Level 3 Extends CDN Infrastructure Into Asia

Level 3 Communications (LVLT) is expanding its content delivery network (CDN) into Asia, including three network nodes in mainland China, the company said today. Level 3 said the move is a response to customer demand for CDN capacity in Asia.

“As global demand for online video and other content continues to accelerate, the need to store and deliver content locally becomes increasingly important,” said Grant van Rooyen, president of Level 3’s Content Markets Group. “The expansion of our CDN service capabilities in Asia reinforces Level 3’s commitment to continue investing in our global CDN business.”

The expansion also helps distinguish Level 3 in an increasingly crowded market for content delivery services, according to Graham Williams, Senior Director of Product Management for Level 3’s Content Markets group. ”The top tier of CDN providers - Akamai, Limelight and Level 3 - now have an Asian presence,” said Williams. “That really is a differentiator between major tier one players and everyone else.”

Update: the BBC, Akamai and Level 3

Yesterday we linked to a post from ThinkBroadband which reported that the BBC had switched the primary CDN provider for its iPlayer from Akamai to Level 3. Dan Rayburn updates and corrects the story, noting that the BBC continues to work with Akamai (AKAM) and has added Level 3 as a second CDN partner.

For more information, see the BBC’s post providing an explanation of its rationale for the change in its iPlayer delivery scheme, emphasizing the importance of H.264 video compression in its decision.

Is it a good reflection on Akamai that the BBC has added Level 3 for the H.264 business? No, but for Akamai it’s a far sight better than losing the entire iPlayer business, and we wanted to make sure we corrected that impression.

CEO Crowe Discusses Level 3’s CDN Strategy

Dan Rayburn has a Q&A with Level 3 CEO James Crowe about the company’s content delivery network and strategy, in which he talks about the company’s plans for CDN infrastructure. An excerpt:

We continue to make significant investments in our platform. We have expanded into Asia and continue to make capacity augments on all three platforms (streaming, storage, and caching) in North America and Europe. In addition, we have been investing in the infrastructure within our Level 3 colocation space where we locate our CDN nodes so that we can do “just in time” capacity deployments to uniquely serve the growth needs of our customers.

See Dan’s post at The Business of Video for the entire interview.

Level 3: Our CDN Business Is Growing

Level 3 (LVLT) has increased the capacity of its content delivery network by a factor of 30, according to Lisa Guillaume, VP at Level3 who spoke to Beet.tv last week at Streaming Media East. “We have a cost advantage in the marketplace, because we own all layers of the network we’re operating our CDN on,” said Guillaume. This video runs about 3 minutes, 30 seconds.

For more news about LVLT, visit our Level 3 channel. For additional video, check out our DCK video archive and the Data Center Videos channel on YouTube.

Level 3 Targets ‘Long Tail’ Content Delivery

Level 3 (LVLT), which continues to sharpen its focus on the content delivery market, is launching a new service combining mass storage and content delivery for audio and video portals. The new product offering, Content Delivery for Extended Libraries (CDXL), will be of particular interest to sites with large libraries of user-generated digital content. CDXL allows audio and video hosting sites to outsource their storage, and use Level 3’s content delivery technology to monetize “long tail” archived content that suddenly becomes popular.

A particular challenge for these portals is recognizing that a piece of older content has suddenly “gone viral” and is generating unexpected demand. “Our system can instantly detect that a piece of content has become popular, and move it to the edge of the network,” said Ric Poland, Director of Product Management for the Content Markets Group at Level 3.

“Content Delivery Networks (CDNs) are transforming how people gain access to rich media, and the network has to be about more than moving lots of bits quickly,” said Gerry Kaufhold, principal analyst with In-Stat. “Level 3’s Content Delivery for Extended Libraries brings a new level of network performance, storage capacity and economic efficiency to the CDN market.”

Level 3 Acquires IBM’s CDN Patents

Are patents the coin of the realm in the content delivery business? If so, the game has just gotten more interesting. Akamai Technologies (AKAM) has prevailed in three different patent infringement cases against rivals in the content delivery markets, most recently with a Feb. 29 court victory over Limelight Networks (LLNW). But even as Akamai was gaining the upper hand in its battle with Limelight, a new challenger was beefing up its intellectual property warchest.

On Feb. 28, Level 3 (LVLT) signed a cross-licensing agreement with IBM involving thousands of patents owned by the two firms. But that’s not all, according to Dan Rayburn, who discovered that Level 3 acquired 20 IBM patents on content delivery and streaming technology.

Level 3 bought the Savvis CDN network in January 2007, and has since launched CDN caching and streaming media services priced at the same rate as its high-speed Internet access service. In January Level 3 CEO Jim Crowe said that “content distribution is where we are focusing our effort.”

Executive Exit Sends Level 3 Shares Lower

There’s been a shakeup at Level 3 (LVLT) in which president and chief operating officer Kevin O’Hara is stepping down and leaving the company. O’Hara is a co-founder of Level 3, and CEO Jim Crowe said his departure was “obviously a difficult decision for both of us. At this time, however, Kevin and I have agreed that a different perspective will be of benefit to our company,” Crowe said in a statement.

Shares of Level 3 are trading at $1.91 a share, down 27 cents, a drop of 12 percent.

O’Hara’s responsibilities will be assumed by Crowe and Neil Hobbs will become executive vice president, operations. Level 3 announced that Sunit Patel, the company’s current chief financial officer, will continue in the role of CFO. The company has terminated its previously announced search for a new CFO.

Crowe: Content Delivery Is Now Our Focus

Level 3 (LVLT) Chairman and CEO James Crowe acknowledges that the company “stubbed its toe” this year but says the emerging IP optical and wireless markets are “what we’ve been planning on and hoping for, for a number of years.” Crowe spoke Wednesday at CitiGroup’s Annual Global Entertainment, Media & Telecommunications Conference. Telephony World provides a summary of Crowe’s presentation, including some interesting comments about Level 3’s ambitions in content delivery:

The content distribution business is the long-term game for Level 3, which is why the company has acquired intellectual property in this realm as well as deployed caching and storage globally. “Content distribution is where we are focusing our effort,” Crowe said. “We believe very firmly that in the longer term, the larger majority of traffic on IP will be large objects, big video-based communications, either file-based or streamed, real-time or batched. It is already almost 50% of the traffic on our network today.”

That attitude is reflected in Level 3’s approach to pricing, which we’ve noted as it unveiled its caching and downloading and video streaming CDN services, which will cost the same as Level 3’s high-speed Internet access. Level 3 owns its own backbone, which gives it a different cost profile than other CDNs who must buy transit. Level 3 expects those economics can help it build a beachhead in the CDN business. But it’s a big beach and getting bigger.

Level 3 Sues Limelight Over CDN Patent

Level 3 Communications (LVLT) has filed suit against Limelight Networks (LLNW), asserting that Limelight is infringing patents that Level 3 acquired when it purchased a content delivery network from Savvis Communications (SVVS) earlier this year. The lawsuit makes more work for lawyers at Limelight, who are already litigating patent infringement claims with CDN market leader Akamai Technologies (AKAM) in a case that may go to trial this year.

The suit was first reported by Dan Rayburn, who noted that Level 3 mentioned patents when it acquired the Savvis CDN network. The news doesn’t seem to have had much impact on shares of Limelight, which have recently been trading between $7 and $8 a share. Limelight went public at $15 a share in a June IPO that saw its shares trade as high as $24. But the stock took a major hit in August when it lowered its revenue guidance, and has traded in single digits ever since.

Level 3 CDN Launches Streaming Service

Level 3 (LVLT) has launched its streaming media service, the latest step in its move into the content delivery network (CDN) business. Level 3 said its streaming service will cost the same as its high-speed Internet access and CDN cache and downloading services, continuing its aggressive pricing strategy. While there may be small premiums for certain file formats due to licensing issues, Level 3 said there will be no additional charges for bursts or large file sizes for any of the streaming formats, which the company said was an industry first.

Level 3 also announced that it is partnering with streaming media specialist Move Networks, which improves delivery of high-definition content by enabling multiple simultaneous streams. Level 3 will distribute Move’s Media Services, and integrate of Move’s technology into Level 3’s content delivery infrastructure. The two companies will also collaborate on future technology development.

Level 3’s streaming service has been in beta for some time, and recently delivered coverage of the finale of the World Cyber Games to 1.5 million viewers around the world. Analysts had expected aggressive pricing, and Level 3 has met those expectations. Grant van Rooyen, the Senior Vice President of Content Markets for Level 3, said that streaming services have historically been priced at a premium to high-speed Internet access, as was the case with caching and downloading services.

“With caching and download we knew that premium was 30 to 50 percent to high-speed IP,” said van Rooyen. “With streaming, we know it’s definitely a premium to IP, and definitely a premium to caching and download. We believe inappropriate premiums have constricted demand. We think unshackling pricing is a key to growth.”