The deal is aimed to accommodate Netflix’ expected future growth and to support storage for the company’s entire, ever-expanding library of content (currently more than 20,000 titles).

As a result, Level 3 says it plans to accelerate investments in its CDN capacity. Level 3 says it intends to effectively double its storage capacity and add 2.9 Tbps of globally available CDN capacity, which is in addition to the 1.65 Tbps that was deployed in the third quarter of 2010.

Over the course of November and December, the two companies will move the content library to Level 3 storage in preparation for serving traffic beginning Jan. 1, 2011.

Netflix in a statement says its subscriber base will exceed 19 million in North America by year’s end, and that they expect more growth and international expansion in future years.

Yesterday’s rumors of the Netflix/Level 3 deal had sent Level 3 Communications’ share soaring, and Akamai’s dropping. Expect that trend to continue.

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Authors: Robin Wauters

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