| Type | Public |
|---|---|
| Traded as | NYSE: LVLT |
| Industry | Telecom |
| Founded | 1985 |
| Headquarters | Broomfield, Colorado, USA |
| Key people | James (Jim) Q. Crowe CEO Jeff Storey COO Sunit Patel CFO |
| Employees | 11,000 |
| Website | www.level3.com |
| Primary ASN: | 3356 |
|---|---|
| Peering Policy | Restrictive |
| Traffic Levels | 1 Tbps+ |
Level 3 Communications (NYSE: LVLT) is a telecommunications and Internet service provider headquartered in Broomfield, Colorado.[1]
It operates a Tier 1 network.[1] The company provides core transport, IP, voice, video and content delivery for most of the medium to large Internet carriers in North America, Latin America, Europe and selected cities in Asia. Level 3 is also the largest CLEC in the United States.
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In 1985 Peter Kiewit Sons' Inc created a subsidiary named Kiewit Diversified Group to manage the corporation's business that were non-construction related. The division was spun off as a separate entity and changed its name to Level 3 Communications in 1998 to signify an increased focus on communication services.[2] That same year saw it make an IPO on NASDAQ.[2] It continued to build its telecommunications network after going public.[2]
In 2003, the company acquired Genuity, and, between 2005-2007, it purchased several other companies including former rivals WilTel Communications, Broadwing Corporation, Looking Glass Networks, Progress Telecom and Telcove (formerly Adelphia Business Systems).[2]
In 2009, Level 3 Communications made it into a "bottom rung" list of the Moody's rating agency, which contained companies with the highest debt payment failure risk.[3]
On April 11, 2011, Level 3 announced a tender offer had been made to acquire fellow Tier 1 provider Global Crossing[4] in an all-stock transaction.[5] On August 5, 2011, Level 3's purchase of Global Crossing was separately approved by shareholders of both companies.[6] On October 4, 2011 the purchase was completed. On October 20, 2011, Level 3 Communications completed a reverse stock split and transferred its stock listing from NASDAQ to the New York Stock Exchange.[7]
Level 3 Communications operates a large network of the Internet. This includes the continental US[8] South America, Western Europe[1][9] and select cities in Asia. It uses trans-Atlantic cables,[10] including Yellow/AC-2, on which it owned and operated two of the four fiber pairs after the 2001 Viatel bankruptcy.[11] Level 3 Communications has also purchased 300 Gbit/s of capacity on the Apollo cable system.[12]
It is the current owner of AS1,[13] but it operationally uses AS3356, which as of 2007[update] consistently has one of the highest ranked connectivity degrees on the Internet.[14][15]
The company runs a content delivery network which it acquired from Savvis in 2006.[16] Level 3 Communications delivers Netflix video and Apple Inc music content over the Internet.[17]
Level 3 distributes and sells its services through a mix of six independent sales channels: large enterprise, wholesale, federal, content and media, midmarket and indirect. All six sales channels report to the president of sales, Andrew Crouch.[18] The top performing Level 3 indirect sales agencies in 2010 include Intelisys, Microcorp, CDW/AVANT Communications, PlanetOne, Advantage Communications Group, Telarus, and Presidio.[19]
In the second quarter of 2011, Level 3's shares increased by 34% and its revenue was up by 2.6% to $932 million.[20] However, with Level 3's debt rising to $7.78 billion, its shares decreased by more than 50% in the third and fourth quarters of 2011 from $36.60 to $16.99.[21]
On December 8, 2010 The New America Foundation submitted a request to The Federal Communications Commission to investigate the ongoing dispute between Level 3 Communications and Comcast with regard to data trafficking agreements. The request called for an investigation of "whether and how last-mile providers might leverage their relationship with broadband consumers to act in an anticompetitive manner," and how "last-mile providers can leverage their market power to harm their competitors in the market for Internet content."[22]
The request for investigation stems from the decision by Comcast to alter the Peering agreement they had with Level 3 due to the increased volume of internet traffic due to the latter's new agreement to be a primary backbone provider of Netflix on-line streaming content.[22] Level 3 Communications agreed to pay a new fee but maintained the view that it goes against Federal Communications Commission regulations that prevent Internet Service Providers from "favoring certain types of traffic."[23]
Another contributing factor to the dispute is the Comcast and NBCUniversal merger. On December 8, 2010 in a letter to the FCC, the New America Foundation wrote to the FCC stating that, "Because this dispute arose shortly after Level 3 signed a deal with Netflix to transmit Netflix content, regulators should examine Comcast’s motives closely. Netflix competes directly with Comcast’s cable TV programming offerings. In fact, over the past two quarters, cable has lost an increasing number of subscribers, and a number of those consumers have substituted Netflix streaming video service for the cable service they have eliminated. It requires little imagination to view Comcast’s behavior as an attempt to raise the distribution costs for Netflix and thus force that competitor to pass these new expenses onto consumers in the form of higher prices."[22]
On December 16, 2010 Level 3 Communications CEO, James Q. Crowe, submitted a letter to the FCC regarding the ongoing dispute between his company and Comcast. In the letter he stated, "The question, quite simply, is whether Comcast and other residential broadband Internet service providers should be allowed to use their dominant control over access to their subscribers' eyes and ears in order to coerce payments from broadband backbone and independent content providers."[24]
On December 17, 2010, Jeff Storey, President and COO of Level 3 Communications wrote a letter to Neil Smit, President of Comcast. In it he wrote, "Last night and today, in direct violation of our Non-disclosure agreement, Comcast disclosed the details of our discussions to the FCC, and publicly disclosed those discussions in a blog post written by John Schanz. This breach of our agreement is exacerbated by the fact that Comcast's portrayal of our discussions is factually incorrect."