Paying less for bandwidth to serve-up streaming media and downloadable video clips on websites could become the bait that hooks the customer. At least that’s what James Segil, co-founder and president of content delivery network EdgeCast Networks, hopes.
On Monday, the Los Angeles-based company plans to introduce a flexible bandwidth pricing model to the CDN business. Most CDN companies charge fixed bandwidth prices along with other services. These are annual contracts, and can cost many hundreds of thousands of dollars per year, and large media sites spend many, many millions, depending on the volume.
Segil says most CDNs today lump the cost of bandwidth with the cost of services. As a result, even though bandwidth prices decline at a steady rate, the CDN operators don’t pass the savings to the customers, and thus make higher profits.
In EdgeCast’s pricing model, the cost for bandwidth remains flexible, decreasing for customers as the bandwidth use increases. Customers save immediately when bandwidth costs drop. “We give the bandwidth to customers at cost and plan to make the profit on the services, such as reporting tools,” Segil says. “More important, we improve their performance, give them more features, offer dedicated edge space, and more – all while reducing their costs as much as 50 percent.”
Customers like IMAX Corp., one of a dozen businesses in entertainment and media, are not complaining and have signed up for EdgeCast to deliver streaming and downloadable video to their websites. Segil says he and partners pulled together enough private capital to launch the network globally, rather than regionally, “to compete better against Akamai and Limelight.”
The company has built out a network based on Cisco routers and Dell servers, and its caching sites are located in San Jose; Los Angeles; Ashburn, Va.; Chicago; Dallas; Atlanta; Seattle; London; Frankfurt; Hong Kong; Tokyo; and Sydney, near primary Internet exchange points that support the EdgeCast network.
The service leverages bandwidth from Level 3, Telia Senora, and others. Segil says positioning the servers near primary Internet exchange points eliminates the need to have thousands of small servers on the edge of the Internet.