Verizon Cuts Peering Costs To CDNs: The Real Story Is More Than Price

Yesterday, Verizon announced a new program dubbed the "Verizon Partner Port Program" which gives content owners and CDNs the benefit of a direct connection from their content storage devices to the Verizon Internet backbone network. While Verizon is saying that they are offering "a significantly lower price to connect directly to the Verizon Internet backbone network," this is about more than just lower pricing.

Some would argue that Verizon is simply offering lower IP transit prices, which really is not that big of a deal. Agreed, from a high-level, that's all this could look like. But after speaking with two major CDNs yesterday, they are very interested in this Verizon offering and say that it may enable them to offer a lower price to any content owner who wants to reach Verizon customers.

While many of the major CDNs already connect to Verizon via peering connections and NAPs, this new service offers CDNs a lot cheaper transport costs than just a traditional IP transit link they would negotiate with Verizon. Since these new connections would be all outbound traffic and not inbound, Verizon can manage their network differently and offer a lower price. CDNs have the ability to connect to Verizon from ten data centers in the U.S., most of which are Equinix facilities.

While Verizon would not disclose pricing to me, CDNs that had already spoken to Verizon talked pricing with me that was much lower than what they would pay for traditional transit services. And one of the CDNs I spoke to said that if Verizon could offer pricing that much lower, the CDN could in turn offer content owners a cheaper price to deliver their content to Verizon subscribers. If that in fact happens, this Verizon offering becomes more than just about lower IP costs. It means it has the ability to reduce the content owners distribution costs, the CDNs operating costs and provides a better experience for users like me who are on the FiOS network.