SME – Everyone Wants to be a CDN

Content delivery space is beginning to get crowded. The SME Exhibit hall is full of CDN providers the latest to the list network operators NTT & Level 3 Communications. This represents an expansion of these companies’ business models to offer end-to-end IP solutions.

As opposed to traditional content delivery networks like Akamai which own servers around the world and distribute content across networks owned by companies like NTT, network service providers are now installing or re-purposing servers on their networks to speed content delivery.

The advantage is obvious – network operators can offer lower costs to users because they own the network infrastructure.

The disadvantages fall into a number of grey areas which raise questions like conflict of interest and potentially monopolistic practices such as providing lower levels of access to competing companies or denying access altogether as happened in the ‘05 dispute between Cogent and Level 3.

The Level 3 representative I spoke with was upfront about the issues they face. Their entry into content delivery was precipitated by the purchase of SAVVIS and while the company is replacing and upgrading their servers to make them more effective, they have limited access beyond the U.S and Europe.

Admittedly they cannot currently compete with the likes of Akamai on speed of delivery or on reach, and they have entered quietly so as not to upset current CDN clients.

The main problem for these companies is that they are late in the game. They are entering a CDN market that is evolving to integrate new technologies like P2P while increasing service, hosting and syndication offerings. They may want a piece of the CDN pie, but they have a long way to go before they earn it.