Aterlo Networks wants to put a Netflix cache in your router

Netflix has more than 37 million subscribers in the U.S., but for millions more, the service is still out of reach because of data caps. A small Canadian startup called Aterlo Networks wants to change that by tricking out off-the-shelf Wi-Fi routers to turn them into Netflix caching appliances.

Aterlo Networks specifically targets uses of satellite broadband services. Those customers sometimes have data plans of as little as 10GB per month. “They really can’t use Netflix at all,” said Aterlo CTO Scot Loach during a recent interview. However, there is a loophole: Some satellite broadband providers offer unlimited data consumption between midnight and 5 a.m. That’s why Aterlo is now testing a product dubbed Nightshift that caches your Netflix movies and TV shows in the middle of the night, and has them ready for you to view the next day.

Consumers use Nightshift by simply plugging a USB flash drive into a compatible router. The company is initially targeting Asus routers, but plans to expand to other routers capable of running the open source DD-WRT router firmware in the future.

Nightshift then keeps tab of a consumer’s Netflix viewing, and automatically starts to cache content he is interested in during free, off-peak hours. For example, if a Nightshift user watches the first episode of House of Cards on their iPad, smart TV or other device of their choice, Nightshift is automatically going to cache the next three episodes up during the following night. And if a user starts to watch a few seconds of a movie, then he will be able to watch the rest the coming day in full HD, without the need to fear costly overage fees. “If you know how to use Netflix, you can use Nightshift,” said Aterlo Networks CEO Gerrit Nagelhout.

Nagelhout and his three colleagues at Aterlo all were long-time employees of traffic management specialist Sandvine, where they learned firsthand about the growing impact Netflix is having on ISPs and their subscribers. So when they left Sandvine this summer, they were initially looking to help ISPs to optimize their networks for Netflix. But while doing their research, they stumbled across millions of rural internet subscribers that have no ability to use Netflix at all — and decided that it may be faster to target these consumers directly.

Nightshift is free during a limited beta test, but the company plans to eventually charge consumers a small fee, which Nagelhout suggested will be less than what they have to pay for Netflix every month. Aterlo is also open to partner with ISPs who may want to offer the product as a value-add for their customers, or possibly even use it to build a hierarchical caching architecture for video traffic that goes all the way into their consumers’ living rooms. Loach said that the team is also thinking about adding an API for content providers that could use Nightshift to push shows directly to consumers.

Speaking of content: Services like Netflix are contractually bound to only make their titles available for streaming, which is why they typically don’t like products that promise consumers to download or record permanent copies. However, Nagelhout insisted that Nightshift does none of that.

The product doesn’t break Netflix’s DRM, he said, but instead just caches content temporarily, much like ISPs are already doing today. In the end, Nightshift may actually help Netflix get additional satellite internet customers who couldn’t justify subscribing to the service with their existing data caps, argued Nagelhout: “We definitely believe that this is good for Netflix.”