Level 3 Communications, Inc., through its subsidiaries, engages primarily in the communications services business. The company also involves in the coal mining business.
Communications Services
The company's communications service offerings include: Softswitch and voice services including wholesale VoIP component services and consumer oriented VoIP services, enterprise or business voice services, managed modem for the dial-up access business, wholesale voice termination services; Internet Protocol and data services, including Internet access and IP and Ethernet Virtual Private Networks and broadband transport services such as wavelengths, dark fiber and private line services, including transoceanic, backhaul, intercity, metro and unprotected private line services; content distribution services including video broadcast services; and colocation services.
The company has aligned the customer interacting or customer facing aspects of its communications business into four groups: Wholesale Markets Group; Business Markets Group; Content Markets Group; and Europe.
Wholesale Markets Group: The Wholesale Markets Group is focused on delivering communications services to meet the high bandwidth needs of various global communications services providers on a wholesale basis. The Wholesale Markets Group’s customers would integrate or package its services into their own products and services to offer voice, video and data services to their end-user customers.
The market segments that the Wholesale Markets Group addresses include: domestic and international carriers; voice service providers, which include calling card companies, conferencing providers, and contact centers that use VoIP technology to better manage costs and enable advanced applications; wireless providers; cable television companies; system integrators; and the U.S. government.
Business Markets Group: The Business Markets Group is focused on delivering communications services to meet the telecommunications needs of small, medium and large enterprises as well as local and regional carriers, higher education institutions and academic consortia as well as state and local governments. Local and regional carriers include ISPs, enhanced service providers, application service providers, wireless providers, mobile virtual network operators, VoIP providers as well as datacenters and hosting facilities. The Business Markets Group focuses on providing its targeted customers with a suite of data, Internet, transport and voice services.
Content Markets Group: The Content Markets Group focuses on offering a range of communications services building blocks to meet the content distribution needs of its customers. Customers that the Content Markets Group serves include: video distribution companies; providers of online gaming and mega-portals; software service providers; social networking providers; traditional media distribution companies including broadcasters, television networks and sports leagues.
Europe: The Europe group focuses on the communications needs of European customers and the European aspects of customers located outside of Europe.
Service Offerings
The company offers a range of communications services, which include the following services.
Switched Services: The company pioneered and developed the Softswitch—a distributed computer system that emulates the functions performed by traditional circuit switches—which enables the company to control and process voice and data calls over an Internet Protocol network. The company also offers various traditional circuit switch-based voice services. The company’s Switched Services include:
Level 3 Voice Termination: Level 3 Voice Termination consists of long distance origination, transport and termination services, offered over a combination of a circuit switch and Softswitch technologies. These services are offered primarily to inter-exchange carriers (IXCs), local phone companies, cable companies and voice over IP providers.
Level 3 Toll Free: Level 3 Toll Free consists of services that terminate toll free calls that are originated or placed on the traditional telephone network. These toll free calls are carried over either a circuit switch or Softswitch network and delivered to customers in Internet Protocol or traditional TDM format. Customers for these services include call centers, conferencing providers, and voice over IP providers.
Level 3 International Voice Termination: Level 3 International Voice Termination service offers the termination of international voice traffic. Customers for these services include local phone companies, wireless companies, cable companies and voice over IP providers.
Level 3 VoIP Enhanced Local: Level 3 VoIP Enhanced Local is a VoIP solution that enables broadband cable operators, IXCs, voice over IP providers, and other companies operating their own switching infrastructure to launch IP-based local and long-distance voice to residential and business customers via any broadband connection. With the purchase of Level 3 VoIP Enhanced Local service, a customer obtains the essential building blocks required to offer residential or business voice over IP phone service, such as local phone numbers, local number portability, local and long distance calling, E-911, operator assistance, directory listings, and directory assistance.
Level 3 Local Inbound: Level 3 Local Inbound service terminates traditional telephone network originated calls to Internet Protocol termination points. Customers, such as call centers, conferencing providers, and voice over IP service providers, can obtain telephone numbers from the company or port-in local telephone numbers that the customer already controls. These local calls are then converted to IP and transported over its backbone to a customer’s IP voice application at a customer-selected IP voice end point.
Level 3 E-911 Direct: Level 3 E-911 Direct is a portfolio of E-911, or Enhanced 911, solutions, including a fixed-location solution with network connections to public safety answering points (PSAPs) that serve approximately 70 percent of U.S. households, and a solution for nomadic voice over IP providers that takes advantage of the same network connections as the fixed-location solution. Enhanced 911 service allows an emergency services operator to automatically receive information related to a 911 caller’s registered address and callback phone number. A nomadic voice over IP provider is a company that permits its end user customer to use VoIP services from more than one location. Level 3 E-911 Direct provides the network capabilities that route and complete 911 calls to appropriate selective routers and PSAPs on the traditional telephone 911 network. PSAPs are provided with calling information that allows them to query appropriate databases to determine the subscriber’s registered address and call-back number. When used with the services provided by a third party VoIP Positioning Center (VPC) to collect, update and report subscriber location information, its Level 3 E-911 Direct service enables VoIP service providers to supply 911 services to their subscribers. Level 3 E-911 Direct works in conjunction with Level 3 VoIP Enhanced Local and Level 3 Local Inbound services as well as on a stand alone basis.
Level 3 One Plus: Level 3 One Plus service provides non-facilities-based resellers and regional carriers with a geographically limited ability to originate calls from the PSTN, and a solution for their interstate, intrastate and international traffic. This service suite features Automatic Number Identification (ANI)-based and Carrier Identification Code (CIC)-based services as well as a end-user service.
Level 3 Business Lines: The Level 3 Business Lines service provides a telephone functionality. The service offering includes a PSTN line that connects to the customer’s business location from its central office facility; the telephone number, which includes associated directory listing; standard services, which include operator services, directory assistance, and 911 services; and long-distance access, which provides equal access to all long-distance carriers, including Level 3.
Level 3 Switched Long Distance: The Level 3 Switched Long Distance service offers customers service with features that meet their business needs. These features include intrastate and interstate voice service with access to approximately 290 international locations.
Level 3 Managed Modem: Level 3 Managed Modem is an outsourced, turn-key infrastructure solution for the management of dial up access to the public Internet. ISPs comprise a majority of the customer base for Level 3 Managed Modem and are provided a managed dial up network infrastructure. As part of this service, Level 3 arranges for the provision of local network coverage, local telephone numbers, racks and modems as well as connectivity from the customer’s location to the Level 3 Gateway facility.
Network and Internet Services: The company offers both wholesale-oriented communications services to enable large scale networks and high speed access to the Internet as well as similar services designed for the enterprise marketplace. It offers a portfolio of data communications services ranging from basic network infrastructure components, such as dark fiber, wavelength, and private line services to higher level routed data services, such as Ethernet, Internet Transit and IP VPN. The company’s Network and Internet Services include the following:
Transport Services: Transport services include wavelengths (Level 3 Intercity Wavelength Services and Level 3 Metro Wavelength Services) and private lines (Level 3 Intercity Private Line Services and Level 3 Metro Services). These services are available across its metropolitan and intercity fiber network. Wavelength services provide unprotected point-to-point connections of a fixed amount of bandwidth using a particular color of light on the fiber network. Wavelength services are available at 2.5 Gbps and 10 Gbps speeds. Private line services are also point to point connections of allocated bandwidth and include SONET or SDH protection to provide resiliency to fiber or equipment outages. The company also offers private line services on an ‘unprotected’ basis, meaning the customer is responsible for providing additional resiliency, if needed. Private line services are available in a range of speeds: DS-1 (1.5 Mbps), DS-3, OC-3, OC-12 and OC-48, as well as SDH equivalents. Customers generally use its transport services to create their own SONET/SDH, ATM and IP networks.
The company also provides transport services within its transatlantic cable system connecting North America and Europe as well as via leased bulk capacity on other transoceanic systems. ‘International Backhaul’ transport services, interconnecting cable landing stations and the terrestrial North American and European networks, are also available.
High Speed Internet Protocol (IP) Service: The company operates an international Internet backbone providing connectivity among customer IP, content and application networks. Access to the Internet is enabled through interconnection among its customers across its network as well as interconnections with other Internet Service provider ‘peers.’ Level 3 High Speed IP offers a range of Ethernet and SONET access port speeds such as 100BaseT, GigE, DS-1, DS-3, OC-3 and OC-12, OC-48 and 10 GigE.
Level 3 Dedicated Internet Access: Level 3 Dedicated Internet Access service provides a high-speed Internet over a Tier One Internet backbone service through various access methods and speeds ranging from 56 Kbps to OC-48 and Gigabit Ethernet. The service also includes Domain Name services, primary, secondary and caching and is available as either a stand-alone service or as a compliment to its other communications services.
Ethernet and VPN Services: Built on its optical transport and MPLS networks, the company offers customers the ability to create private point-to-point, point-to-multipoint, and full-mesh networks based on Ethernet and IP VPN, ATM and Frame Relay technologies. These services allow service providers, corporations, government entities, and distribution businesses to replace multiple networks with a single solution to transmit the voice, video, and data over a single or converged network. These solutions are used for service provider and corporate data and voice networks, data center networking, disaster recovery and out-of-region or redundant customer connectivity for other service providers. These services include Level 3 Ethernet VPN, Level 3 IP VPN, Level 3 Metro Ethernet Private Line, Level 3 ATM, and Level 3 Frame Relay.
Colocation Service: The company offers data center space where customers can locate servers, content storage devices and communications network equipment. At its colocation sites, the company offers connectivity to its network and to other networks, including metro and intercity networks, the traditional telephone network and the Internet. Main components of this service offering are AC/DC power, emergency back-up generator power, equipment cooling and fire protection.
Dark Fiber Service: Level 3 Intercity Dark Fiber and Level 3 Metro Dark Fiber provide carriers, service providers, government entities and large enterprises an infrastructure when a fiber solution is required based on applications, control or scale requirements. The services include fiber, colocation space in its Gateway and in its network facilities, power and physical operations and maintenance of the fiber and associated infrastructure.
Professional Services: With Level 3 Professional Services, the company offers field technical support services 24 hours a day to companies wishing to outsource their telecommunications equipment support at locations across North America and Europe. It also provides design, implementation and ongoing network management services for network projects.
Content Distribution: The company’s Content Distribution primary products and services include the following:
Content Delivery Network: The company’s content delivery network service is a configuration of its hosting and network assets located in approximately 25 countries. Its caching services provide swift delivery of media content, such as graphics, video, and voice, and provide downloads of software releases and security patches. Its streaming services can be used to deliver single events or libraries of video, music or animated content. The company’s Intelligent Traffic Management software can be used to route traffic to individual servers based on business rules or continuously monitor systems and to reroute traffic should performance bottlenecks emerge.
Fiber Optic and Satellite Video Transport Services: The company offers various products to provide audio and video feeds over fiber or satellite for broadcast and production customers.
Advertising Distribution Services: These services include the following. Audio Distribution, where the company sends radio spots to stations via electronic and physical distribution. Spots are distributed to approximately 10,500 stations in North America via the Internet using no proprietary hardware. Video Distribution, where the company has the capability to deliver video content electronically and physically to television stations, broadcast networks and cable networks across the United States.
Storage: The company offers secure storage of media components in its climate-controlled storage facilities located in Burbank, California, Chicago, Illinois and Newark, Delaware.
Communications Network: As of December 31, 2006, the company had an intercity network covering 67,000 miles and local networks in 116 markets in North America; and an intercity network covering 4,200 miles and local networks in 9 markets in Europe.
Customers
The company's major customer includes AT&T Inc. along with its subsidiaries, such as SBC Communications, BellSouth and Cingular.
Acquisitions
In December 2005, the company acquired WilTel Communications Group, LLC and its operating subsidiaries (WilTel). In addition the company acquired Progress Telecom, LLC (Progress Telecom) on March 20, 2006, ICG Communications, Inc. (ICG Communications) on May 31, 2006, TelCove, Inc. (TelCove) on July 24, 2006 and Looking Glass Networks Holding Co., Inc. (Looking Glass) on August 2, 2006. The company also acquired Broadwing Corporation in January 2007.
Competition
The company’s key competitors for its voice service offerings are other providers of wholesale communications services including AT&T, Verizon, Sprint and competitive local exchange carriers. Its key competitors for managed modem services are other providers of dial up Internet access including Verizon and Qwest Communications.
For its IP and Data services, the company competes with companies that include Verizon, Sprint, AT&T, Qwest Communications, Global Crossing, Cogent and XO in North America, and Sprint, Verizon, France Telecom, Deutsche Telecom, Global Crossing and Cogent in Europe. For transport services, its key competitors in the United States are other facilities based communications companies including AT&T, Verizon, Sprint, Qwest Communications and XO. In Europe, its key competitors are other carriers such as PTTs, Telia International, Colt Telecom Group plc, Verizon, and Global Crossing.
The company’s key competitors for its colocation services are other facilities based communications companies, and other colocation providers, such as web hosting companies and third party colocation companies. In the United States, these companies include AT&T, Savvis, Equinix, Switch & Data and Qwest Communications. In Europe, competitors include Global Switch, InterXion, Redbus, Telecity and Telehouse Europe.
For enterprise services, its key competitors include incumbent local exchange carriers (such as AT&T, Verizon and Qwest), long distance services providers (such as Sprint), and competitive local exchange carriers (such as Time Warner Telecom and XO). For content distribution network (CDN) services, its key competitors include Akamai Technologies and Limelight Networks.
Coal Mining
The company is engaged in coal mining through its subsidiary, KCP, Inc. (KCP). KCP has a 50% interest in two mines, which are operated by a subsidiary of Peter Kiewit Sons’, Inc. (PKS). Decker Coal Company (Decker) is a joint venture with Western Minerals, Inc., which is a subsidiary of Rio Tinto Energy America Inc. Black Butte Coal Company (Black Butte) is a joint venture with Bitter Creek Coal Company, a subsidiary of Anadarko Petroleum Corporation. The Decker mine is located in southeastern Montana and the Black Butte mine is in southwestern Wyoming. The coal mines use the surface mining method.
The coal produced from the KCP mines is sold primarily to electric utilities, which burn coal to produce steam to generate electricity. KCP has long-term contracts with Commonwealth Edison Company (with Decker) and The Detroit Edison Company (with Decker). KCP also has other sales commitments, including those with Sierra Pacific, Idaho Power, PacifiCorp, and Minnesota Power that provide for the delivery of approximately 9.3 million tons through 2009.
Significant Events
On September 7, 2006, the company completed the sale of 100% of the capital stock of its indirect, wholly owned subsidiary, Software Spectrum, Inc. to Insight Enterprises, Inc. Software Spectrum was a direct marketer of software and provider of software licensing services to corporations. With the completion of the sale of Software Spectrum, the company exited the information services business.
History
Level 3 Communications, Inc. was founded in 1884.
