Price drop puts Level 3 in CDN spotlight

* Level 3 takes aim at content delivery market with new pricing model

Who doesn’t like a bargain?

In an effort to boost uptake of its content delivery network (CDN) service, Level 3 Communications is drawing on the appeal of a good deal. The service provider has said it will offer its CDN service for the same rate as basic Internet access service, rather than charging a premium for CDN features.

The new pricing structure is aimed at enticing customers with large-file, large-volume needs, such as those that have to deal with software downloads, live-events and video file distribution. It’s also a sign Level 3 is serious about managed services and ready to challenge market veterans like Akamai Technologies and Limelight Networks

Amy Larsen DeCarlo, a principal analyst at research firm Current Analysis, said the new pricing model is a positive move for Level 3 (a relative newcomer to the CDN market) as well as IT buyers.

“Level 3’s pricing gambit is a boon for customers – and a challenge to every competitor in the space,” DeCarlo wrote in a research brief. “Level 3 read the market perfectly and responded with the best maneuver it could make to elevate its own status in the CDN space overnight in a battleground dominated by price.”

The service makes use of Level 3’s existing long-haul network and collocation assets as well as CDN assets the company gained in its $135 million acquisition of Savvis’ CDN business

The Savvis deal, completed in January, is among seven acquisitions Level 3 has made in two years. It acquired Broadwing for $1.4 billion and WilTel for $700 million -- two deals that helped Level 3 quickly gain business customers, business service offerings, and network assets. It also bought Progressive Telecom for about $68.5 million and ICG Communications for $163 million.

With Level 3’s $1.2 billion TelCove acquisition, the service provider gained 22,000 route miles of local and long-haul fiber. Lastly, Level 3 acquired Servecast in July for $45 million (and expects to complete the full integration of the video management platform it gained as part of that acquisition of in the first quarter of 2008).

Level 3 says its new CDN pricing structure is one element in a continuing rollout of services and features. In May, Level 3 announced the availability of caching and downloading features. Looking ahead, the company plans to introduce streaming services supporting all major formats by the end of 2007.

Learn more about this topic

 
Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.
Now read: Getting grounded in IoT