Telecom giant Level 3 Communications (LVLT) is readying a super-cheap video streaming service that could prove to be a major headache for content delivery networks like Akamai Technologies (AKAM) and Limelight Networks (LLNW), Dan Rayburn writes.
Big CDNs are in a price war and have seen profits tank in recent quarters, thanks in part to pressure from cut-rate upstarts like CacheFly and NY’s Panther Express. But Level 3 could be the industry’s biggest challenge yet. Unlike Akamai or the smaller companies, which have to buy bandwidth wholesale, Level 3 already owns many of the big pipes that carry Internet traffic around the world. That should allow them to price their CDN service even cheaper than competitors. Good news for content providers and Web video startups — and bad news for Akamai and the rest of the CDNs.
Disclosure: SAI Chairman Kevin Ryan is an investor and CEO of Panther Express.