CenturyLink Says They Will Double-Down On Level 3’s CDN Business

With the acquisition of Level 3 by CenturyLink now complete, many have been asking if CenturyLink plans to stay in the commercial CDN business. Based on the conversations I have had with CenturyLink executives the company plans to continue to support the commercial CDN services that have long been offered by Level 3 and will work to grow the business.

Over the past 18 months, Level 3 has been quietly but consistently growing share despite a perceived lack of market activity, announcing double-digit growth in the CDN product line for each of the last 6 quarters. (Q2 2016: 22%, Q3 2016: 15%, Q4 2016: 15%, Q1 2017: 15%, Q2 2017: 12%, Q3 2017: 15% projected) This has primarily been driven by a strategy of targeting existing customers in their base, which accounts for their lack of noise in the market compared with some of their competitors.

One discussion the company has stayed close to is the emergence of a trend towards multi-CDN in large-scale delivery. Through partnering with independent load-balancing and QoS analytics companies, they have recognized that the opportunity for CDNs is increasingly not defined by a “them OR us” sales conversation, but rather a “them AND us” one, with traffic being dynamically allocated based primarily on performance and secondarily on cost.

To that end, Level 3’s development through 2017 has focused on performance, with architectural changes enabling a more flexible set of deployment options. In addition, 2017 product releases included an all-new video packaging platform, support for HTTP/2 and IPv6, a redesigned portal and a real-time log streaming module, which suggests continued investment. Maintaining momentum will be important, as volume delivery increases of 50+% YoY and growing will continue to drive significant peaks in demand. In addition to software optimizations, the company points towards a 60%+ increase in raw serving capacity, with pronounced jumps in APAC and LATAM and steady increases in North America and EMEA.

I haven’t seen any signs of Level 3 losing any major share of CDN business in the market, but they did recently lose Jon Alexander who was at Level 3 for six years, most recently as Senior Director of Product Management for their CDN business. The company says they are actively looking to fill that position and it’s crucial they get someone with deep knowledge of the CDN industry and one who can map out a clear vision for their CDN product offering going forward.