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Level 3 Communications, Inc. (NYSE:LVLT) has been trumpeting the explosion of internet video as a significant macro market trend in their favor.

Investors need to remember three points:

(1) most P2P video is un-monetized as it is a non-excludable service that rides a flat rate bandwidth pipe between users,
(2) the telecom centric service providers (i.e. AT&T (NYSE:T), Verizon (NYSE:VZ)) who are deploying NEW video services have their own backbones and
(3) historically bandwidth has always proven cheaper to deploy then to control.

The last point means that cost of controlling or providing some form of quality of service has always proven more expensive then simply adding capacity. Additional reading material can be found here and here (.pdf).

Full Disclosure: I do not own shares of any of the companies mentioned in this post.