Level 3 has returned to Asia at last, albeit just for CDN so far. Well, that’s not entirely fair. The company has always done business across the Pacific, and until they sold it their Software Spectrum business had a presence as well. The CDN assets they bought from Savvis did include a few starter nodes in Asia, which is the seed they are now trying to get started. But Level 3 hasn’t built and maintained substantial network assets there since they cut their losses back in 2002, paying Reach to take the unfinished network off their hands.
According to the Level 3 CDN Newsletter for Q3 2008, the company will have at least 6 CDN nodes in the region:
In Asia alone, Level 3 plans to expand its caching capacity tenfold. In Singapore, Tokyo and Hong Kong, capacity will be increased exponentially. In Mainland China, Level 3 will add three locations in order to serve the most populous areas and optimize content delivery within China.
This investment in Asia, despite the company’s drive for positive cash flow, certainly marks a turning point, but shouldn’t be overplayed. They don’t offer other products in Asia and their assets are quite limited – a few IRUs on undersea cables that came with Wiltel. And since they are in no position for M&A in the region, they are not likely to do more than CDN for some time.
It is likely that they are mostly working with partners to run these CDN nodes rather than going solo. This is especially likely in mainland China, where the last I heard ChinaCache was the only legally licensed CDN. Level 3 CEO Jim Crowe has made a couple trips to China in the last year or two, and it seems possible that developing a relationship with ChinaCache might have been one reason behind those trips. I don’t know that of course, I have no sources to back up that thought, it’s just a connect-the-dots guess. Having the head honchos meet is necessary for relationship building in the chinese business culture. Despite the influx of western investment in the last decade, gaining a foothold in anything related to network infrastructure in mainland China is a very non-trivial task.
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