As expected, AT&T (T) is readying its expanded content/media delivery business for a big Q3 push. The company sent out a press release today informing the world that it’s spending $70 million on network and development investments by the end of the year; that it’s signed deals with three software companies to deal with various forms of multimedia content; and that it’s appointed Cathy Martine as EVP of its new Content Distribution unit.
What’s the point? To take advantage of the fact that AT&T owns one of the largest networks in the world, which it can leverage to chip some of the $800 million CDN market away from the likes of Akamai Technologies (AKAM), Limelight Networks (LLNW), and a host of smaller players like Level3 (LVLT). (Disclosure: SAI chairman Kevin Ryan is an investor in Panther Express, a CDN.)
AT&T probably won’t steal any of Akamai or Limelight’s big customers overnight — it lacks the CDN capacity that Akamai has, and the breadth of other services like DRM and transcoding, according to analyst Dan Rayburn. But its CDN services could be a worthwhile upsell to companies that already purchase bandwidth/hosting from AT&T, or as a backup CDN to Akamai or its competitors.
Akamai shares closed down 1.6% Tuesday to $34.66; Limelight dropped 2.6% to $3.77.