The Cost of Building A CDN

The CDN industry offers a few options for selling CDN services. The inexpensive way to go is to become a white label reseller. The costliest route is to build a CDN from scratch. The best solution depends on the type of company reselling the CDN services. Here is summary of available options:

  • Become CDN reseller
  • License CDN software & deploy it on your own infrastructure
  • License CDN software + infrastructure from the CDN
  • Build a CDN platform from scratch

The Brightcove Option
Brightcove, the leading global OVP, has a market value that is higher than all CDNs, with the exception of Akamai. It’s big enough to build out a CDN, or license a piece of it. The best route for Brightcove is to license the CDN software platform, and deploy it on its own infrastructure. If Brightcove spends $3.6M annually on reselling CDN services, it can build its own for $2M to $2.4, pay Akamai $400k-600K for use as a secondary CDN, and save about $1M/year in the process.

Infrastructure Components
Building a CDN requires the following hardware: servers, routers, switches, & disk arrays. Next, the data center services needed are co-location, power, and bandwidth. Thereafter, CDN software platform with all the bells & whistles is a must. Finally, a cloud provider can setup, configure & deploy all infrastructure & POPs.

Global POPs & Network
Brightcove can start off by deploying POPs at the major Internet Exchanges (IX) in the US, Europe & APAC. It doesn’t need as many POPs as a pure play CDN. It can deploy POPs in LA, San Jose, Ashburn, Miami, Dallas, Seattle, London, Amsterdam, Singapore & Tokyo.

Brightcove can outsource the deployment of all the hardware to a cloud provider, and lease the hardware on a monthly basis over a 5 year term. Then, contract with the carriers for bandwidth. The cloud provider will set up the anycast routing, configure servers & routers, and deploy it at globally, under a Brightcove ASN.

CDN Cost Structure
Here is a budgetary estimate for CDN build-out.
Brightcove Budget = $2.4M per Year = $200,000/month

  • 12 Servers x 10 POPs = 120 serves x $500/mo/server = $60,000/month
  • 2 Routers (Redundant) x 10 POPs = 20 routers x $700/mo/router = $14,000/month
  • CDN Software Platform plus features = $50,000/month
  • Bandwidth for all 10 POPs = 30Gbps x $2/Mbps = $60,000
  • Proactive Management & Monitoring = $15,500
  • Total Monthly Estimate = $199,500

*Load balancing can be done with open source caching software
*Setup cost is going to equal to 1 month fee, to deploy, setup, & configure hardware at all POPs

End Result
Brightcove has a CDN running under its own ASN. It’s gets the best of both worlds: CDN services at a low cost, and a 3rd party managing and supporting it. No CAPEX, since all hardware will be leased. And the cloud provider would create the peering arrangements with carriers globally. At the end of the 5 year term, Brightcove can take over ownership of CDN hardware, if it is in its best interest. However, I don’t think that’s necessary. Owning and operating a CDN is a whole different animal.