Verizon Port Partner Program – Just Smoke?

January 8th, 2009 by · 6 Comments

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.

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Categories: Content Distribution · Internet Backbones · Internet Traffic

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6 Comments So Far

  • iSiS says:

    As usual, you’re on the money with this post. One correction I’d add though – I think they’re advertising “paid peering” to Verizon AS’s as opposed to wholesale “full” transit.

    Nevertheless, it is refreshing to see the sleeping dog open their eyes a bit. I’m working on trying to get a quote. I’m sure it will only take 5 phone calls/emails and 2 weeks. Then I’ll be ready for the cross-connect turn-up by April :-).

  • Rob Powell says:

    Paid peering, eh? Well, that makes some sense too I guess. We would be interested to know what sort of pricing you get, although I’ll bet it will be covered by an NDA or something.

  • Paolo says:

    P cube, Partner Ports Program, according to Tier 1 Research. This is from their daily newsletter headlines:

    >>Verizon has disclosed the existence of its first paid peering product, the Partner Ports Program. For content delivery networks (CDNs) and carriers this is a relatively important move, although that’s not immediately obvious.

  • It isn’t Transit. It’s transport and One-Way. It makes sense for VZ and content providers to get to the FiOS users. It’s a spin on what Google has been doing for a long while – taking a x-connect from any company in telecom hotels like 56. But any relief from the wickedly expensive VZ/VZB/MCI/UUNet IP pricing would be welcome. I just hope the blood dries on the contracts before VZ screws its “Partners”.

  • iSiS says:

    Peter, its definitely NOT transport, and what do you mean by “one-way?” There’s no such thing as one-way data communication unless you want traffic to be black-holed.

    The Verizon product offering would consist of a BGP session b/w the CDN and (most likely) AS701. AS701 would then have a BGP session with the CDN’s AS (via the Equinix XC) and the CDN would subsequently receive routes from only 701 and all of the Verizon properties (VZ DSL, Fios, etc) and their customers.

    Verizon gets paid by the CDN at the end of the month based on a 95th percentile commit plus any burst.

  • I have seen pricing sub $10 per megabyte.

    Verizon pricing for Partner Port is based on simplys term and utilization. Although one year pricing is very aggressive at the higher utilization tiers, who would want to lock in prices for bandwidth given year over year the rate per meg decreases.

    Moreover Verizon (since last I visited this offering) is only extending the service to its highest consuming bandwidth customers. To my knowledge they were only in pusuit of the 20 highest bandwidth consuming customers. That may have changed as the program matures from beta.

    I agree with the original comment, which if you are on the same backbone IP traffic should attempt to route to the shortest path if providers are running OSPF which most are however peering relationships would have to exist to do so.

    The bottonline is make sure you are paying the most aggressive rate in advance as this just a repackaging of what has existed for a very long time.

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