Is GTT likely to get into the CDN business now that Hibernia Networks is part of GTT? Supposedly, Hibernia Networks entered the CDN market a while back, touting their low-cost content delivery services. They built a website for Hibernia CDN and started targeting their customers with the new offering. However, they hit a brick called the “reality of the CDN market.” The reality is that the CDN market is a lot harder to penetrate than what most people think. We’ll go out on a limb and say that, as of today, Hibernia CDN likely has 0 to 5 CDN customers.
However, they do have a decent-looking website. If Hibernia CDN does have a dozen customers and GTT decides to enter the market, we expect them to hit the same brick wall. The truth of the matter is half of the CDN pure-plays will exit the market in the next 24 months as the price per GB drops to the $0.005 – $0.001 range in the coming years for basic delivery. The basic low-cost content delivery market is going to shift to the giants that have economy of scale: Akamai, Google, Azure and AWS.
Hibernia’s approach to CDN is similar to Level 3: build a CDN that leverages your own network. That might work for Level 3, but it won’t work with Hibernia since their network is much smaller than Level 3’s, even post-acquisition. And it isn’t like Level 3 is killing it in the CDN business. The business model of a Telco CDN has yet to prove itself. According to their website, Hibernia CDN provides the following services:
- Game and Software Distribution
- Live Streaming and VOD
- Advertising
Hibernia CDN could probably pull off software distribution and VOD delivery, if they can do it profitably at half a cent per GB. But I doubt they can serve the advertising and live streaming market competitively. These two services are much harder to do, and it takes years of experience to get it right. And in order to do so, you need lots of customers, which they are lacking. So will GTT get into the CDN business? Highly unlikely.