Level 3 Communications, (Quote) a worldwide bandwidth carrier
for telephone companies, Internet service providers (ISPs) and
corporations, scored a big hit Wednesday by signing Sony Corp.'s
(Quote) broadband venture to an unspecified, multi-year deal.
Sony Screenblast is an online interactive Web site targeted to broadband
users who have a penchant for making movies and creating their own
multimedia content, in addition to giving would-be directors the tools to
modify existing Sony fare and store it online at the Web site.
Sony's premium service will be a boon for Level 3's bottom line if the
program is a success, too. If the service becomes popular in the
mainstream, and it might with its ability to let user's modify existing
television and movie content like "Men in Black" and kiddie favorite
"Dawson's Creek," Sony will need to buy more bandwidth to support all the
data-rich files that get uploaded and downloaded at their site.
Screenblast was launched in the fall last year, and is one a growing number
of applications designed and catering the broadband market. Digital
subscription line (DSL), cable, satellite and fixed wireless providers have
long touted the benefits of a broadband connection, but have been unable to
capitalize with the dearth of actual services that content providers offered.
Slow to acknowledge the demand, old media giants like Sony and Time Warner
have been slow to develop these services, though they seem to be making up
for lost time now.
Level 3, in addition to more bandwidth access than Sony could possibly need
for its fledgling broadband service right now, will provide the collocation
facilities for Sony, a deal that lets the media giant store servers and
routing equipment to meet the demand for a hopeful Screenblast success.
Mike Arrieta, Screenblast vice president and co-general manager, said the
deal is specifically beneficial for storing its users new content for
others to see.
"It is through Level 3's high-quality collocation service and the
reliability of its high-performance broadband backbone that we are able to
offer such a dynamic, interactive platform in Screenblast," Arrieta
said. "Level 3's connectivity to broadband access providers enables
content providers to effectively reach broadband end users."
Level 3 beat out a lot of competition to grab the potentially lucrative
contract. The bandwidth carrier market is a tight one, with competition
from the likes of Williams Communications, another popular capacity provider.
The carrier industry, faced with a glut in bandwidth after the expected
Internet boom dried up in the wake of the dot bomb era, has been scrambling
to sign on fat corporate contracts with entertainment companies (like Sony)
to pay for their worldwide expansion.
Most of these carriers have been forced to scale back, Level 3 especially,
and managed to keep investor confidence high. It's expected that as these
carriers scale back, they'll be able to rein in costs and become more
profitable.
Mike Knaisch, Level 3 senior vice president, said the demand for bandwidth
will surely rebound in the near future.
"The media and entertainment industries are strategically important for
Level 3 because of their substantial bandwidth needs that we believe will
continue to grow rapidly," Knaisch said. "Our agreement with SPDE
provides us with a significant revenue opportunity over time in a market
that is important to the continuing growth of Level 3."
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