Akamai Technologies (AKAM) was clipped after AT&T (T) said that they will build up their Content Delivery Network business. Cowen & Co. downgraded AKAM as a result. Yawn.

Cowen noted that AT&T has such a big network that the average distance between a Content Delivery Network node and the customer could shrink to 100 miles by the end of 2008, compared with Akamai's current 250 miles. Double yawn.

AT&T has been in the Content Delivery Network business for four years, and gone nowhere. They may have a customer for video somewhere, but I've never read about one, and there aren't any customer case studies on their website. Meanwhile, Akamai sold nothing but dumb caching services four years ago, but they now offer a full suite of services around that, including support for streaming video (a la YouTube), fail-safe delivery, content management systems and software, load balancing, network monitoring, real-time reporting on delivery performance, redundancy, security and optimization.

After Akamai started, by 2000 they had lots of big name competitors who said that they were going into content delivery: Quest, MCI, Sprint and even the then-version of AT&T. After a year or so, they were all gone. Meanwhile, Akamai's average revenue per user grows quarter after quarter. Sure, some customers still sign up for dumb content delivery, but they quickly realize that by using Akamai's other services, they can greatly increase the economic value of what they are sending over the Internet. Quicker delivery of physical packets, which is what AT&T is talking about, is a small part of a total Internet distribution service. I watch Limelight Networks, Level3 and others as they try to compete with AKAM, and I know this market is so huge that there will be more than one winner, but right now I think that AKAM is the way to take advantage of the video explosion.