Level 3 services some of the largest ISPs in the country, but with per-port, per-hour, and per-user pricing, it has the flexibility to work with small to medium sized ISPs as well.

by Jeff Goldman [January 16, 2003]

Level 3 Communications was spun off in late 1997 from Kiewit Diversified Group, a subsidiary of the construction and mining company, Peter Kiewit Sons', Inc. In March 1998, the subsidiary became an independent corporation. Level 3 now operates its own international network, which includes local loops in 36 cities worldwide.

According to Level 3 spokesman Paul Lonnegren, the founders' intent was to create the newest and most cost effective fiber optic network possible. "That network, because of its cost advantages, puts us in a particularly good position with wholesale dialup," Lonnegren said. "Our margins are industry-leading because of the technology choices that we've made."

Level 3 Communications Voice: (877) 2LEVEL3            (877-253-8353)

The company's wholesale dialup offering, (3)Connect Modem, supports many of the largest ISPs in the U.S. Ken Good, Level 3's Manager of Product Marketing, says they've been able to satisfy such demanding customers because of their commitment to the product. "We're pouring more money into this business, which, given what's going on in our space, is the exception, not the rule," he said.

According to Marcio Avillez, Level 3's Director of Marketing for Global Softswitch Services, the fact that the company offers V.92 service is one good example of that commitment. "It's not something we charge more for," he said. "It offers some feature functionality that's really attractive, especially for the value user who doesn't want to have two phones lines."

Avillez says V.92 is perfect for a low-cost ISP that wants to differentiate its offering. "The guys on the lower end of the price range are in a position to say, 'Look at all the value I can deliver to you, even at $10 per month,'" he said. "Some of the smaller ISPs we serve have gotten a lot of traction because they've positioned it as a way to get more out of that $10 a month you're paying for the Internet."

Level 3's offer to acquire Genuity, Inc., announced in November of last year, stands to increase the company's business enormously. Avillez points out that Level 3's footprint will likely benefit as well. "There's a not-insignificant number of markets where Genuity is today that we don't serve—and we'd be getting those markets onto the network pretty quickly through this acquisition," he said.

Why Level 3?
Avillez suggests that there are three key reasons for an ISP to choose Level 3 for wholesale dialup. First, while Level 3 services a number of large ISPs, it also works well with small to mid-size ISPs. "We are focused on that middle market," he said. "We've had some good initial traction there, and we are gearing our product development and feature development towards being able to serve that market well."

Second, Avillez says, the fact that Level 3's network has satisfied the needs of larger ISPs is a good sign for all of its customers. "You know Level 3 has gone through the wringer with AOL and with EarthLink," he said. "As such, I think we have one of the better performing networks out there today. You can buy access to the same kind of performance, at very competitive prices, that the major ISPs are getting."

Finally, he adds, it all comes back to Level 3's commitment to the business. "We are one of the few people who continue to invest in the wholesale dial, the narrowband piece of the business," he said. "We were one of the early adopters of V.92, we're expanding our coverage, and we're doing a lot of things behind the scenes in terms of improving the uptime and the quality of service on our network."

The (3)Connect Modem service offers three different pricing programs: per-port, per-hour, and per-user. "Within those price structures, we feel we've got the options to work with customers as their business grows," Good said. "They might be just getting started and a per-user model looks attractive, then as they grow, we can move them along to another product that might better meet their needs."

There's no setup fee for the per-user model, Good adds, allowing smaller ISPs to enter at any level. For per-port and per-hour pricing, there are additional fees involved. Per-user pricing ranges from $3.15 to $4.35 per user per month, depending on the volume of users and the depth of coverage required. Similarly, per-hour pricing ranges from $0.11 to $0.30 per hour, and per-port pricing ranges from $30.00 to $81.00.

Room for the little guy
While Level 3 does make an effort to work with ISPs of all sizes, Avillez suggests that 10,000 subscribers is a good benchmark. "If you're an ISP that has somewhere under that number, we work with several other ISPs who resell our network," he said. "You're probably going to get a better rate through those ISPs, because they're buying in more volume from us than you could yourself if you came directly to us."

One smaller ISP that works successfully with Level 3 is Orange County Online. Founded in 1997, the ISP works with Level 3, O1 Communications, and ICG Communications to provide a national footprint. In addition to dialup, Orange County Online offers broadband access, hosting, and colocation to about 6,000 customers nationwide.

Brian Packham, Orange County Online's CEO, says he'd worked with NaviPath until that provider closed its doors about a year and a half ago. "They recommended that we go to Level 3," he said. "I talked to Level 3 extensively before going with them, and I found out that they were rolling out V.92, which is something that our client base was already on and was accustomed to."

Packham says that offering V.92 has been a key differentiator for the ISP. "If someone's looking at my ISP versus someone else, and they have V.92 and I'm not offering it, they're going to go to the guy that is," he said. "I think you almost have to have it out there right now."

Another major selling point for Packham was the fact that Level 3 offers per-hour pricing. Unlike per-port or per-user, per-hour pricing allows a subscriber to log onto different networks like O1, ICG, and Level 3 in succession without charging the ISP a fee each time. "By paying a per hour charge and then putting a 200 hour cap per month on our users, it works out: I don't care where they log on," he said.

Finally, Packham says, he's been impressed by how helpful Level 3 has been. Not only has Packham met his local rep, he's met the people in charge of the service—and he has a direct line to one of their lead tech people. "Normally, if you want to get to the tech people at these companies, you've got to go through tiers of nonsense to get to them," he said. "They've always just said, 'Here's my number.' That says a lot."

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	[Nov. 29, 2002]	Level 3 Picks Up Genuity
	[Sept. 1, 2002]	Backbone Directory: Level 3 Communications
	[July 9, 2002]	Level 3 Up, Qwest Down