As we noted in our Data Center Investor roundup earlier today, shares of content delivery networks Akamai Technologies and Limelight Networks have lost ground this year amid investor concern about growing competition from telco companies developing their own offerings.
Last week Dan Rayburn from StreamingMedia.com had several important stories about the evolution of the content delivery market and the relationship between telecom companies and network operators.
First, Dan reported that telcos and carriers are in discussions to combine their CDN operations to create a federated content delivery network called the Open Carrier Exchange (OCX).
Carriers Covet Control
"While this idea has been circulating in the market for many years, with little to show for it, carriers now appear to be more serious about the idea," Rayburn writes. "The idea of the OCX is for carriers and telcos to share ideas, come up with some CDN standards and allow one another to connect their CDN networks, in a yet to be determined fashion. As we heard from carriers and telcos directly at last month's Content Delivery Summit, they now want to compete with traditional CDNs and take control of delivering video across their own network."
Dan also takes a look at Akamai's response to competition from the telco sector: a licensed CDN offering that will allow telcos and ISPs to license Akamai's software to build their delivery networks. The move is largely seen as a defensive strategy for Akamai as more carriers turn to a build-your-own approach.
Challenges Face Akamai LCDN
But it may not be an easy market to crack. Rayburn takes a comprehensive look at the challenges and opportunities facing a licensed CDN offering from Akamai. One stumbling block may be cultural.
"I have spoken to many Akamai customers that feel the company's service operates too much as a black box and that customers have very little transparency into how Akamai's network actually works," Rayburn writes. "So if Akamai really wants to play in the telco CDN space, they are going to have to participate in the telco RFI/RFP process, and respond in detail on their capabilities, processes, roadmap and the like. In addition, they are going to have to allow the telco to deploy, operate, maintain, and report on the inner workings of the CDN, because it will be their product. This is not something Akamai is accustomed to culturally, and will represent a significant shift in their actions if the want to sell into the telco space."