It's clear now that the preferred route for most carriers into the CDN business is to partner with a pure-play provider. Yesterday it was Telus dipping its toes into the water via a partnership with EdgeCast. The Canadian service provider will now be able to offer CDN services to content providers north of the border. For a secondary market like this, such a partnership makes a lot of sense.
According to Dan Rayburn (who has further analysis worth reading), Telus had previously had a limited relationship with Akamai (NASDAQ:AKAM, news, filings) but was unable to take it where they wanted to go. EdgeCast has been perhaps the most agressive CDN out there in partnering with carriers directly, e.g. Global Crossing, Deutsche Telekom, AAPT, and others. It certainly seems to be working for them, though the full opportunity still seems yet to materialize. At what Rayburn estimates is about $20M in annual revenue, they'll need some more partners to catch up to Limelight, Level 3, and CDNetworks - let alone Akamai.
When it comes to carriers building their own, it's really quite stunning how cold the trail has become. Other than Level 3 Communications (NYSE:LVLT, news, filings), who continues to blaze an increasingly independent trail, the entire concept seems to be comatose. Anyone heard from Teliasonera or BT about the CDNs they were going to build? Even AT&T is awfully quiet on the subject, even though they were probably the furthest along and the capex required is a rounding error for them.
I'm still wondering where Velocix will pop up again, under the wings of Alcatel-Lucent of course.
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