Frontier GlobalCenter - the data and Internet arm of Frontier Communications - and content distributor Akamai have announced a partnership, the first sign that large carriers are paying close attention to content distributors. In the past, such partnerships often put companies such as Akamai into the crosshairs as potential acquisition targets.
While the deal's exact terms have not been announced, the money will be changing hands both ways. Akamai will pay Frontier GlobalCenter to colocate its servers with the carrier, and Frontier will pay Akamai to distribute its customers' content through Akamai's network. Frontier execs plan to repackage Akamai's distribution, called FreeFlow, as a new service to be launched by the end of the year.
"This is planned as a premium service, and there will be an additional charge for it," said Matt Parnell, Frontier GlobalCenter product manager for new service.
Frontier hasn't developed pricing for the service yet. Akamai charges $2,000 per megabyte of content sent. Two-way partnership between the companies might mean that they charge each other less for the services exchanged. Akamai executives couldn't comment on this announcement by our deadline. Akamai filed with the Securities and Exchange Commission to raise $86 million through an initial public offering.
The reason Frontier decided to go with Akamai instead of the other major content provider, Sandpiper, is Frontier's perception that Akamai is close to striking a technology deal with Cisco.
"When we thought this deal through, we realized that once Cisco and Akamai enable Cisco routers with Akamai technology, every place with a Cisco router could become an Akamai server," said Paul Santinelli, Frontier's vice president of technology and applications.
Cisco invested $40 million in Akamai last month. Some analysts said Akamai is playing with fire by getting close to Cisco.
"It's not a great secret that Cisco is interested in Akamai's technology, because it works and it's great," said Greg Howard, principal analyst with HTRC. "If Cisco indeed licenses this technology, it means that Akamai will have more competitors with service providers for its main business."
Cisco officers said that the assumption that every Cisco router will be an Akamai server is incorrect.
"We are interested in bringing in the routing part of the Akamai solution into our IOS [Internetworking Operating System], not the FreeFlow part of the solution," said Kevin Degadillo, Cisco IOS product manager.
This is not to say that Cisco will not become a part of FreeFlow eventually.
"We are bringing [the] Akamai solution into our caching product, so we will be able to cache Akamai content and participate in FreeFlow," Degadillo said.