Apple Negotiating Paid Interconnect Deals With ISPs For Their Own CDN
In February I blogged about a new group formed inside of Apple last year, tasked with building out their own CDN to deliver Apple software updates, apps and other Apple related content.
Context & Ripple Effects
This story extends what StreamingMediaBlog reported in February, when Apple's newly formed internal group tasked with building out its own CDN first surfaced. That buildout was framed then as serving Apple's own software updates and apps; the new reporting says Apple is now negotiating paid interconnection deals with ISPs to carry that traffic, which moves the project from data-center plumbing into the paid-peering market.
The timing matters because Apple is simultaneously reported — via the Wall Street Journal in March — to be in talks with Comcast about a streaming-TV service, which would make direct control of last-mile delivery far more valuable than it is for app updates alone. Pickup across Ars Technica, MacRumors, 9to5Mac, CircleID and four other outlets within days shows how closely the paid-peering question is being watched; note the interconnect deals themselves remain unconfirmed reports, not announced agreements.
First-order effects
- ISPs that sign paid interconnection deals gain a new revenue line from one of the largest single sources of internet traffic — Apple's OS updates and app downloads — shifting that traffic from third-party CDN handoff points onto direct links.
- Apple's dependence on commercial CDN providers for its update and app delivery shrinks if the buildout proceeds, converting a recurring vendor cost into owned capacity.
Second-order effects
- Commercial CDN operators face losing their largest single-content-owner accounts as Apple-class companies internalize delivery, pushing those vendors to compete harder on price and managed services for smaller customers.
- Other bandwidth-heavy content owners — video services chief among them — come under pressure to strike similar paid interconnection deals rather than rely on shared transit, since Apple's deals normalize paying ISPs directly for performance.
Third-order effects
- If paid interconnection becomes the standard route to guaranteed quality of service, delivery economics bifurcate: deep-pocketed platforms buy direct paths while smaller publishers pay CDN intermediaries who in turn pay the same ISPs, entrenching scale advantages at both ends.
- Combined with Apple's reported interest in a Comcast-distributed TV service, owned infrastructure plus negotiated ISP relationships points toward content companies treating network access itself as a strategic asset rather than a commodity input.
The trend: Major content owners are moving from renting third-party CDN capacity to building their own delivery infrastructure and paying ISPs directly for interconnection — a shift from buying transit to buying guaranteed access.