It is in content-owners' interests to encourage the trend also, as ultimately their brand is the one that is hurt by unreliability. Yes, it might hurt carrier X's business when carrier X cannot get to Popular Content Site, but some fraction of carrier X's customers will go away thinking, "performance to Popular Content Site sucks! Popular Company sucks!"

It is interesting to see how things are sorting out. Yes, content owners are concerned about this, but the solution may not be good for the diversified carriers. I suspect you are going to see more deals like AOL's TeraPOP project. Networks with large content owners are connecting directly with networks with large users bypassing the usual backbones in the process. The diversified carriers are being relegated to managing the banks of modem pools. One thing which will really kill your stock price is if investors get the idea your portion of the market is about to turn into a commidity. The term 'disintermediation' is often used to describe how commerce will develope on the Internet. Diversified backbone providers serve a useful purpose while the market is fragmented. But the very centralization which makes the 'synergy' referenced in many of the mergers also sows the seeds of bypass. On one side you have the large access concentrators such as AOL, Earthlink, Mindspring; on the other side large content concentrators such as GlobalCenter, Exodus. What purpose does the carrier in the middle serve?

Moreover, as the capacity market distortions are sorted out in many places, it almost certainly will be cheaper for content owners to spread the work of distribution around, so that the traffic stays as local as possible.

Yes and no. There is a tension or balance between distribution and centralization. I don't think it is possible to make a blanket statement one style or another will be cheaper. -- Sean Donelan, Data Research Associates, Inc, St. Louis, MO Affiliation given for identification not representation