Verizon (NYSE:VZ, news, filings) today announced a new program they are calling the Verizon Port Partner Program which is aimed at winning CDN business. The media of course picked this up and repeated it heavily, because it was about Verizon and content delivery and that has to be news, right? But what is it exactly? That's the humorous part to me. If you cut through all the marketing and packaging, here's what Verizon did. They cut IP transit prices for CDN customers. That's it.
That's right, if you are a CDN, you can now buy overpriced IP transit at a discount in such exotic and rare places as Equinix (NASDAQ:EQIX, news, filings)! That's somewhat like announcing you can buy really nice socks at Bloomingdales, ON SALE NOW! Oh but you say that now now one can directly hook up his server farm to Verizon's network, gaining direct access to Verizon's customers. Err, that's how the internet works... When you buy transit from a network, the traffic you send over it goes directly to the customers of that network, and through peering or more transit to the rest. What else would they do with it?
Don't get me wrong, it really is news that Verizon is cutting IP transit prices. They haven't had competitive pricing in the wholesale IP transit space in a very long time, not since they called it uunet and it was part of MCI I think. I am very curious to know just how competitive this new pricing is, have any readers got a quote yet? Are they matching Cogent Communications (NASDAQ:CCOI, news, filings)? Or just double the price now instead of five times?
You have to hand it to Verizon's marketing department, they really packaged this well. Imagine if they issued a PR announcing that Verizon was re-entering the wholesale IP transit business by cutting prices to the bone - the response would have been a tad different. However, it is probably a mistake to see that as their end goal. Clearly they are taking aim at the content business as they work on the Velocix-based CDN of their own. That CDN of course, would be faster to reach their customers since the content isn't coming from Equinix but from closer to the end users.
And that is the point, I think. After getting a relationship started with content providers and CDNs with this program, at some point Verizon intends to offer them the chance to improve their speed further, by buying CDN services to extend deeper into the network. This is about farming, and they are sowing the seeds.
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!Categories: Content Distribution · Internet Backbones · Internet Traffic