Dan Rayburn

Research analyst, streaming and online video
Dan Rayburn
Research analyst, streaming and online video
Contributor since: 2007
I am not asking anyone to "follow my lead". I am NOT a stock investor, as is evident by the fact this is the first time I have ever bought a stock in a public company. I am NOT giving out investing advice of any kind.
I got in under $100, sold some at $117. A 17% return within 48 hours. Rest I am holding long term.
Yes, this is the first stock I have ever bought.
Who says Level 3 "gave in to" Cogent? The devil is in the details, which you don't know. What are the terms? You have to ask what's really going on with these deals. They are not as simple as you make them out to be.
Calling me a "shill" makes no sense. I don't work for any of the ISPs.
And in most cases, the "battles" that Cogent has been in have been settled by both companies coming to an agreement, without any kind of "legal" action. So saying Cogent "seems to win every big legal battle" makes no sense.
This note by Level 3 really outlines just how poorly Cogent treats their customers:
This article was not written for investors or for Seeking Alpha. It was written for "industry" people on my blog at http://bit.ly/1EokcOE. SeekingAlpha republishes some of my posts, with permission.
Investors and those who don't know what the term CDN means are not whom I am writing for.
No, Apple would never do that. It needs a lot of capacity as Apple's traffic keeps growing, their file sizes are huge and they have cloud services that need better performance. This has nothing to do with some sort of "iTV" device like some people are speculating.
The original article was reposted from my blog at streamingmediablog.com, where my readers already know what CDN stands for. Seeking Alpaha copied it, with permission, from there.
Since AT&T re-sells some Akamai services, I would imagaine this has no impact on them, since they don't have their own CDN. Once they got out of the CDN business and closed it down and decided to re-sell from a third party, I stopped tracking them.
Verizon released a press release today about a new product. I'm not writting about "issues", I'm writing about news put out by a company and trying to provide as much insight into it as possible. What a reader wants to do with the news is up to them, I'm not trying to convince anyone of anything, I don't make money or lose money based on the revenue or value of any of these companies.
I don't provide any advice on stocks, for any company. I am not a trader and have never bought or traded a single share of stock in any company ever. I'm simply providing details of things going on in the industry, it's up to others how they use the info.
"these can become a major hurdle for new innovative products come to market"
these types of interconnection deals have taken place since the late 90's and have allowed internet services to get to the point they are at today. are you saying that there are fewer "new innovative products" as a result of paid interconect deals? if so, please provide a single example of a service that has been negatively impacted due to paid interconnect deals.
You numbers are off. Here is how you can figure out pricing, to get an general idea of what they are paying.
From one of my earlier posts:
While I do have a lot of sources and are privy to a lot of details others aren’t, there is plenty of public and easily accessible data that allows you to get a good estimate on the size of this deal and debunk the numbers being reported. For starters, no one has reported how much traffic Netflix is actually sending into Comcast’s network and you need to know that before you can discuss the size of the deal. Without doing that math first, any dollar signs attached to this deal are pure guesses.
In 2012, Comcast said they were carrying 4 Tbps of traffic and with the current Internet growth rates, one could easily extrapolate that Comcast’s network is now at 8 Tbps. Based on Sandvine’s data that says Netflix account for 1/3 of traffic, Netflix would need about 3 Tbps of capacity from Comcast today, with that number growing. The way these deals are priced is on a per Mbps sustained model, also known as 95/5 or 95th percentile. Wedbush Securities put out a report that ran numbers based on a per GB delivered model, not per Mbps sustained, saying “Comcast likely sought as much as $0.01/GB transmitted”.
They then estimated that each of Netflix’s 33M U.S. subscribers consume 100 GB of data per month and came up with a total of 3.3B GB of data delivery per month, saying “Netflix would be required to pay approximately $400M per year.” While Wedbush’s numbers are wrong and aren’t using the per Mbps sustained model, the number they gave out was for all of Netflix’s delivery, across all ISPs, not just Comcast’s. However, the media didn’t read it right and went with the idea that Comcast was asking Netflix for $400M, which is sloppy reporting. Once one media outlet said it, many never second guessed the number and started re-quoting it. In the end, Wedbush said they “estimate that Comcast will charge Netflix between $25M-$50M annually”, which still isn’t right and they provide no methodology of how they came up with that range. I provide methodology below to show it’s not accurate.
What no one seems to have noticed is that Comcast has previously stated that less than .1% of their total revenue came from these kind of commercial interconnect relationships in 2013. That means that for all of last year, Comcast got paid between $30M-$60M, which included all of the similar deals they have with Google, AOL and others. So the idea that Netflix would be larger than all of those deals combined, makes no sense. If you want to get a sense, not an exact number, but an idea of what Netflix is paying use transit pricing.
I laugh when I see all of these “save the internet” people saying these deals are bad as they are clouded in secrecy and no when knows what’s really taking place. When we know how much traffic Netflix has and we know the average going rate of transit, both public numbers, you can estimate what Netflix’s cost is. That said, keep in mind a few things. Transit pricing is higher than what Netflix pays Comcast as wholesale is cheaper than transit. Also, Netflix is not the “average” customer and their contract clearly has to have a lot of variables in it, with lots of sliding scale pricing, and different ways to measure it, since the volume of their traffic increases so quickly.
So with those caveats, some of the lowest transit pricing I have seen, which I have previously published here, is around $.50 per Mbps. If Netflix needs 3 Tbps of capacity from Comcast to start, that would cost Netflix $1.5M per month. But, and this is a big one, Netflix isn’t the average customer. Their price will be special and they have a multi-year contract and a lot of variables. So to get a “rough estimate” of what this deal costs Netflix, simply pick whatever per Mbps price you want and multiply it times 3 Tbps. Some will pick a higher number, some lower. If you pick a number a bit lower than $0.50, this deal would cost Netflix about $12M per year. But run the numbers yourself using whatever variable you want, now that I have outlined how much capacity Netflix needs.
Call Netflix and ask them. It is cheaper. When they signed the deal it was not immediately cheaper as they still had transit contracts they had committed to. Once they are out of those contracts, the price they pay to deliver content directly to Comcast as oppsoed to going through transit providers IS cheaper. They save a lot of money over the life of the contract with Comcast as it is more than 5 years in length. They have locked in pricing.
In addition to telling Wall Street analysts it is cheaper, multiple members of the media have also told me that in calls they have done with Netflix, the company has told them the Comcast deal saves them money over transit is is LESS expensive.
No, it does not. MLB has confirmed that MLB is "coming" to the box, but there is no ETA as to when. They have only said it will be "this season". Today, MLB.TV is not on the box.
ESPN is on the box, but it's not live baseball, hockey, footbal, basketball etc.
Two companies meeting is not a "story". Apple speaks to all the major content owners on a regular basis. That's not news.
I don't have to accuse them of anything. Their poor writing shows they don't understand the technology that are writing about. They also clearly have poor sources or for all we know, all they did was hear a rumor. Far less has been used to write a story.
I don't need to define any tech terms as I didn't use any. Nor did I use any vague terms like "flow" or "special treatment". And I did define what bandwidth is.
This article was not written for Seeking Alpha, it was replublished from my blog, which targets video professionals.
There are many ways to invest money, not all of them have to be public. Private businesses, real estate, gold, family business etc. - lots of other alternatives to the stock market.
No idea what you are talking about, but as I said in my post, I don't buy/trade stocks. This post was not written for Seeking Alpha, they republished it from my blog.
Except that channels are sparse and the amount of headend hardware required to do this would be staggering.
They already disclosed this to the street years ago. They have known for 2+ years that their Netflix business would be slowly tappered off.
What? If it was $30M-$60M in revenue for Comcast last year, why would you think this is $1B in five years? Makes no sense. There aren't dozens of companies like Netflix, Microsoft and Google in the market whom Comcast can do deals with.
Netflix won't have to pay more. They don't buy direct from someone like Comcast, they buy transit from someone else who connects with transit. Or, Netflix goes back to having 100% of their video in the U.S. delivered by Level 3 and Limelight.
I didn't imply anything about what a consumer should expect quality wise based on the size of the network they are on or how many subs it had, my point of comparing the two is that Netflix's ISP rating isn't a true apples-to-apples comparison. They are comparing a company with a very small footprint, to ones that are much larger. It's much easier to delivery a good QoS, for any service, when you don't have to deliver it to a lot of people.
Define "plenty". There are between 100M-110M pay TV subscribers in the U.S. At no point in time have all of the MSOs combined lost even 1% of that, in a single quarter. A few hundred thousand subscribers is not "plenty".
Twice in my post I said that some ISPs "see Netflix as a competitor".
Lots of words are thrown around by many people like "throttling", "filtering", "prioritizing" etc. yet they all mean different things from a technical standpoint of how they are done.
I didn't suggest it wasn't possible for ISPs to degrade the quality of video being delivered, but they can do it simply by not buying enough capacity and upgrading the links with their peers. It's that simple. They don't need to do any complex technical "filtering", "shaping" or "throttling" of traffic.
Good question. I know they plan to use Apache Traffic Server for caching, but what all of the pieces will be I don't know.
None of the patents Akamai, Limelight or Level 3 have should keep Apple from doing this or force them to have to license anything. Keep in mind that to date, of all the CDNs that have sued one another, none have yet to win in court.
Acquiring LLNW or any other CDN would give you big components of the business you don't want, don't need, or don't want to be in. Much easier to spend less capex and build a purpose driven CDN only for what Apple's needs are. Just like Microsoft. In Microsoft's case they did buy some technology from Limelight, but they could have bought the whole company and didn't.