By Sinead Carew
NEW YORK Dec 6 AT&T Inc has agreed to
partner with Akamai Technologies Inc instead of
competing with it on content delivery network (CDN) services,
which deliver content faster by avoiding Internet congestion,
sending Akamai's shares up 10 percent.
As part of their agreement, AT&T will transfer its existing
CDN operations, customers and services to Akamai's platform in
2013, the company said on Thursday.
Janney Montgomery Scott analyst Richard Fetyko said that the
agreement was important for Akamai as it effectively eliminates
AT&T as a rival and potentially brings Akamai new business.
"It's an admission by one of the largest telcos that the CDN
business is not an easy business to manage," said Fetyko who
noted that investors had been concerned about the prospect of
competition from big operators like AT&T.
"It shows investors that telcos are not likely to be
competing with Akamai any time soon," he said, adding that Level
3 Communications was now the only telephone company in
Shares in Akamai rival Limelight Networks Inc fell
2 percent after the news because of AT&T's choice of Akamai.
AT&T and Akamai said they will initially focus on North
America and planned to expand globally within 12 months. They
will connect Akamai CDN services to AT&T's network and share
resources such as technical support and marketing.
Akamai shares were up $3.56 or 10 percent at $39.06 in
morning trade on Nasdaq. AT&T shares were down 11 cents at
$33.80 on the New York Stock Exchange. Limelight shares were
down 4 cents at $2.03 on Nasdaq.