Jul 9, 2008 11:00 AM,

Yankee: Carriers likely to acquire CDNs

By Carol Wilson

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While Akamai currently dominates the world of content delivery networks (CDN), a leading analyst firm believes service providers such as AT&T, British Telecom and Verizon will soon be playing in that sandbox and might quickly gain traction through acquisition of smaller players such as Limelight Networks.

Yankee Group analyst David Vorhaus this month issued the first Yankee Group CDN scorecard, designed as a means for both service providers and content owners to evaluate what has become a sometimes confusing plethora of CDN options based on key criteria such as price, brand recognition, financial viability, ancillary services, architectural approach and management.

Companies such as Swarmcast, Velocix, Panther Express, BitGravity, EdgeCast, Kontiki and more have moved into the CDN space because they recognize the opportunity created when a growing volume of high-bandwidth, latency-sensitive content is moving into converged IP networks, Vorhaus said. That movement creates both challenges and opportunities for service providers, who must find a way to keep their networks running smoothly without the expense and hassle of constant network upgrades, Vorhaus said.

It makes sense for service providers to get into the CDN space because of the growing commercial opportunity and the ability to exploit their existing infrastructure, Vorhaus said. AT&T earlier this summer announced an expansion of its CDN plans, a move Vorhaus sees as a first step.

“AT&T has ramped up their position in the CDN business – they didn’t change a ton about what they are actually doing, because they have had a CDN solution within the wholesale division, but they created a dedicated group with its own identity,” Vorhaus said in an interview. “That’s an important step – CDN needs to be its own solution set. And it’s indicative of the fact they have a growth plan for it. AT&T said it is planning to invest $70 million over the course of the rest of the year and increase its capacity by six times – that is the start.”