Last winter when it seemed like every telecommunications company was making plans for a CDN of one kind or another, British Telecom (NYSE:BT, news, filings) was said to be building its own rather than buying, reselling, or partnering with one. Now it has emerged that their plan is a bit different than we might have expected from earlier comments. BT Wholesale apparently wishes to build a CDN in collaboration with its ISP competition.
Because of the idiosyncrasies of the British telecom market, initially we should probably see this as a British-specific phenomenon. Remember the complaints about the BBC's iPlayer causing huge headaches? The traffic growth was overwhelming the ISP's backhaul pipes, but they weren't getting paid more and thus upgrades were a bit one-sided. Well, the situation hasn't changed all that much, and a good portion of those upgrades are of course largely paid to BT wholesale.
One might suggest that BT is in the catbird seat, but with enough pressure change will eventually come and they are smart enough to try to manage that change rather than let it twist free. More usage of CDNs wouldn't help much, most of that traffic was already coming off the CDNs anyway. Building their own CDN in competition wouldn't either. But how about if BT builds a CDN which has nodes in its ISP customer networks? That leaves BT at the center of content distribution in its home market, relieves the pain its customers were feeling, and creates a performance moat over which other CDNs must swim.
Is it going to work? The details will be everything of course. Words mean little, economics mean everything. To make this beneficial to its customers, BT will have to give up something. To get content providers to sign on, they'll again have to give up something. Being the middle man is tough in the internet business ... unless of course you happen to be the dominant carrier and own all the pipes. Oh yeah, forgot that part. But the CDN business is a very different world from telecom and it is still a place that no carrier has really had much success yet, so one has to be a bit skeptical that they have the necessary mojo.
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