Limelight Surfs on Global Crossing's Waves

February 6th, 2009 by · Leave a Comment

In an SEC filing yesterday, CDN upstart Limelight Networks (NASDAQ:LLNW, news, filings) revealed that they have entered into a substantial contract with international telecommunications carrier glbc for wavelengths. The deal comes as an amendment to an existing relationship and consists of a four year term with a substantial prepayment - i.e. some form of IRU. The capacity will cover routes between up to twenty cities in the US and Europe and include 40Gbps on certain routes. No doubt this represents the connectivity between Limelight's major CDN nodes.

Such a relationship between Limelight and Global Crossing is only natural. Other candidates for Limelight like Level 3 Communications (NYSE:LVLT, news, filings), AT&T (NYSE:T, news, filings), and Verizon (NYSE:VZ, news, filings) either have already entered the CDN space as competitors or will soon, but Global Crossing has not done so yet. Other US carriers like XO or Qwest don't have the coverage outside the US to meet international needs, while international telecoms like BT or FT don't have sufficient fiber assets in the US on which to offer wavelengths.

In fact, I would go so far as to suggest that a Global Crossing/Limelight alliance might make enough sense for them to one day just get it over with and merge.  Still, Global Crossing arguably needs to improve its metro fiber depth in the US before making such a foray.  Of course, Limelight's recent legal success against Level 3 may make it easier for many suitors to reconsider the company as a target, so they may have a limited shelf life.

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Categories: Content Distribution · Internet Backbones · Mergers and Acquisitions

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