Contents - AL-Tax

10.1 Summary of Key Facts 139 The particular configuration of individual CDN services providers’ edge andstorage servers; The lease of private line backbone capacity from independent companies, suchas Global Crossing, Inc.; Individual providers’ proprietary, internally-developed software that managesthe delivery of content objects, storage and retrieval of customer content libraries,activity logging and information reporting; and, Individual CDN services providers’ peering relationships with broadbandISPs.Akamai is currently the largest North American CDN services provider, withover 22,000 servers deployed globally. However, competing providers are growingrapidly, and count some of the largest multinational content providers amongtheir customers (e.g., Disney, Apple, Amazon.com, eBay, myspace.com, facebook,Microsoft and others). CDN services are marketed via webinars, newsletter sponsorships,trade shows, banner campaigns, cold calls, etc.The Group in this case employs approximately 220 people in sales and marketing,85 people in network engineering, 40 people in research and development(consisting predominantly of software engineers), and 35 people in general andadministrative capacities. Almost all of these individuals (with the exception of 15–18 people) are employed by USP, and are based in the United States. The remainingindividuals are employed by foreign affiliates, and are based overseas. The Grouphas numerous servers, routers and switches deployed throughout North America,Europe and Asia. As noted, foreign affiliates own all infrastructure assets locatedoutside North America (albeit not the proprietary software incorporated into theseassets), while USP owns all infrastructure assets within North America (and all proprietarysoftware used worldwide).As a starting point in our analysis (under both the current and proposed regimes),it is necessary to determine whether USP and its foreign affiliates collectively provideCDN services to third parties, or USP alone provides these services, albeit withthe use of servers, routers and switches owned by its foreign affiliates. We concludethat USP simply accesses network infrastructure assets owned by its foreign affiliatesand is the sole provider of CDN services as such. This conclusion is premisedon the following facts:1. The performance of CDN services requires network engineers, software engineersand administrators, and these individuals are, and will continue to be,employed solely by USP;2. In addition to hardware and enabling software, connectivity is a sine qua nonof CDN services. USP is the contract party on, and bears the cost of, its arm’slength lease of dedicated backbone network assets. It has also negotiated peeringagreements with numerous ISPs, and bears the associated settlement costs;and,3. USP is the contract party on all transactions with third party content providers.