ISP Strategy to Overcome "Bandwidth Greedy" OTT Services

The story of Telkom and Netflix is ​​entering a new chapter. Unblocking the service after 4,5 years, this time the root of the problem is the claim of costs incurred by the ISP / operator to provide network pipes which are considered not worth the money. Yago's defensive effort provided by foreign OTT services.

Telkom hopes that there will be further business agreements with OTT services, so that they will not only be dumppipe "greedy" service bandwidthTelkom's proposal for Netflix is ​​to connect with Telkom's Content Delivery Service (CDN) which is run by its subsidiary, Tel, which works closely with global CDN player Akamai.

The scheme that is expected to emerge is cooperation in joint product offerings, for example between: Telkomsel and Disney Plus, or payment of premium access fees so OTT consumers can enjoy bandwidth priority.

Netflix itself has created its own CDN called open connect. This program provides ISP partners with the opportunity to improve the Netflix experience for their customers by localizing Netflix traffic and minimizing traffic served through transit providers.

This way It is considered cost efficient uplink WAN to provide the best experience to users is very expensive. ISP will do peer with Netflix at the IXP location, but to simplify the process, OCA (Open Connect Appliance) is provided for hosting locally.

Menurut report S&P Global, Netflix is ​​actually included in the ranks of OTT services that are aggressively establishing partnerships in various Asia Pacific countries. In Singapore, Netflix has bundling packages with StarHub and Singtel. In Sri Lanka, they work with local provider Dialog. Previously, India secured an agreement with Atria Convergence Technologies and ACT Fibernet.

In Indonesia itself, even though it is one of the most popular OTT services, Netflix's partnership progress is relatively slow. Netflix currently does not accommodate payments other than debit/credit cards. Meanwhile, with ISP, they have done promotions with XL and XL Home.

Telkom's complaint regarding the greedy service phenomenon bandwidth or bandwidth hog actually not new and not unique. According to the "2019 Global Internet Phenomena Report" compiled by a network equipment company Sandvine, service streaming is the largest contributor downstream traffic around the world. Netflix and YouTube were named as the biggest contributors.

Video streaming apps consume 60% of total volume downstream traffic on the Internet. Netflix took up 12,6% of the total volume downstream traffic across the internet and 11,44% of all internet traffic. This is followed by Google at 12% of all internet traffic, driven by YouTube, search engines and the Android ecosystem.

In its home country, Netflix is ​​one of the initiators of network neutrality (net-neutrality). However, along the way, Netflix paid premium fees to the four largest ISP and telecommunications players in the United States, namely Comcast, Time Warner Cable, Verizon and AT&T.

This March, European Union urged Netflix to lower video quality to standard format in anticipation of potential bandwidth overload. As an illustration, streaming one hour of video in standard format on Netflix takes up 1 GB of capacity, while HD format goes up to 3 GB.

Like most other streaming apps, Netflix uses a method adaptive bit rate (ABR) as the regulatory standard. Every service streaming will automatically adjust based on the customer's internet connection at that time, to provide the best experience. Customers can also manually set the video quality to a lower level to save bandwidth.

Operator attitude

In a virtual discussion held by Sobat Cyber ​​Indonesia Official on Friday (25/9), Telkom Wholesale & International Service Director Dian Rachmawan considered that foreign OTT services never pay infrastructure costs, even at the same time eliminating the operator's main income, namely Voice and messaging.

On the other hand, Dian claims that the current regulations are asymmetrical. Network operators are tightly regulated, while digital competitors do not have any regulatory obligations due to their highly fluid and global nature.

“OTT enjoys the extraordinary advantage of being tax-free in almost all countries, while traditional operators have to pay Hosting Rights Fees (BHP), taxes and Universal Service Obligation (USO). Currently, they are only subject to the obligation to collect VAT tax that is actually paid by customers. "The government has not been able to collect income tax from business activities in Indonesia," he explained.

Due to the absence of OTT service regulations, the experimental steps chosen by Telkom to accept the existence of OTT services are four ways, namely blocking OTT services, bundling with OTT services (creating special data packages), partnering commercially with OTT services, and developing their own OTT services.

Telkom chose to block Netlix in 2016 and combined three other measures against foreign OTT services.

Three other local operators when contacted DailySocial have a different view. Synergy direct peering is called a key. In the world of ISPs, peering is the process of two internet networks connecting and exchanging traffic at an IXP (International eXchange Point).

This allows them to connect directly to hand off traffic between each other's customers, without having to pay a third party to carry that traffic over their internet network.

Without an IXP, crossing from one network to another would be dependent on transit providers which often has a negative performance impact. With IXP, a network can do peer with several other networks over a single connection and can provide traffic without the entry of a transit provider.

The ISP that the IXP connects to usually makes an agreement peering and pay for a portion of the maintenance of the physical infrastructure at the site.

Indosat Ooredoo, for example, states that OTT services are one of the services that customers access using internet facilities. Therefore, the company already has commercial collaborations with almost all major OTT services operating in Indonesia. The aim is to ensure that no parties are harmed, whether in terms of customers, operators or OTT service providers themselves.

"Of course, it is our obligation as a telecommunications service provider to meet customers' digital needs with various package options that can be selected according to each customer's needs," explained Indosat Ooredoo SVP / Head of Corporate Communications Turina Farouk.

Direct peering Operators are needed because their aim is to provide more services to customers because they are directly connected to content providers. Thus, the latency and uncertainty constraints of the connection through “transit provider” can be omitted.

In practice, Indosat implements direct peering with topology below this.

Meanwhile, Terry Williams, VP Product & Marketing MyRepublic, explained, on the one hand, foreign OTT services are the biggest contributors to international traffic, which is significantly more expensive than local traffic.

But on the other hand, foreign OTT is one of the main drivers behind the acceleration of ISP business growth, especially in these difficult times. The solution that ISPs can do is to do so direct peering with OTT players and puts server- throughout Sumatra and Java so that consumers can gain experience streaming best.

“This method can also reduce costs bandwidth international which allows us to offer truly unlimited high-speed internet [without fair usage policy] in Indonesia," said Williams.

Only XL Axiata agrees with Telkom's statement. Group Head Corporate Communication Tri Wahyuningsih (Ayu) said that this assumption could be justified because the current situation is that many OTTs do not have local infrastructure in Indonesia.

As a result, traffic will immediately use it bandwidth quite large international. According to him, there are two conditions that cause this to happen. First, the number of OTT customers is not yet large so they do not feel the need to create infrastructure in Indonesia.

"In this case, of course, it willimpact pada customer experience, if the ISP does not have enough bandwidth then experience definitely disturbed," said Ayu.

Second, the big OTT services that usually see experience sebagai value most importantly will definitely think about starting to build local infrastructure to improve consumer experience.

Just like Indosat and MyRepublic, XL Axiata made an agreement direct peering to reduce latency on the network by having direct access to the OTT in question. Some of the services that are already connected are those that have high traffic, such as Netflix, YouTube, and Facebook.

"From a simple topology, all XL customers will have it hop routing which is smaller when compared to using open networks. "

He also confirmed that OTT needs to make more contributions, not just marketing promotions. This is because investment in building network infrastructure is expensive, especially in Indonesia, which has a large territory and consists of many islands.

The company always analyzes OTT usage traffic vs number of customers to encourage OTT to have local infrastructure.

“This will be quite helpful for us to improve value and customer experience. Apart from that, we always hope that OTT can also contribute. Not only in terms of promotions marketing, but also delivers fair sharing contribution. "

He gave an example, contribution from the supporting infrastructure side as one way to do this balancing to cost infrastructure and customer acquisition.

Shopping bandwidth international started to fall

Chairman of the Indonesian Internet Service Providers Association (APJII) Jamalul Izza said that currently internet access via smartphones reached 171 million people, up 317% from 2015. Of this figure, 80% of them were OTT users. In the smartphone device industry, many OTT services are already embedded as preinstall from the manufacturer because it is believed to provide competitiveness in the eyes of consumers.

OTT services drive exponential growth in network traffic. Since OTT started to become popular five years ago, there has been an increase in the amount of IIX (Internet Indonesia Internet eXchange) traffic from 30 Gbps in 2015 to more than 800 Gbps this year.

"Now local traffic has increased because many foreign OTTs have put CDN into the country and some have connected with IIX. "The advantage for us when spending is that dollars eventually fall and international traffic automatically decreases," said Jamalul.

Several foreign OTT services have entered the IIX network, such as Facebook, Alibaba, and Akamai. This condition has an impact on decreasing the current account deficit (current account deficit) because the need for United States dollars is decreasing for international bandwidth spending.

Facebook's entry into IIX had a major impact on reducing international bandwidth spending. Google and Facebook are technology giants whose services are widely used throughout the world.

IIX itself functions to speed up local internet access in the area. It is passed by traffic internet-protocol, both from abroad and domestically, and then directed to internet users, both individuals and organizations.

Currently there are 14 IIXs spread across Medan, Pekanbaru, Palembang, Lampung, West Java, Central Java, Bali, Balikpapan, Sulawesi, Manado, Banten, and the center is in Jakarta.

Jamalul sees that foreign OTT services are starting to realize that Indonesia is a good market for them. Placing the server domestically will have a good impact when surfing the internet. "Now they [foreign OTT services] are starting to approach them because if you put them outside the experience will be much different."

An increase in local traffic is actually what is most needed for the industry because it cannot be denied that the role of foreign OTT services is quite crucial and has high traffic.

"This is a form of OTT contribution that can be given to APJII friends who are building infrastructure. "Therefore, we need clear regulations regarding foreign OTTs doing business in Indonesia."

Not only placing servers in the country, APJII assesses that ideal OTT service conditions contain four elements, namely fair revenue distribution, benefit all parties, level playing field the same thing, and data sovereignty because the data is in Indonesia and must be connected to IIX.

“The association's dream is how Indonesia can become internet hub in this world. Now is it in Singapore or not Hong Kong? "For this reason, now what we are working on is how to increase local traffic so that not all traffic goes abroad," he concluded.