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PanAmSat, Level 3 Create Hybrid Network

Creating a "hybrid network," satellite operator PanAmSat will tie its systems into Level 3 Communications 's fiber-optic network.

The move will improve delivery of video and data to PanAmSat customers -- TV affiliates, cable programmers and news agencies, including ABC, HBO and CNN. The companies also signed an agreement to further develop and promote the system.

Neither the financial terms, nor the duration of the contract, was disclosed.

"This application represents a new advance in the convergence of satellite and fiber-optic networks," said Joe Wright, PanAmSat's president and CEO.

The Wilton, Conn., company will use Level 3's Packet Asynchronous Transfer Mode and Internet access services to replace six uplink facilities scattered throughout the United States. PanAmSat customers can access these "virtual teleports" via Level 3's points-of-presence in 70 U.S. and European cities.

"PanAmSat's fleet offers an exceptional level of reliability, power and reach backed by an impressive level of expertise and technical ingenuity," said Kevin O'Hara, president and COO of Level 3.

For Level 3, of Broomfield, Colo., PanAmSat is the type of deal it likes: a large customer with the potential for long-term, recurring revenues. In addition to its TV customers, PanAmSat also serves telecoms and Internet service providers.

Though it seems to have survived the worst of the telecom downturn, Level 3 is still refining its services mix. For example, on Friday it said it was selling its unprofitable managed hosting business (a holdover from its Genuity acquisition) to Computer Sciences Corp.

In addition to customers, CSC will gain data centers in Chantilly, Calif., and Cambridge, Mass., and about 125 employees. Financial terms of the deal, which is expected to close by the second quarter, were not disclosed.

"It makes sense for us to support those Genuity services that do leverage the inherent efficiency and operational capabilities of the Level 3 network," said Jack Waters, Level 3's CTO said at the time.

Those include wholesale Internet access and transport services, like those being provided to PanAmSat, as well as virtual private networks and security offerings.