Level 3 Communications has been gearing up for a major assault on the content delivery networks business and appears ready to price such services at a rate that basically offers caching and downloading services for no more than the cost of buying IP transport. If, as expected, Level 3 prices content delivery at the same price as Ip transit, it could disrupt much of the market.It isn't so much the disruption of profit margins: that already is happening as several dozen contestants now are slugging it out for some share of the growing market.
The bigger issue is how participants in the media, hosted applications and enterprise end user markets are able to change the way they do things if enhanced quality becomes an integral part of the IP transport they buy.
Level 3 hopes to have its streaming services ready by mid-November. At that point it will have a wider shot at disrupting the market for transport of real time services. Right now much of the market is focused on video content. But there are other real time applications and services that really would benefit from lower-priced and more capable delivery over networks that eliminate jitter and latency over the global wide area network.
Access networks on each end still are issues, but tail circuits also keep improving. As more applications move to "cloud-based" processing and storage, they will have to start having the "feel" of local desktop apps. CDNs will be part of that experience. And that's where the major impact will lie.
1 comment:
Gary, great post. Please pardon my late response, I am backtracking and conducting research in regards to the CDN Pricing debate as it pertains to Level 3. Since the time of your post not much has happened in terms of Level 3 causing a major disruption in the CDN industry, perhaps due to their inability to deliver. Level 3's strategy is doing nothing more than hurting the Industry overall, they seem to be lowing price points to a degree that is not even profitable for themselves. How much longer can Level 3 continue to operate in the red? Thanks for the coverage.
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