PeerApp, Pando Collaborate to make Peer-to-Peer Palatable to ISPs

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the advent of YouTube, the Apple iTunes video store, and other popular sources of streaming and downloadable video. Hui Zhang, a computer scientist at Carnegie Mellon University predicts that without new technologies to absorb the overflow, bandwidth-intensive content and applications could suck up 98 percent of the Internet’s capacity by 2009, reducing performance for everyone.

Some ISPs have attacked the problem simply by making it harder for their customers to use P2P networks, although they’ve done it secretively. In October, the Associated Press and the Electronic Frontier Foundation published the results of tests showing that Comcast—the cable TV and cable-broadband provider in Boston, the San Francisco Bay Area, and many other large metropolitan areas—was interfering with BitTorrent traffic by injecting forged packets into the data traveling between peers. Comcast denied that it blocks traffic from P2P applications, but company executives later admitted to the New York Times that the ISP does delay or “postpone” some P2P traffic to ensure quality of service for its customers.

In one way, Comcast’s attitude toward P2P traffic is understandable. Software like BitTorrent isn’t tuned to respect ISPs’ efficiency needs: if a user in Cincinnati is trying to download The Right Stuff and his BitTorrent client finds a chunk of the movie stored on the hard drive of another BitTorrent user in Norway, it will grab that chunk first, even if the guy across the street also happens to have a copy. Technologies like PeerApp’s caching servers allow ISPs to eliminate some of that long-distance traffic by storing frequently-requested files closer to those requesting them.

Listman says PeerApp has sold its servers to many ISPs in other countries, including Australia, Barbados, Colombia, Israel, Singapore, Thailand, and Venezuela. North American ISPs are still wary of P2P caching, because, by their very nature, PeerApp’s servers store chunks of content that might have been decrypted or copied illegally (as so much P2P content is). Mark Strangio, director of marketing for PeerApp, says the company’s servers store content in a way that “eliminates the possibility for legal entanglements in the unlikely event that some of that content were not appropriately protected by DRM [digital rights management, i.e. encryption].” But it’s the company’s new partnership with Pando that could really help PeerApp make its case to the domestic ISPs—or at least get them in the back door.

“The major media companies are saying ‘Okay, I buy into the economics of P2P, since the economics of traditional CDNs are so too expensive,'” says Listman. “But the ISPs have now gotten so much bad press [over P2P throttling] that the media companies are also asking, ‘When I go down that path, how I am going to make sure my content is not throttled when it hits the service providers?’ Pando is saying, ‘Let’s solve that problem by partnering with companies that do this caching.’ It’s a complementary relationship. Consumers will be happy because the kind of content they are asking for will be accelerated, and it becomes something that the service providers are pleased to provide, because it doesn’t break the bank on bandwidth.”

At least, that’s the scenario PeerApp hopes will play out. If it does, it could get home broadband subscribers one step closer to the promised land of on-demand, high-definition video over the Internet, and make PeerApp’s investors—including Boston-based Pilot House Venture Group as well as the Israel-based groups Cedar Fund and Evergreen Venture Partners—very happy. “We are dealing with a relatively new technology, and the selling process takes time,” says Strangio. “But we are very bullish on the possibilities, as are our investors. It’s a very interesting phase in the evolution of the Internet.”

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Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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