Amidst Pressure, Level 3 Continues to Push CDN

If there was any doubt about the level of commitment of Level 3 Communications (NYSE:LVLT, news, filings) to the CDN sector, last week’s news should help clear it up.  On Thursday, Level 3 enhanced its content delivery capabilities with a new offering called Content Analytics.  Customers can use the new capabilities to gain insight into the traffic patterns of their audience, and is capable of supporting over 100,000 URLs per CDN caching property.  Others have detailed the service itself, I’ll simply say that with the economic pressure the company is under it is telling that they continue to spend money advancing their CDN product suite.

Level 3 also continued to communicate its plans quite clearly, as shown by comments by Mark Taylor, the Head of Media Product and Strategy, over on Dan Rayburn’s blog regarding the company’s view of HTTP streaming versus proprietary protocols – well worth a read.  Of course, it is in Level 3’s interests for there to be many protocol and server options, as it reduces the control software makers can exert over the market.  The more options Level 3 has, the more likely they will be able to find the ones that accentuate the advantage of owning the network itself.  Dan in particular has been looking at why HTTP streaming is not being priced more cheaply given the cost savings claimed by operators.  I think it will, at some point.  But in the end, they will charge what the market will bear and right now that seems to mean no discount.

So why spend all this effort on its CDN, even as revenues in the sector get punished by the recession and short term cash flow is everything?  Because the internet is evolving, and such services are becoming (or have already become) an integral part of it.  And the economics of the new content-delivery-internet are healthy, whereas those of the underlying transit-peering-internet remain fundamentally toxic on their own.  Today there are few fiber based telecoms who don’t have a foot in the CDN world somehow, and Level 3’s continued push implies that the tide is not about to ebb.

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Categories: Content Distribution · Internet Backbones