Contentinople reports today that glbc is the latest carrier looking to enter the CDN business, according to a Yankee Group report on the subject. Supposedly, rather than build their own, buy someone else’s, or partner their way in, Global Crossing is planning to simply resell CDN services from several carriers. The first lucky CDN is Edgecast, which has had quite a run as a wholesaler after deals with both Deutsche Telecom AG (ETR:DTE, news, filings) and Navisite (NASDAQ:NAVI, news, filings) [a subsidiary of Time Warner Cable (NYSE:TWC, news)] . Global Crossing could be a powerful reseller for CDN services outside the US, leveraging their customer bases in both the UK and Latin America.
My first thought is that this is a rather minor early move, a dipping of a toe into the water to see if it is hot. Reselling CDN services is a low margin business, Internap Network Services (NASDAQ:INAP, news, filings) used to do it for Akamai (NASDAQ:AKAM, news, filings), but later bought their own instead later on (a good idea, but with spectacularly poor execution). Global Crossing isn’t reselling CDN services to make bundles of money, nobody resells to do that. There are basically two angles: either they just need the product in their portfolio to compete, or they want to develop some expertise before jumping all the way in.
Given the strategic situation here for carriers, I suspect the latter possibility is the case. At some point, it feels like Global Crossing naturally moves into the CDN space, and I have mentioned before that I like the fit with Limelight Networks (NASDAQ:LLNW, news, filings). However, right now is too soon to commit to any one line of action, if only because they have other problems left to solve – such as their metro weakness in the US. In addition, it is clear from its own comments that the company sees itself in M&A in the next year or two, and they’d like to keep their options open. So while some carriers are moving full speed into the CDN business, Global Crossing’s entry is a tentative one.
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