model, P2P solutions from companies such as BitTorrent, Solid State Networks and Red Swoosh (part of Akamai) are marketing themselves directly to content owners as a more efficient and cost-effective way to disseminate content. Additionally, hybrid P2P-CDN solutions such as those offered by Joost, CacheLogic and Oversi appeal to service providers by calling out the ways that P2P caching can alleviate the concerns brought by increased traffic flow. As more content owners and service providers look to these solutions and P2P technology distances itself from the stigma brought on it in previous years by the media and the courts, “legitimate” P2P could surpass its illegitimate cousin in terms of traffic volume.

The Dichotomy of P2P The upshot of these outcomes is that P2P provides both a troublesome traffic burden and an emerging business opportunity for both content owners and service providers as network resources grow scarcer. P2P will continue to constitute nearly two-thirds of traffic on the public internet in the coming years. Its role in video distribution will be magnified as content owners respond to consumer demands to have their content available anywhere by migrating an increasing amount of video to IP. This will in turn spur greater investment in policy management and control solutions that are designed (in part) to mitigate the burden of P2P traffic. Yankee Group forecasts the market for policy management to reach $718 million by 2010. Yet P2P technology has the potential to help alleviate many of the same concerns that it creates. P2P is likely to grow as an alternative distribution mechanism that can handle large file formats and locally cache massive amounts of content in a peering model to relieve traffic pressure on the network backbone. As this occurs and the legitimacy of the technology becomes more established, both service providers and content owners will rely on P2P to distribute and store content in a more efficient and cost-effective manner.

Recommendations •

P2P caching solutions must achieve carrier-grade reliability and scalability. Traffic over the IP backbone of the largest service provider networks can exceed 6 petabytes on a daily basis. To make a significant dent in controlling this level of traffic, particularly as it grows, P2P caching vendors must increase the scalability of their products, as well as provide a measure of reliability that meets the comfort level required by service providers. Distributing video for a major content provider such as HBO or ESPN is all well and good, but it is not the same as managing the P2P traffic for a service provider such as AT&T or BT.

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Larger vendors should have targeted solutions that address P2P management. Service providers are aware of the role of P2P traffic in the coming years, and they are undoubtedly concerned about it. As one major North American operator described the situation, while P2P traffic is currently huge in the network, it is just touching on the growth potential. Once companies such as Blockbuster and Netflix place all of their content online, the operator expects P2P traffic volume to escalate quickly and become a significant problem. Tier 1 vendors must directly address these concerns by marketing solutions that specifically control P2P traffic. Examples of these sorts of targeted solutions include embedded DPI technology, partnerships with pure-play DPI or policy management vendors, enhanced network management capabilities within existing elements, or localizing P2P traffic through caching solutions.

© Copyright 2007. Yankee Group Research, Inc. All rights reserved.

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