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.

Scott Brown, formerly from Turner Broadcasting has been named the new CEO in the U.S. for P2P provider Octoshape. Earlier this week, Turner and Octoshape announced that Octoshape's P2P technology was used by Turner for live stream offerings for both the 2008 elections (CNN) and their live sports coverage from TBS.

The P2P solution is running on the Highwinds content delivery network and while the release says that "Octoshape broke several streaming records", no actual numbers were disclosed. The real test is going to be in the next few weeks when CNN will use the technology during the presidential inauguration.

I'm happy to announce that Jeffrey Cohen, GM of Microsoft's Edge Computing Network is our first confirmed keynote for the Content Delivery Summit taking place in May 2009. Jeffrey brings some very unique experience to the summit since he is responsible for the build out of Microsoft's own internal content delivery network but also contracts directly with all of the major CDNs on video delivery.

As many have probably read, there has been a lot of speculation going on in the news recently about Microsoft's CDN plans and what they could mean to the industry. Some have suggested that Microsoft plans to compete with other CDNs, might potentially purchase a CDN or could take all of their own CDN business in-house. This is your chance to come hear first-hand what Microsoft's CDN strategy is and hear their thoughts on the role that online video is going to play in the future.

On Monday, in the Eastern District Court of Virginia, the Level 3 and Limelight Networks patent suit got underway. While this is only the start of what is expected to be a long and drawn out legal proceeding, I think Level 3 and Limelight Networks should come to terms and end the suit.

As a company, Level 3 is in a very different position today than they were almost two years ago when they first notified Limelight about the patents they control from the SAVVIS acquisition. Two years ago, Level 3's stock price was around $7 and they had a market cap of almost $10 billion. Today, their stock is under a dollar and their market cap is under $2 billion. Times have changed, the economy has gotten worse and companies are now doing everything they can to cut costs. 

Like all companies, Level 3 is under a lot of pressure in the New Year to increase sales, but they also have a lot of debt to worry about. The telecom industry could take a big hit in 2009 and one would have to think that Level 3 will raise more money as soon as market conditions allow. In my opinion, the last thing Level 3 needs right now is to be spending money, time and resources on a patent suit with Limelight. Even if Level 3 were to win the suit, the process would most likely take years with all the appeals and it's not as if Level 3 would get a lot in the way of damages when compared to the rest of Level 3's total yearly revenue.

Meanwhile, Level 3 spends millions on the suit, ties up executives and can't spend every waking second possible working to improve the rest of their business. Any company engaged in a lawsuit is always distracted in some way from focusing 100% on their customers. Not that the suit helps Limelight Networks either, which is now spending money and time on two suits, the other being from Akamai. The difference however with the Akamai suit is that Akamai and Limelight are a lot more similar in terms of services offered than Limelight and Level 3 are. Level 3 is a carrier and as a result, gets the majority of their revenue from other services outside of similar CDN services offered by Limelight. Level 3 has a lot less to lose with Limelight than Akamai does.

In addition to Level 3 and market conditions changing in the past two years, the technology being debated has changed quite a bit since that time as well. Much of the Level 3 suit is talking about very generic technology and in my opinion, language that could be debated forever. My impression is that when Level 3 filed the suit, it was based on their assumption and interpretation of how they thought the Limelight Network was operating at the time. But compared to two years ago, Limelight is an entirely different company from a technology and services standpoint. Much has changed and I wonder just how much of the patents in question are even relevant to Limelight's offering today.

Like any company, Level 3 wants to protect their patent portfolio and enforce what they believe to be infringement on Limelight's part. But at the same time, I think Level 3 has to weigh what can be gained in the long run, by what can be lost in the short term. Unless a settlement is reached, Level 3 is not going to see any money anytime soon, and could lost the case and never see any money at all. Meanwhile they spend their own money and time on the suit and can't spend that time on improving their business in other ways. It's a bad time for Level 3 to be doing anything other than focusing 100% on their business.

So how could Level 3 and Limelight settle the suit? Limelight buys a lot of transit, one of the core services offered by Level 3. Level 3 could come to some kind of agreement to drop the suit against Limelight if Limelight purchased a certain amount of transit from them each year. I don't know what percentage of transit purchased by Limelight is from Level 3, but I'm sure it is a number that could be greatly increased. Level 3 would get immediate revenue, would cut the millions they are going to spend this year on the suit and could focus their efforts on other aspects of their business. And with Level 3 offering other services Limelight purchases, like co-location, one could make a reasonable argument that Level 3 could sell Limelight other products outside of just transit. I don't think it's that far fetched of an idea.

While I have no knowledge if any such discussion is taking place amongst Level 3 and Limelight, we are at a point in business where all companies are looking at ways to cut costs, increase revenue and focus their efforts on strengthening their core business, not spending time on things that are distractions. Level 3 could accomplish all of these things by thinking about other ways to solve the patent disagreement outside of being engaged in a multi-year, multimillion dollar suit.

Related Posts:

– Judge Denies Limelight's Motion For Summary Judgment In Level 3 Case

– Details From The Markman Ruling In Level 3 and Limelight Networks Patent Case

Today, Apple announced at Macworld that by the end of the first quarter, all songs in their catalog will be DRM free. While that's nice, but not really that big of a deal, the real question is when DRM free videos will be made available?

Lets face it, most folks who buy music from iTunes only want to play it on an iPod anyway and are not moving the content around to many other devices. Music is not what's driving the growth of the Internet, new applications, or bandwidth consumption. It's all about video. If Apple really wants to push the market forward and help video consumption explode, it needs to convince content owners that offering DRM free videos would help jumpstart the industry. New business models would be created overnight and consumers would be happy, which means they would buy and consume more content. We'd see an amazing amount of growth in just a year's time.

For all we know, Apple is already doing this and trying to convince content owners of the need for DRM free videos. But until the day consumers can buy content once and move it to any device they want, the market for purchasing video content won't see the kind of growth that many of us in the industry have been waiting for.

  I am excited to announce that StreamingMedia.com will be launching a new one-day summit in May 2009 that will focus on the infrastructure of online video. Held in conjunction with the Streaming Media East show, my goal is to bring together content owners, infrastructure providers, analysts, and Wall Street to discuss the business and technology challenges of delivering video online. (www.ContentDeliverySummit.com)

While competition is fierce amongst CDN vendors, there is still an opportunity for all vendors and customers to help push the market forward with information sharing, best practices and debates about the most important business and technology topics relevant to the growth of this industry. This is where the Content Delivery Summit comes in.

The majority of speakers at the summit will be customers, those who actually buy CDN services and can share with us what impact video delivery is having on their business today and what kind of growth they expect in the future. We'll have two tracks with roughly twelve sessions, four keynote presenters and roughly sixty total speakers and will be having multiple networking functions during and after the event. 

To help enable every sponsor and attendee to get the most out of the summit, I will be personally contacting every single pre-registered attendee before the event and helping them to arrange meetings with others at the show. I am going to spend a lot of time and effort to connect as many customers, vendors, analysts, and Wall Street executives with one another as possible and really show attendees and sponsors the value of attending. We're also going to be giving away free analyst research on the CDN industry and other goodies to all attendees.

We know that 2009 will be a tough year for many in the industry so when registration opens, we're going to keep the cost to attend very low and will be offering discounts and other special pricing to enable as many to attend as possible. We're also keeping sponsorship packages for vendors as low as possible with a silver sponsorship only costing $2k. We really want this to be the place where the CDN industry can come together and help demonstrate how big a role video over IP is going to play.

While the summit website is now officially live, we'll be adding sponsors, keynote speakers and session topics over the next few weeks.

If you are interested in speaking at the summit, visit the website and get your speaking request in now! The call for speakers closes in three weeks and there are a limited number of speaking spots. Roughly a third of the spots have already been filled with CDN customers.

If you are interested in moderating a session at the show, have a topic you want to see discussed or think there is a role you can play in the summit, call me. Within three weeks I expect the program to be filled and nearly complete, so don't hesitate and call me immediately (917-523-4562) if you want to help plan any of the agenda. I am still looking for experienced moderators who can help organize a discussion on CDN topics pertaining to business, technology or financing.

I'll be posting many updates to the website and my blog over the next few weeks as we announce more details of the summit and look to publish the entire agenda by the end of January.

While 2009 marks the 14th year since some of the first CDNs starting delivering video on the web, I think there is a lot more that the CDN industry needs to be doing as a collective group, working together to share information and help grow the market faster. If you have any ideas on how the Content Delivery Summit can help to achieve this, I welcome and any all suggestions and answer my phone 24 hours a day, 7 days a week. I'd love to hear from you. (917-523-4562)

This morning, Akamai, Ascent Media and Sofatronic announced the creating of a new integrated digital workflow and distribution solution for the production, hosting and delivery of BD Live functionality for Blu-ray Discs.

The companies say the new service provides a more efficient and cost effective way for movie studios and content creators to harness the full power of BD Live’s Internet-enabled features, such as bonus content, online community, and interactive and e-commerce applications.

While it's a smart idea for all three vendors to partner on the new service and lay the groundwork for the future, I wonder just how many of the over 1,200 Blu-ray movies offered today have BD Live functionality? And more importantly, how many studios moving forward are going to support the extra costs involved with providing additional content via the Internet? Ideally, this is where Akamai, Ascent Media and Sofatronic's solution would come in, reducing the cost and complexity of making this content available.

But outside of fixing the workflow issue, there are two other problems that need to be resolved, the biggest of which is convincing consumers to purchase Blu-ray players. At the end of Q3 2008, the Blu-ray Disc Association said that "more than 6.5 million Blu-ray capable players, including PS3, have been sold in the U.S. and more than 15 million units have been sold worldwide." But what the Blu-ray Disc Association doesn't say is how many of those units are broadband enabled? Depending on which research report you want to believe, it is estimated that between 20-30 million Blu-ray units are expected to be sold in 2009, with the percentage of those capable of connecting to the Internet unknown. That being said, nearly every analyst report in the beginning of 2008 predicted 30 million units would be sold for 2008, and those estimates were high by at least 10 million. The bottom line is that broadband capable Blu-ray players need to get adopted first and movie studios need to make a commitment to BD Live functionality.

In addition to the adoption problem, the other issue is whether consumers get any real benefit getting extra content from a BD Live enabled service as opposed to just including that extra content on the disc itself. Three months ago when the Iron Man disc came out, whoever was serving up the BD Live content had servers that could not handle the load, which prevented many customers from getting the extra content. And as pointed out in an article on CNET, the fact that most BD-Live features could easily be fit on a Blu-ray Disc, instead of having to download them from the Internet, makes you wonder if the BD Live feature is really worth it. It might just be too new for consumers to see what will be possible with BD Live, or it may just be an industry using a technology because it exists, even if the demand does not. For now, it sounds too early to know either way.

Over the coming weeks I will be getting hands-on with an Internet enabled Blu-ray player and taking a look at the BD Live functionality and the Netflix streaming service. I'll be posting a review of both shortly.