Level 3 Communications Inc. (NYSE: LVLT) says its vast fiber network will help turn its newly acquired content delivery network (CDN) business into something that can compete with Akamai Technologies Inc. (Nasdaq: AKAM) and Limelight Networks Inc. (Nasdaq: LLNW).

The company said in December it would pay $135 million in cash for Savvis (Nasdaq: SVVS)'s CDN business. The Savvis CDN consists of two dozen caching server centers in North America, Europe and Asia, and a layer of routing and caching software, Level 3 says. (See Savvis to Sell CDN and Level 3 Spends $135M on Savvis CDN.)

Level 3 says it also acquired all of Savvis' CDN customers, including marquee account Microsoft Corp. (Nasdaq: MSFT)

Level 3 VP and general manager of the CDN business, Tom Boasberg, says his company's intent is to convince current Level 3 customers like Google (Nasdaq: GOOG), YouTube Inc. , and MySpace to use its new CDN services, too.

Boasberg says Level 3's advantage is that it doesn't have to pay third party carriers to transport data out to the data centers. "We're the only CDN with a Tier 1 IP backbone. We're not paying anyone else IP transit. We're not paying anyone else interconnection costs to interconnect with other IP providers to deliver content," Boasberg says. (See Level 3 Still Hungry for Fiber.)

The carrier will sell CDN services as part of a larger bundle of services that includes collocation, point-to-point connectivity, and private-line services.

Not everyone believes you need a fiber network to run a solid CDN. Akamai, the market-leading CDN, says buying transport in large amounts (at volume rates) from numerous carriers, is an expense that's a necessary part of the CDN business. (See Akamai Shows No Jitter in Q4.)

An Akamai spokesman writes in an email note to Light Reading that distribution of large content requires connectivity to "hundreds of networks, not just a single network."

Boasberg says Level 3 has "an aggressive buildout plan" for the Savvis CDN, but details are a little vague. At this time next year, Boasberg says, the number of caching server centers on the network will grow from "a couple dozen" to "a few dozen." He explains that "hundreds or thousands of caching nodes" won't be needed to fulfill its customers' distribution needs.

— Mark Sullivan, Reporter, Light Reading