Level 3’s CDN Footprint Keeps Expanding

April 16th, 2012 by · 4 Comments

Level 3 Communications (NYSE:LVLT, news, filings) said this morning that it has completed a major expansion of its CDN capacity globally. That Level 3 is continuing to pour resources into the fastest growing piece of its business isn’t shocking of course, but it’s nice to get some details now and then.

Level 3 has now boosted total CDN capacity above 5.6Tbps, more than 150% above the levels about 18 months ago. They have also added more nodes in far away places around the world, including Buenos Aires, Rio de Janerio, Medellin, Jeddah, Montreal, and Toronto.  Additional coverage expansion is planned for Asia, Africa, and Latin America over the next few years – probably at a faster clip too since the Global Crossing assets give them a leg up with some regional infrastructure and (more importantly) existing relationships.

Ok, those last two expansion cities of Montreal and Toronto aren’t so far away, but we will probably be hearing about more Canadian activity from Level 3 from here on out. They have long chafed at the foreign ownership restrictions that were recently relaxed, as they prevented the company from taking full advantage of the intercity loop they built through the same region way back in the bubble.

Level 3’s CDN expansion also added various infrastructure support to Netflix’s expansion into Latin America and the UK/Ireland. Of course, back in the US Netflix is still trying to walk off last year’s marketing debacle, but while it may have slowed them down a bit the traffic keeps on building globally.

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Categories: Content Distribution · Internet Backbones

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4 Comments So Far

  • CarlK says:

    While former Level 3 executive, Dan Caruso, continues filling in important gaps throughout the U.S.


    • Grant Lewis says:

      Its been said that most acquisitions that fail do so because they weren’t the right fit, the cultures were too different and or the leadership team of the acquiring company failed to execute on the required actions to yield the associated synergies of the deal. In fact just as important as getting the deal to close is the post-acquisition strategies that once closing is met make the
      difference in post deal closing value creation. Moreover its clear that acquisition experience is important but not sufficient to create value as you can look around and see many failed telecom attempts that were unsuccessful due to the lack of codifying the integration
      process so as to ensure no stratification of desired outcome. It is pretty clear in Dan Caruso’s case that it is not so much what Zayo buys but what he and his leadership team is able to do after they acquire the assets. To me I believe Dan is demonstrating what it means to create value through acquisition. Impressive.

  • Anonymous says:

    Throwing more money to support Netflix would be brilliant if only te relationship were profitable. The CDN business plan can be best summed up:
    Step one, get the traffic at any cost.
    Step two, we’re not sure.
    Step three, hope to make money.

    • Grant Lewis says:

      They say in the content business that the person with the most “eyeballs” a/k/a viewers “wins”. Its possible that Netflix may not be profitable and or the deal itself may not be as profitable as it should but the fact is Netflix still has a tremendous amount of viewers thus driving demand on the Level 3 network. Marginalizing this is a mistake as the more the assets are leveraged/utilized the more value is created for the end game. That is afterall the point in achieving such scale …. getting yourself into a position where you have the most amount of leverage with your biggest competitors ….

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