Communications company Level 3's planned purchase of Global Crossing, announced earlier this week, may have come out of the blue for some industry pundits but makes sense in today's increasingly competitive market, according to Global Crossing senior director for product management Jeff Smith.

Smith, addressing an event in London this week, said the move will help the Colorado-based company Level 3 enter the Latin American market, and will also allow it to use Global Crossing's Asia Pacific customer network to reach new customers there. 

"Global Crossing had really started to bring in Ethernet capabilities from the last three years," Smith said.

"We are now seeing the push for cloud computing really being driven by Ethernet."

By buying Global Crossing, Level 3 will have the resources to compete in the enterprise market against AT&A and Verizon, and will benefit from reduction in network and operating expenses.

Global Crossing has a number of data center operations and already offers video services and solutions in the countries it operates in.

Smith said global Crossing may be a small company compared to other IP service providers but it has a "very large asset real, and that with this in mind, the news of Level 3's acquisition was not that much of a surprise".

The acquisition will give Level 3 and Global Crossing reach in 70 countries, and 700 cities.

Just yesterday it emerged that Level 3 will be funding its US$1.9 billion purchase of Global Crossing with US$1.75 billion of loans and bonds under a six-year long-term loan.