Update: Businessweek has an article on why TataComm invested in BitGravity – it’s something that all telcos are doing: “Level 3 Communications joined the fray in 2007, followed by AT&T in June of this year. A month later, Reliance Globalcom, another big Indian carrier, cut a deal to tap the CDN operated by Atlanta-based Internap Network Services. On the heels of the Tata BitGravity hookup, analysts say, are British Telecom (BT) and Verizon Communications (VZ).” This is because of the global increase in consumption of video content. Note – contrary to what Businessweek claims, CDNs don’t reduce bandwidth consumption; they just speed delivery of content.

Original Story: Tata Communications (formerly VSNL) has invested $11.5 million in convertible debt in BitGravity Inc, a next-generation content delivery network (CDN) used for interactive broadcasting. Note that Tata Communications had announced a strategic partnership with BitGravity in March 2008, for a service targeting Europe and Asia. John Hayduk, CTO of Tata Communications, has joined the BitGravity board. The amount of

What’s interesting is that just around a month ago, BitGravity had raised $2.5 Million in funding from Allen & Co and Sling Media Founder and CEO Blake Krikorian. So that’s $14 million in all.

TataComm and BitGravity will offer a co-branded service, innovatively branded as “Tata Communications’ CDN Powered by BitGravity”. Riding on Tata Communications’ infrastructure gives BitGravity access to, according to the release, access to 200 countries across 300 Points of Purchase (PoPs).

In India, the Tata Communications-BitGravity combo faces competition from another operator – Reliance Globalcom, which, a couple of months ago, announced a tie-up with NASDAQ listed Internap. The other two are Akamai and Limelight, both fairly well established in India, particularly when it comes to content delivery for media portals.