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11/21/2008
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Job Cuts At Akamai, Despite Net Usage Gains

Growth was driven by new undersea cable links, the launch of many global WiMax networks, and new fiber-to-the-premises services.

Akamai Technologies, a company with its finger on the pulse of the Internet, reported this week that Internet penetration is generally gaining in the United States and worldwide.

But the gains haven't been enough to keep Akamai from laying off 110 employees, representing 7% of its staff.

With at least 10% of Internet traffic flowing over Akamai's network, the company is considered a proxy for the Internet, and it said Thursday that it plans to jump the gun and carry out the layoffs before Internet usage falls.

In its quarterly "State of the Internet" report this week, Akamai said Internet connectivity was up significantly this quarter, driven by new undersea cable links, the launch of many global WiMax networks, and new fiber-to-the-premises services in Japan, the Ukraine, and the Netherlands.

The Akamai report also presented a window on Internet usage in the United States. "Virginia, Massachusetts, and New Jersey have the highest levels of Internet penetration in the United States," the report said. "South Dakota, Maine, and Hawaii nearly doubled their rates of high broadband connectivity (greater than 5 Mbps) quarter over quarter, while Oklahoma and Kentucky are the only two U.S. states to see consecutive quarter-over-quarter growth in high broadband connectivity since Q4 2007."

Akamai added that Delaware, Washington state, Virginia, Texas, and Georgia have been shedding narrowband connectivity of 256 Kbps at rates of more than 40%, faster than other states. The District of Columbia and Washington state have the highest percentages of connections below 256 Kbps. The company's research also found that significant broadband increases in many states were driven by investments in rural connectivity.

On the international scene, South Korea continued its lead with the highest levels of broadband connectivity, while Mayotte and Equatorial Guinea were the "slowest" countries with connection speeds below 256 Kbps.

In spite of the growth in Internet traffic, Akamai, which employs 1,500, said it planned to layoff 110 employees. Chief executive Paul Sagan said demand for Akamai's service remained high, but its customers were having financial difficulties and this caused the company to take preventive action by instituting layoffs.

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