With 66 million subscribers worldwide, Netflix is clearly resonating with the consumer mainstream.
But not all consumers with an Internet connection can tap into the video-streaming service, particularly those in rural areas who must opt for digital subscriber line connections saddled with long loops or satellite-delivered broadband services that are limited by slow speeds and strict, complicated data-usage policies.
A small Canadian startup founded last year called Aterlo Networks views this as a market opportunity. It has developed a system that essentially turns WiFi routers into local Netflix caches. Aterlo, run by former executives of bandwidth-management company Sandvine, estimates that 30 million U.S. homes have Internet services that can’t handle HD streaming, a number that jumps to 160 million worldwide.
“There’s a surprisingly large and increasing number of people being left behind because their Internet service doesn’t have what it takes,” Aterlo chief technology officer Scot Loach said, noting that the issue will become amplified as Netflix and other OTT providers expand their 4K/Ultra HD streaming libraries.
Aterlo’s solution, called NightShift, involves pre-loading content into the home on a local cache during off-peak hours (primarily late evenings). For example, Exede, a U.S. satellite broadband service, offers plans with a feature called “Free Zone” that provides unmetered data from midnight to 5 a.m. that does not count toward a customer’s monthly data limit, which can be as low as 12 Gigabytes per month.
Aterlo’s caching system operates on a thumb drive add-on that is connected to the user’s consumer premises device, such as a home router or broadband gateway. Loach likens the process to “time-shifting on-demand content,” noting that content that gets preloaded into those caches involves the same encrypted fi les delivered via the OTT provider’s content delivery network or network center.
Loach said Aterlo’s “transparent” caching system doesn’t fiddle with Netflix’s underlying DRM (digital-rights-management) key exchanges, and that Netflix customers must still log into the service with their credentials to access any Netflix fare that is cached locally.
Aterlo’s business model is subscription based (it regularly sells for $9.99 per month). In addition to selling subscriptions directly, Aterlo is also working with several distribution partners, including satellite broadband resellers. Last week, it struck a deal with Wireless Nation, a New Zealand-based ISP that uses satellite- and fixed-wireless-based platforms.
However, the company’s main focus is the U.S. satellite Internet industry. “That’s … the problem we’re seeing here that’s most acute and the easiest for us to solve,” Loach said.
And it’s early days, as Aterlo started selling NightShift about two months ago. Subscriber levels are currently “in the hundreds,” Loach said. “We’re finding our sales channels and building awareness in the market.”