Chalk up another telco win for EdgeCast. Yesterday the company announced that Canadian telco provider Telus would being reselling all of EdgeCast's content delivery services. Like many of the other carriers that work with EdgeCast, Telus will use EdgeCast's platform to provision and support their own customers across the EdgeCast network. Telus has spent the last few months training roughly 400 account managers responsible for selling into medium and large size enterprise and government accounts and are developing an overlay network of CDN specialists.
It's interesting to note that Telus mentioned that they "had a buy and a sell relationship with Akamai for years which was useful on some very specific opportunities", but that they "couldn't move it to the next level." Their deal with EdgeCast will eventually end up being an exclusive reseller agreement and Telus said the primary reason they picked EdgeCast was because they "understood carriers needs" and that EdgeCast "was designed to work in a carrier environment".
While many people have been speculating for the past two years that telcos and carriers would dominate the CDN space and put the pure-play CDNs out of business, that could not be further from the truth. Telus is another of nearly a dozen examples of carriers getting into the CDN space by partnering with pure-play CDNs as opposed to spending a lot of CAPEX to build out their own CDN capabilities. Telus mentioned to me that their capital spend and operational focus right now is all about national wireless network upgrades as well as backbone upgrades, and spending money to build out their own CDN is not crucial to the success of their business. Like most carriers, they simply can't justify the CAPEX to build or buy their own CDN.
While the market for CDN services in Canada is still small when compared to the U.S., projections data from Cisco says the total CDN market in Canada, for video and non-video content, was $106M last year, growing to $174M by the end of 2010. When asked to comment on those numbers Telus said they seemed a bit "high" and felt the size of the market in Canada for CDN services was more along the lines of "about $90-$110M this year".
For EdgeCast, they are doing a nice little business dealing directly with the carriers and now have contracts with Deutsche Telekom (OTCQX:DTEGY), Global Crossing (NASDAQ:GLBC), Telus, AAPT in Australia, Dogan Telecom in Turkey, and I hear more deals are on the way. Based on the deal sizes I have seen and the number of customers EdgeCast has, I estimate they are on a run rate of over $20M in revenue for 2010.
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