Level 3 Gets Foot In Verizon’s Worldwide Door

Level 3 Communications Inc., facilities and fiber
optics services are now a link in one telephone company’s plans to connect
worldwide operations.

The multi-year, multi-million deal, which Level 3 officials
declined to elaborate on, is an integral part of efforts
by Verizon Global Solutions Inc. (GSI), to expand into the worldwide
business broadband market.

GSI is a subsidiary of incumbent local exchange carrier (ILEC) Verizon
Communications , headquartered in New York. The company
plans to initially offer business-class broadband services, like virtual
private networking and videoconferencing, to worldwide clients and
eventually become a worldwide services provider.

When completed, Level 3’s collocation facilities in Los Angeles and Miami
will help tie together Verizon’s American portals to Europe, South America
and the Asian countries by housing the equipment that will move data from
these international locations to GSI’s gateway switch in New York. GSI has
reserved a combined total of 3,500 square feet of real estate to house its
routers and switches.

Although the deal isn’t a major breakthough by any stretch of the
imagination, it’s a stepping-stone in Level 3’s quest to
broker deals that keep its operations viable. The importance of the
deal depends a lot on the commitment undertaken by GSI in the form of
bandwidth connection. The Level 3 Private Line offers lines ranging from
OC-3 all the way up to STM-16 for international transport.

GSI, already in bed with Metromedia Fiber Networks
since both are owned by Verizon, will likely keep its involvement with
Level 3 at the backup level for the time being.

But what may be a relatively minor agreement today could lead to increased
business down the road, and Level 3, with offices worldwide, has the
infrastructure to accommodate international requirements.

Metromedia Fiber has been facing some very difficult financial problems,
and even lawsuits, in the past year. In the last quarter, the carrier had
made $77 million in revenues with $148.3 million in losses. Continued
problems could force Verizon to take some more insurance, in the form of
bigger deals with Level 3, to guarantee service for its clients.

Kevin O’Hara, Level 3 president and chief operating officer, is obviously
happy to get a big company like Verizon, which is in the middle of a huge
international deployment, to sign a long-term contract.

“We are extremely pleased to be working with Verizon,” O’Hara said. “We
look forward to providing GSI with the broadband services it needs to
operate its network hubs, so the company can provide its customers with the
most reliable services possible.”

Right now, the international carrier can use some good news to share with
investors, who have been forced to keep their patience with the flagging
company. Lowered revenue targets for 2001, which prompted
a 25 percent workforce cut, has made Wall Street and the rest of the
industry leery about the company’s long-term viability.

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