Optical/IP Networks

Internap Charges Into CDNs

Internap Network Services Corp. (Nasdaq: INAP), about to enter the content delivery network (CDN) business with its VitalStream Holdings Inc. (OTCBB:VSTH) buy, says it will rely on an end-to-end service-level agreement (SLA) to win its share of the booming CDN market. Internap is a shareholder vote away from closing the roughly $217 million VitalStream deal, which took place in October 2006, says Internap VP of investor relations Andrew Albrecht. (See Internap Buys VitalStream.)

During a speech to investors in San Francisco yesterday, Internap CFO David Buckel said the company's SLA sets it apart from other CDNs such as Akamai Technologies Inc. (Nasdaq: AKAM) and Limelight Networks Inc. (Nasdaq: LLNW).

"We have the best SLA in the business because it is a point-to-point guarantee," Buckel said. "Internap tracks the content all the way across as it hops from network to network -- from the origination point all the way to the eyeballs."

Internap does that through contracts with more than ten large backbone networks -- think AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), and Cogent Communications Holdings Inc. (Nasdaq: CCOI) -- to haul content from the origination point to an Internap data center near the end user.

"Each one of those carriers gives an SLA to us," Buckel said.

Before content is moved onto one of these transport networks, routing optimization software decides which network will be best for the job, given traffic conditions and other variables. The software continually switches content streams from one backbone network to another to make sure the best one is being used, Buckel said.

Other CDNs have SLAs, of course, but Buckel suggested that they might be empty promises. "Oh yes, they'll sell you an SLA, and then they just give you credits when it fails," he said.

Before the VitalStream acquisition, 60 percent of Internap's business came from routing optimization services, 30 percent from interconnection and collocation, and 10 percent from "other," says Merriman Curhan Ford & Co. analyst Colby Synesael, who covers CDNs. (See Internap Reports Q2.)

Synesael expects Internap to report 2006 revenues of $180 million, and expects the CDN business to contribute about $36 million in revenues during 2007. Internap's Buckel, however, declined to provide Light Reading any revenue predictions.

VitalStream has data centers in Los Angeles, Washington, and Amsterdam. Internap will add its 38 data centers to VitalStream's three, and all of them will operate underneath VitalStream's streaming software platform. Internap says it can partner with other companies for access to more data centers.

With the VitalStream buy, Internap also picked up some potentially valuable ancillary software that can inject video with advertising, complete with digital rights management (DRM). Internap hopes to exploit the software to help customers not only distribute their content, but get paid for it. — Mark Sullivan, Reporter, Light Reading

Pete Baldwin 12/5/2012 | 3:14:26 PM
re: Internap Charges Into CDNs For them that's interested ... the shareholder meeting to (presumably) approve the Vitalstream buy will be Tuesday Feb. 20. Press release:

ATLANTA--(BUSINESS WIRE)--Internap Network Services Corporation (NASDAQ: INAP), a leading provider of performance-based routing solutions over the Internet, today announced details of its special meeting of stockholders on Tuesday, February 20, at 3 p.m. EST. Only stockholders of record on that date are entitled to vote at the meeting. At the meeting, shareholders will vote on one proposal, which is approval of InternapGÇÖs issuance of approximately 11.9 million shares of InternapGÇÖs common stock in connection with its announced intent to acquire VitalStream Holdings, Inc.

The meeting will be held at InternapGÇÖs offices at 250 Williams Street NW, Suite E-100, Atlanta, Georgia. Stockholders may also participate via conference call by dialing 1-800-599-9829; participant passcode 69180463. International callers may dial 01-617-847-8703; participant passcode 69180463.

A live audio Web cast of the presentation will be available on the investor relations section of InternapGÇÖs Web site at http://www.internap.com/invest.... Internap will also provide access to a replay of the Web cast following the call.
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