“EdgeCast’s role as a provider of the white-label service illustrates a key step that we believe is critical for stand-alone CDNs looking to survive, which is a shift in focus toward an indirect sale model through partnerships with the operators.” The carrier activity in the CDN market to date has been primarily in the form of partnerships with existing stand-alone CDN providers. Although many network operators have told Yankee Group they are also conducting internal development initiatives, the path with the lowest initial barriers to entry is to either whitelabel or resell CDN services from an existing CDN (then bundle them with the operator’s wholesale offering)... Global Crossing has recently entered into a reselling agreement with EdgeCast as the first piece of a strategy that will involve similar partnerships with multiple CDNs to provide a diverse set of offerings to potential customers (with the ultimate goal of moving this multipronged offering into a single, Global Crossing-branded, white-label offering). Finally, Deutsche Telekom announced this month it will be white-labeling a CDN service from EdgeCast. All of these partnerships are unique and intriguing for their own reasons, but Yankee Group believes this last one is most significant. First of all, it represents a major step by one of the world’s largest service providers, and the offering has very highvisibility and strategic importance to Deutsche Telekom. Moreover, EdgeCast’s role as a provider of the white-label service illustrates a key step that we believe is critical for stand-alone CDNs looking to survive, which is a shift in focus toward an indirect sale model through partnerships with the operators. Success with an indirect model is predicated on heavy focus and support from the larger network operator partners, and there is no more suitable partner than Deutsche Telekom. Global Crossing’s multi-CDN partner approach is a strong entry as well because it will allow for a diverse array of potential customers to pick and choose what content delivery option is most appropriate for them, dependent on price, availability of services, type of content delivered, etc. Ultimately though, a resale approach must be step one of a more direct strategy.
	Source: Yankee Group Research, Inc., Carrier Encroachment into the CDN Marketplace January 2009 © Copyright 2009. Yankee Group Research, Inc. All rights reserved.