AT&T Finally Gives Up On Their In-House CDN: Will Resell Akamai's CDN Services
In August I reported that AT&T was planning to shut down their in-house CDN and re-sell CDN services from Akamai or Limelight Networks and that Akamai would probably win the deal since they were willing …
Context & Ripple Effects
The reversal is stark: eighteen months after AT&T scaled up its content delivery ambitions as an in-house capability, the carrier is shutting that platform down entirely and putting Akamai's CDN behind its own brand. The deal closes out a contest the blog flagged back in August 2012, when Akamai or Limelight were named as the likely suppliers — and it lands at a carrier already leaning on Akamai's orbit, given the reported $300M Cotendo acquisition rumors from late 2011 that would have deepened Akamai's network-software bench.
The pickup is unusually broad for a CDN contract story — Bloomberg, Reuters, the Wall Street Journal, Forbes, ZDNet and FierceTelecom all ran it the same day — which says less about the dollar value than about what it signals: a tier-one telco conceding that specialist CDNs beat carrier-built delivery.
First-order effects
- AT&T's existing CDN customers get migrated onto Akamai's infrastructure under an AT&T-branded reseller arrangement, while AT&T retires the cost of running its own delivery network.
- Limelight Networks loses a marquee telco distribution deal it was actively bidding for, leaving Akamai as the sole beneficiary of AT&T's channel.
Second-order effects
- Akamai effectively rents AT&T's enterprise and wholesale sales reach without building it, a template other carriers watching this deal can copy — and one that pressures Limelight and mid-tier CDNs to chase their own carrier partnerships or compete on price alone.
- Carrier-built CDN capacity coming off the market shifts competitive weight toward the specialists, tightening pricing discipline across the delivery market just as video traffic scales.
Third-order effects
- If the pattern holds, telecom operators stop treating content delivery as a must-build layer and consolidate into a two-tier structure: specialist CDNs run the infrastructure, carriers resell it — mirroring how operators have handled other managed services they failed to productize in-house.
The trend: Carriers are exiting in-house infrastructure services they cannot win on merit and converting themselves into resale channels for specialist platforms, with Akamai the early consolidator of that shift in content delivery.