Level 3 Signs $35 Million Deal For Customers

Level 3 Communications Inc. is giving
its customers a last-mile solution with the strategic alliance it signed
Tuesday with DSLnetworks.

The three-year, $35 million deal calls for DSLnetworks to provide wholesale
last-mile DSL access and solutions to Level 3’s
Internet and applications service provider customers (ISP and ASP),
leveraging the carrier’s national IP backbone. Last-mile is a term
referring to the Internet connection between a telephone company’s central
office and the customer.

In return, Level 3 is the exclusive IP backbone provider for
DSLnetworks. ISP and ASP customers can look outside DSLnetworks for DSL
services, but Level 3 will market the DSL wholesaler first.

Mike Knaisch, Level senior vice president of strategic alliances, said the
agreement gives its customers one convenient stop for complete end-to-end
Internet connectivity.

“In effect, this agreement provides one-stop shopping for ISPs,” Knaisch
said. “This end-to-end service allows ISPs and other Web-centric companies
to use one combined last-mile and long-haul Internet access service to
deliver data, video and voice applications to their customers. Level 3’s
alliance with DSLnetworks gives our customers, especially Internet
companies involved in the digital distribution of entertainment content,
access to a leading last-mile broadband distribution network with broad
U.S. DSL coverage without concern about interconnection issues.”

DSLnetworks, which currently aggregates the DSL access from ISPs and
competitive local exchange carriers (CLECs) like Covad Communications Group, NorthPoint
Communications
and Rhythms NetConnections Inc., will now have to expand its operations through Level 3’s
gateways. In addition to the gateway it already uses in Los Angeles,
DSLnetworks will co-locate its equipment to Level 3 facilities in New York,
Atlanta, Dallas, Chicago and San Francisco. It plans to have all equipment
installed by January, 2001.

Brad Connors, DSLnetworks president and chief executive officer, said the
contract is a wise investment on his company’s part, ensuring any level of
scalability an ISP would need for DSL deployment.

“By providing national DSL access with dedicated IP backbone resources,
DSLnetworks is positioned to enable ISPs to quickly roll out DSL services
that can scale to hundreds of thousands of users.”

The deal emphasizes Level 3’s commitment to focus on its IP network, not
expanding into providing services as many other facilities do. Earlier
this month, the carrier announced its new, destination-based packet pricing
call CrossRoads. Instead of the industry-standard flat-rate pricing, Level
3 customers only pay for the packets that arrive to its servers.

Officials expect the new billing structure to save customers nearly 50
percent of current expenditures. Because CrossRoads acts like a voice
carrier, customers are billed for the varied types of Internet traffic,
from local (network) to long-distance (third-part network).

The plan is available in 38 major North American markets, including
Chicago, Dallas, New York, San Francisco and Washington.

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