AT&T Building Out CDN, Preparing To Push Into The Market

Last December, at AT&T’s analyst day, their presentation included a few slides about their content delivery build out and capacity planning in 2008 to handle web acceleration, software downloads and streaming based services.

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.

Currently, some customers of AT&T’s are still having their content delivered via Akamai, who AT&T has been re-selling and using as one of it’s partners for some time. But moving forward, AT&T expects to deliver more content across its own network and rely less on partners for delivery. AT&T has been busy training their direct sales force and re-sellers to sell their CDN services and in the third quarter, AT&T expects to aggressively push into the market.

While AT&T won’t have some of the additional CDN services in the content ecosystem like content management, transcoding, DRM etc… like most CDNs, they will probably partner with others in the industry who provide these services. Their content delivery services already support some additional functionality like authentication, pulling content from customers origin storage and reporting via their customer portal. While AT&T will not say how many customers they have for their CDN services today, or how much revenue they want to generate from CDN services in 2008, they have listed, and the U.S. Golf Association (USGA) as current customers.

While many analysts who cover Akamai were worried when AT&T talked about their CDN plans during their analyst day, AT&T still has a lot of work to do in order to become a major player in the content delivery industry. They do have some advantages going for them, most notable of which is that they are not a startup and not relying on content delivery services alone for their revenue. They won’t go out of business in 18 months when the VC money dries up, like some of the other CDNs will, and AT&T has an enormous marketing budget, re-seller channel and plenty of R&D resources. That’s not to say those advantages will guarantee AT&T success, as we saw Qwest, MCI and other telcos in the market fail with these same advantages years ago. But with Level 3 now becoming a major player in the CDN market, AT&T making a bigger push, it’s only a matter of time before the telcos once again try to dominate this market. 

Some will say that since AT&T, Level 3 and other telcos own the network, that gives them a competitive advantage over CDNs who’s don’t own the pipe. Others say that owning the pipe is too expensive, requires too much capex and does not allow the telco to deliver traffic from multiple "best of breed" networks. At this stage, the verdict is still out on who is right, but one thing is for sure. The telcos are entering the content delivery market and things are going to get very interesting in 2009 when outsourced CDN services for video alone become a billion dollar market in the U.S.

  • Abe

    As I asserted when this idea first was discussed in this blog, T will not be able to easily achieve the presence that Akamai has in multiple networks. Indeed, T will probably be prevented from placing servers in networks with which it competes.
    I suggest that T might well strengthen its existing partnership with Akamai in an effort to broaden its CDN.

  • AT&T Preps CDN Offering

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

  • Dan,
    Good info, thanks. Dan Frommer over at SAI is looking for more info on AT&T (he has a “where’s the beef” story out today), I’ve linked him back here via comments.

  • AT&T has offered a streaming CDN for many years. It was first marketed as ICDS and offered WMT and Real. Performance has always been good, they are great about informing clients ahead of technical upgrades and they are equally good at reporting their technical issues (unlike may other CDNs who never even admit to errors and problems).
    We used them primarily for streaming live events in the Real networks format. Their network only supported a push (either they never upgraded to helix of they never upgraded their UI). Given the complete collapse of Real as a format, we now only use them as a WMT back up CDN if our other primary choices fail (meaning we never use them anymore)
    They offer a decent, although very outdated web interface for configuring live event publishing points (not Web 2.0 and kinda slow).
    Their biggest problem is that they don’t seem to have a sales force for this service and their prices are even higher than Akamai. The AT&T CDN is one of several we use but is the last choice among our producers. We have been a client with them since 1999 and have not spoken to a sales person since 2001.
    I hope they do move forward and upgrade their services and I hope they realize that relationships with your clients does make a difference when it comes to which CDN a client chooses.

  • Abe – it is obvious you don’t know the extensive footprint and SONET infrastructure that T posses. This company almost owns the world when it comes to fiber.
    As for Ray’s comments – you must realize T is not focused on customer support – unless you are paying them $1 MM a year. You are part of the Select markets / mid markets & they will come – if you will sign a contract.
    I worked for the Bell – they really have never had a customer focused mentality – but that is the same for some of the other CDN’s we currently have in the market. Service & being customer savvy will be the king when the ride ends for this circus.
    (and Streaming is the commodity of the CDN solutions – the rest is where the sticky comes)

  • Abe

    grinsandfun: I am aware of T’s fiber; still, there are many other networks.