Level 3 Opens Broadcast Encoding Centers: Ecosystem Offering Now In Play

Level3-ecosystem-diagram
This month, Level 3 officially opened their two new broadcast encoding centers and has already started signal acquisition, content ingestion and video encoding services for customers in their content markets group. The two broadcast centers, located in Manhattan and Tulsa, now enable Level 3 to market to customers a unique offering, controlling customers video content from creation to distribution.

While many content delivery networks (CDN) are trying to figure out how to get out of the commodity business of shipping bits and are talking about the "ecosystem", Level 3 has now deployed one of the most unique ecosystem offerings in the market. The new broadcast centers allows level 3 to provide support for encoding up to 24 simultaneous live events in Windows Media, Flash or Move Networks formats. And with both broadcast centers tied into Level 3's Vyvx offering, the company can also ingest video directly from customer's locations and downlink and uplink video from nearly 95% of the world's satellites.

Why many will say that in the bigger picture, these services are not a huge money maker for Level 3, the point of this offering is to enable content owners to be able to get more content online faster and easier. Moving forward, this new offering will also enable Level 3 to become one of the premiere CDNs in the market for live events since they can do more than just deliver the bits. I got my start in this industry as a webcaster and understand the need customers have when it comes to live broadcasting, a trend we are seeing more of on the web. For live events, it's all about the production, getting the signal from one location to another, encoding the video into the right formats and distributing it to the right partners. Not to mention do it all at broadcast quality and with complete redundancy. With live events, you get one chance and once chance only to get it right. And while Akamai and Limelight still retain control of the most of the large scale live events on the web, Level 3 is quickly catching up.

While not announced, Level 3 is already broadcasting many professional sports events in Europe and other locations and has over 700 Vyvx customers. Add in the fact that Level 3 gets more than 20,000 requests for short term Vyvx accounts each month, mostly for sporting events and breaking news, and it does not take a lot of math to figure out how quickly this business will ramp up for Level 3.

To support live events, most other CDNs currently use partners like iStreamPlanet, Origin Digital, or OnStreamMedia to handle the signal acquisition and encoding needs for events. And while those companies and others do a good job, the vast majority of customers, especially in the broadcast vertical, are looking for one company to handle it from end-to-end. For most customers, calling a CDN and asking for live event help, outside of delivery, is a painful process. Typically they are told to call a partner or find someone who does live event production and then call the CDN back when they have it all worked out. While CDNs are very good at delivering live streams, they are pretty poor in handling all of the others pieces of a live event and assigning a live event manager who can assist with things not under control of the CDN. That hands-on approach is what makes a live event successful. And if we think about where video is going with higher bitrates, longer form content and HD video quality, the process of ingesting and encoding video is going to be harder to manage and become more important to major content creators.

While Level 3's broadcast encoding centers are primarily handling one-off events right now, in the first half of next year, Level 3 expects to make much of their live event services available on a self-provisioning model. Clients will have the ability to reserve encoders and ingest and encode their own streams on the fly, without having to call into Level 3. While most content owners are content to have someone else do it today, there is a shift going on in the industry as those in the media, entertainment and broadcast verticals take more control of their content. As online and broadcast divisions inside a company merge, more are shifting resources to where they want to provision encoders and live event solutions themselves. That logic is part of the reason why Level 3 acquired Servecast last year so they could layer some of Servecast applications on top of the Level 3 infrastructure.

For the past year and a half, I have been saying that Level 3 is going to become a serious player in the content delivery arena, offering more than just pushing bits. And while they still have a few pieces of the solution to bring to the market, like better reporting and some of the front-end applications, 2009 should be a good year for Level 3's content delivery business.

  • One has to question what the top-line revenue goals for L3 will have to be to justify the expense of these two encoding centers.
    We have all seen the rise and fall and rise again of the streaming media industry. We saw Digital Island blow a grip of cash in NYC only to shut down 2 years later. Of course there was the Activate BOC in Seattle which was carved up for parts and our own NaviSite BOC in Andover and the Broadcast.com BOC in Dallas and I think I could keep going here if I just dug through some old notes. 🙂
    But seriously one would hope L3 will make the pricing extremely affordable so they can truly monetize these build-outs.
    I don’t see L3 carving into iStreamPlanet’s business anytime soon because they still have boots on the ground actually going to live events to encode or uplink them locally. Maybe this will affect Origin or OnStream but only to the extent that their customers are willing to leave their current CDN partners and sign with L3 for hosting etc.

  • Just a Streaming Enthusiast

    On the surface, this looks like a great plan. If I were a cigar smoking executive sitting in a board room, this would look awesome on the whiteboard. The problem, which was touched on in the article, is that large end-to-end providers historically do a poor job of pulling it all together and providing the on-the-ground skin-in-the-game that typical streaming event management requires. Case in point, when WilTel owned Vyvx (now part of Level 3) – they invested heavily in a streaming arm in order to provide the end-to-end service. However, they were never able to integrate the pieces (traditional broadcast transport + webcasting) to the degree that the whole was better than the sum of the parts. In the end, they shut down the webcast piece and Vyvx is now owned by Level 3. Savvis, when they had a CDN, also had their own webcast division – but they also couldn’t keep the appropriate resources focused on it to make it successful, so even before they gave up their CDN (to Level3), they rolled the webcast division off into Origin Digital. Level3 seems to have the same track record of finding it dificult to integrate the various pieces of the transmission/data puzzle. I agree with Christopher, the iStreamplanets exist because they can make the webcast business their number one priority and do a good job. Likewise, they can shop the best CDNs since they are predominantly agnostic and create custom solutions that work for each situation – as opposed to fitting the customer into a pre-baked commodity solution. Finally, as the web becomes more interactive through technologies like Flash and Silverlight, the rich experiences that wrap around video streams will take even greater levels of project management, development and integration work – tasks that the big CDNs seem ill prepared to take on. All this said, more options are better than fewer and competition in the industry serves everyone – so I welcome them into the space but remain cautious about their ability to make an impact.

  • I see a huge difference between what Level 3 is doing and what Wiltel and SAVVIS tried to do. Wiltel and SAVVIS never made webcasting a priority, never packaged, marketed and sold it as a product and really didn’t give it any thought. Webcasting to them was an after-thought, this thing on the side that was not integrated into their core business. SAVVIS never even really did anything with the assets they bought and just sat on them for over a year. Level 3 planned to integrate this into their core business from day one and looks to it as an actual product. Their approach, in my eyes, make it very different than what Wiltel or SAVVIS half-heartedly tried to do.

  • Just a Streaming Enthusiast

    I hope you’re right. They have the pieces – integration will be key. Level 3 has quite a chore in making all of this work together (especially from a standpoint of productizing the offering from aquisition to long haul to CDN distribution. That’s a lot of parts from a project management perspective, let alone the booking and billing systems). Add the legacy Broadwing technologies into the mix and you’ve got even more assets in the arsenal – and even more integration headaches to go along with it. So yes – they have all the right pieces. If they can tie them together and create value in the one-stop shop approach, they will gobble up market share. However, given the size of the machine they are running, I think there will still be huge opportunity for the iStreamplanets and Origin Digitals of the world.

  • a broadcast market enthusiast

    No one out there does the aquisition and longhaul piece as well as the Vyvx team….no one. And the Broadcast Encoding Centers and process involved for the hand off are handled and integrated into that same team. The feeds, hd, sd, etc are already being brought back to the Tulsa NOC for monitoring, so really the only process addition here is to plug that feed into a new box, an encoding box, and make sure it stays up. Something that team is quite adept at.