A report by Juniper Research states that the number of subscribers for services such as Netflix and Amazon Prime Instant Video will increase from 92.1 million in 2014 to 333.2 million global subscriptions by 2019. Also, by 2021, it is expected that Content Delivery Networks (CDN) will transport 71 % of all Internet traffic, compared to 52 percent in 2016.
Traditional media and network operators are also joining the wave by testing new subscription models, partnering with some of the incumbents in the digital entertainment market, and creating local exclusive content to retain consumers. TV networks are also offering streaming to complement their bundles and reach consumers everywhere in every device.
This OTT overload puts pressure on bandwidth, edge processing, and content distribution. Telecom providers are investing heavily in converged technologies and services combining content delivery networks (CDN), edge computing, and specialized gear to cope with end-user demands.
Mckinsey predicts that by 2021, streaming video will represent 13% of Internet video traffic. And the million-dollar question is: how are Mexico networks getting ready for this?
OTT services in Mexico have a vast room to grow
Less than 20% of Pay-TV subscribers in Mexico subscribe to OTT services such as Claro Video, Blim, Amazon Video, and Netflix; according to the 2017 First Survey of Telecom Service Users published by the industry regulator in the country.
Pay-TV household penetration in Mexico is at 62% (March 2017) with more than 20 million residential customers nationwide. Thus, OTT services adoption accounts for a little less than 4 million households; most of them in northern and central Mexico.
Mexican networks are starting to recognize the value of public peering
The fact that the majority of content-heavy traffic concentrates in northern Mexico pushes network strategists to wisely decide how to distribute the traffic and plan the network throughout the country.
For instance, network operators in Mexico strategically divide the Mexican geography based on critical high-demanding areas. Peering relationships in central Mexico would take care of the southern half of the country whereas peering up north is essential for covering the other half.
All the traffic from the northern part of the country is routed through the US to border markets. Some of these networks reach Dallas for peering; however, cost and performance implication are proving this to be suboptimal.
The opportunity and growth are so evident that CDN companies have jumped to take advantage of it in McAllen, Texas, where MDC connects the largest concentration of core PoPs for Mexican networks.
IXPs have had a hard time succeeding in Mexico; in fact, today there is little or no public peering option in the country for content providers to start peering with Mexican networks. However, networks that concentrate in McAllen now have the option to join the MEX-IX and exchange traffic with content providers to improve their performance and get all the cost benefits of skipping Dallas.
Take a look: MEX-IX Detailed Information on PeeringDB
As Mexican networks get ready to start peering, demand for better and faster connectivity is driven by the OTT overload and the rising of IoT in Mexico. Meanwhile, we continue working with network strategists to help them optimize and benefit from the vast interconnection ecosystem available in our carrier-neutral data centers on the US border.