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AT&T Preps CDN Offering

AT&T has confirmed that it is entering the content delivery market in a bigger way.

AT&T has confirmed that it is entering the content delivery market in a bigger way, ending months of speculation about its plans. Here's an excerpt from Dan Rayburn at the Business of Online Video:

Since December, AT&T has been busy working on the build out and expects to spend between $70-$80 million on infrastructure this year. By the end of 2008, AT&T is aiming to have 400Gbps of capacity online, for all their content delivery services, which would increase their capacity by 4x what they have now. When completed, their content delivery services will be delivered from 32 nodes in 7 countries and they will be Adobe Flash Certified by year's end and will be supporting live and on-demand delivery for all the major formats.

AT&T has been expanding its data center network and now has 28 worldwide - 14 within the U.S. and 14 overseas.

Ryan Lawler at Contentinople notes that AT&T already offers streaming and caching services, but will be ramping up those services by adding content servers to network locations around the world. One analyst downgraded Akamai (AKAM), the CDN market leader, citing an assumed cost advantage for AT&T (T).

The cost advantage comes from AT&T owning its network, since Akamai leases capacity from carriers like, well, AT&T. Akamai, not surprisingly, disputes that owning a backbone network would be a built-in cost advantage. "AT&T and Level 3 claim their cost structure is lower, but I'd love to see the numbers," says David Belson, senior competitive analyst for Akamai. Belson claims Akamai has the upper hand, because its network serves files from within ISP networks, rather than traveling over backbone networks to reach end users.