Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Tuesday, January 05, 2021

Catel's CDN is paying itself off in savings and quality of service for 30 cooperatives

In 2017, the content distribution project (CDN) of the Chamber of Telecommunications Cooperatives (Catel, in Spanish) was born, by the hand of Telviso, and as of mid-2019, it was consolidated with the Cooperativa Eléctrica de Luján, which added its own associates. The initiative allowed cooperatives in Argentina to achieve a significant reduction in the wholesale cost of the Internet.

In 2017, the content distribution project (CDN) of the Chamber of Telecommunications Cooperatives (Catel, in Spanish) was created, by the hand of Telviso, and as of mid-2019, it was consolidated with the Cooperativa Eléctrica de Luján, which added its own associates. The initiative, which at this point generates returns on investment and is fed back with improvements for data centers and infrastructure, is based on cooperatives near Telviso and Luján taking the most demanded content from their CDNs. As these contents already absorb 80% of the traffic demand, some 30 cooperatives achieved a significant drop in the wholesale cost of the Internet - even more so in a context of a rising dollar - and were able to overcome a year of exponential demand for the pandemic with frozen rates.

The kickoff was the installation of Netflix, Google, Akamai, and Facebook servers in the Telviso data center three years ago. As Horacio Vitullo, Deputy Manager of Wholesale Businesses at the cooperative recalls, the IP traffic they bought dropped drastically by 30%. “Today 87% of the content traffic consumed by our neighbors is resolved in our own data center. This has an impact on the economy and on the quality of service”, he said in dialogue with Convergencialatina.

From Telviso they went out to offer this advantage to other cooperatives in the area. In 2017, the mega wholesaler cost was US$ 14, even when 60% of international traffic was resolved in Buenos Aires, and only 40% had an international outlet. They set a “ridiculous” price, as Vitullo describes it, at US$ 2, and initially convinced López Camelo, La Lonja, Derqui and Luján. They also added Tortuguitas and Fátima, through Luján, Flandria. Today they connect some 20 cooperatives directly, and others indirectly, in a kind of “waterfall” scheme (see separate graph).

In some cases, Telviso offers the fiber optic link to the cooperative and the cost of electricity at the border, to which are added the costs of the data center (cooling, personnel, energy). The cooperative has 22 suburban fiber rings in the northern suburbs: when putting together the commercial model for the CDN project, they estimated the investment to connect them at US$ 10,000, plus maintenance of at least US$ 4,000 or US$ 5,000 per year (to deal with cases of vandalism, urbanization expenses, contractors). This translates into a maintenance cost that is added to that of the content: "Now that we have ROI from the project, we invest in redundancy, so that we have two paths to reach the content," Vitullo said.

A before and one after. The reasons for cooperatives to access CDNs are as diverse as the particular settings of each one. The latest to join Telviso's provision is Fátima, which used to only have one IP transit provider, Metrotel, and wanted to expand its capabilities. In the case of Tortuguitas, it has its own server (three Netflix stacks) but it is useful to connect to Telviso because it has four, and in the latter the 4K and full HD content of the streaming platform is hosted.

From the CEGnet (Cooperativa Eléctrica de Gálvez), officials perceive it as “a before and after”. Up to 2019, they had a single provider, Telecom, and few tools to negotiate the price of wholesale bandwidth. To add another, they had to reach the side of the Rosario-Santa Fe highway, 25 km away from Gálvez. As reported by Fernando Zehringer, head of the Telecommunications sector, “the cost of the work prevented us from moving forward. When the CDN project was created, it was the first time that we were able to show a viable project, an ROI to justify the work. The initial advantage we saw was that it would bring connectivity and economic benefits, even with the cost of the laying to the highway.”

The work was faced this year, in the middle of the pandemic, after a $ 6 million investment. It had started in February, had to be suspended due to quarantine, was resumed in April and ended at the end of June. As a result, CEGnet now has three providers -Telecom, Telefónica and Arsat-, and from this range of variants, it managed to reduce the cost of the mega by 50%.

To reach the Telviso CDN, the Gálvez cooperative opted for the LAN to LAN provided by Arsat as part of the CDN project, another of the pillars of the initiative. “As it gives us transportation at a flexible and pesified price, we managed to reduce the contracting of IP transit by between 40% and 50%. This cancellation does not imply that the purchase disappears, but rather that we look for those contents in the CDN, at a lower cost,” Zehringer indicated.

CEGnet went from paying US$ 8 to US$ 10 for the mega IP transit, to US$ 4 to US$ 5, and adds the cost of the CDN, between $ 170 and $ 200.

After completing the work in June, a configuration stage began, so that only in the first quarter of 2021 would the cooperative's bandwidth be fully “rearranged”. In August some users began to connect to the Telviso CDN, and the economic benefits have been seen since September.

“Even though that at the first moment of the pandemic we had to face it with what we had, this allowed us to think about benefits for the client, not based on the calculation of bandwidth. Before it was so expensive that it impacted on all our decisions. Today it is possible to structure plans with more bandwidth and at the same time support the frozen rate”, concluded Zehringer.

The incorporation of Luján. In June 2019, the possibility arose of adding the Luján cooperative to the Catel CDN scheme. The trigger was Arsat's decision to set the price of the mega transport at US$ 2. "That LAN to LAN" opened the door "to cooperatives that were paying US$ 8 to US$ 10 to their wholesale suppliers," recalls Pablo Fernández, Coopenet manager at Cooperativa Eléctrica de Luján and secretary at Catel.

The first to connect to Luján's CDN was Suipacha, followed by Viamonte (see separate box), both with links from Arsat to get closer to Luján. By December 2019, there were seven cooperatives that accessed the content and consumed 50% of the traffic that was destined for the end users of Luján. That is why we had to face an US$ 80,000 investment to reinforce the central routing of the cooperative: equipment was purchased from Juniper and in the first months of the pandemic it was put into operation. Thanks to this perfect timing, the exponential demand for quarantine could be met. And another 8 cooperatives joined the scheme (the last one was Unión del Sud).

“Today 80% of the traffic is resolved in mini data centers or edge data centers. This was born as a collective service, and by having more number of associated cooperatives, we have more traffic consumption and more possibilities for content providers to host servers in our data center”, expressed Fernández. In fact, in Luján there are 2 Netflix stacks, for example, and to access part of the content, they must search for it on Telviso.

In a kind of virtuous circle, what is charged as maintenance cost goes to improvements in the data center. In the case of Luján, they had to reinforce the power supply, having more servers (US$ 15,000) and expanding switches (US$ 5,000). A new battery room was added and UPS will need to be purchased soon.

Viamonte, in first person. “Due to our cooperative essence, we do not feel that we are“ on the other side ”in this project. It has been very participatory. Unlike a commercial issue, the price that those of us who access the CDN must face was discussed. The experience had very good results. For those of us who were buying IP transit, it generated significant savings for us by accessing convenient and differential prices,” said Alejandro Gil, manager at the Cooperativa Eléctrica de General Viamonte.

The official remembers the experience as a “guinea pig”. It was the second cooperative to join the Luján CDN, after Suipacha, in August 2019. Both had asked Arsat for a link from their towns to Luján, and the Suipacha one was completed first. "From there it was to turn the service around from the economic point of view," admits Gil.

The quality of service, which he described as "impeccable", allowed the Viamonte cooperative to face the pandemic, with bandwidth consumption doubling with unchanged rates. “It was done at the right time. I could not tell you what would have happened without this access," he confessed

Currently, the entity only contracts IP transit for 30% of the traffic. Of the total 5 GB you need, 1 GB corresponds to what was purchased in IP transit from Telecom, and 4 GB comes from the CDN in Luján. In addition, he pays Arsat for the transport. In total, the cooperative pays US$ 2.5 per mega. Before, it had two providers -Telefónica and Telecom- and today it only continues with Telecom.

Regarding the direct impacts for the user, the plans were raised (today the minimum is 5 Mbps and before it was 2 Mbps) and there was an increase in the last four months of around 15% in the base of broadband accesses, with requests for higher speed plans.

“It is a joint commercial bet, because to the extent that all CDN users raise volumes, better conditions are accessed. If we empower ourselves together, it is better than cutting ourselves. Also, because it is variable: for example, Disney+ could unseat Netflix. We must bet on strengthening the CDN, and achieve a greater representation in relation to the volume of traffic”.

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