The recent announcement that Russian carrier VimpelCom is looking for an equipment supplier for a content delivery network (CDN) provides yet another indication of how the growth of over-the-top (OTT) video is contributing to a new phase in operator strategy vis-à-vis CDNs.

 

As reported by Russian news agencies, AKTR and comnews, VimpelCom expects to finalize a tender to select a CDN vendor in the first half of 2012. The announcement is interesting because it comes relatively soon after the October 2011 revelation that VimpelCom’s mobile market rival MegaFon had formed a strategic partnership with the South Korean CDN provider CDNetworks. Under the terms of their agreement, MegaFon will deploy CDNetwork’s cloud-based infrastructure in its data centers, creating what it calls the “first local CDN in Russia”. MegaFon will use its CDN to offer a higher level of service to content providers and companies which want to offer an improved website performance to Russian audiences. MegaFon’s CDN should help it deliver content at faster speeds and with improved levels of quality.

 

The MegaFon-CDNetworks partnership, together with the revelation of VimpelCom’s CDN plans, highlight three key characteristics of Russia’s rapidly-evolving market for CDN services.

 

The first characteristic is the importance the country’s telecoms operators appear to be attributing to local CDNs. Local CDNs consist of caching servers which are positioned much closer to end users than traditional CDN topographies. By deploying their own local CDNs (in MegaFon’s case, this involves using a ready-made CDN service from CDNetworks), telcos are able to gain greater control over the delivery of content right up to their customers’ homes, offices and devices. This is particularly important in markets such as Russia, which are witnessing impressive growth in the consumption of OTT video (see Informa’s Russia, OTT-content update, November 2011).

 

The second characteristic of Russia’s emerging CDN market is the leadership role mobile operators are taking in developing CDNs. Although MegaFon claims to have been the first to market with a local CDN, VimpelCom appears poised to follow suit and may even announce a commercial launch of CDN services by the end of 2012. Meanwhile, Russian mobile market leader MTS also reportedly plans to build its own CDN.

 

Russia has a significantly higher number of mobile customers than it does fixed-broadband subscribers. Furthermore, the consumption of video and other forms of multimedia content via mobile devices is growing rapidly. Although only 18% of the population owned a smartphone in 1H11, that figure is fast increasing, and the development coincides with growing consumption of OTT services via mobile handsets. Russia’s mobile operators recognize this trend and have been busy investing in all manner of optimization and delivery solutions for mobile video. The deployment of their own CDNs should be seen as the next logical step for Russia’s mobile operators, which are eager to manage the growing volume of OTT content on their networks and explore new opportunities for monetizing that content.