In an XCHANGE Magazine article on Thursday, Level 3's Lisa Guillaume mentioned an intriguing new aspect of its CDN business. Here is the quote:
We're trialing a service called Express Routes to help broadband service providers manage their costs in metro and local networks,” explained Lisa Guillaume, ... The routes are custom-built and connect the operator’s CDN nodes directly to equipment such as DSLAMs in access networks, she added.
What does that mean exactly? Well, I'll give it a shot based on what information we have, maybe Level 3 (LVLT) will correct me if I'm too far off. It seems that they want to build dedicated pipes from their CDN nodes to the far edge of the access networks. In terms of raw assets, Pure CDNs are just strategically placed piles of servers with small leased pipes between them to update the caches and IP transit or peering connections to reach users. The Level 3 concept adds dedicated transport spokes from the centralized node to edge devices, bypassing public internet routes to the edge. Thus they can centralize the servers yet still distribute the data locally without touching the public internet, the latency introduced by greater centralization will be reduced.
Such spokes would benefit both the CDN by bypassing congestion in other networks they have no control over, and also the access network by helping manage that congestion and make their traffic more predictable and easier to manage. Streaming of HD quality movies should have more reliable quality over such a bypass route than otherwise. One could think of these dedicated spokes as analogous to Akamai's tens of thousands edge servers - let them have space and they reduce the ISP's IP transit costs. Except these aren't servers, they are direct pipes to servers farther away. The CDN saves money through centralization, yet mitigates the effects of distance between storage and the edge. Another way an ISP might think of this is as an offer by Level 3 to take over part of their aggregation network.
I don't pretend to know how the economics might work. It's not clear who pays, i.e. how much of the cost might be subsidized by the benefit to Level 3 or whether it would be more like metro ethernet or IP transit in structure. But it is a very interesting design change that is probably only available to a network operator like Level 3 because they already have the fiber and are in control of the costs. Of course, there is a threshold problem. They have to convince many ISPs to use the service in order for it to give them a real delivery advantage, and the ISPs aren't going to care until Level 3's CDN moves enough data to move the needle. However, it is clear that Level 3 is trying hard to turn their claimed advantage of owning the network into reality.