Level 3 Communications makes valuable connections through its networking efforts. Operator of one of the world's largest fiber-optic communications networks, the firm connects customers in 60 countries. Its services include broadband Internet access, wholesale voice origination and termination, enterprise voice, content distribution, broadband transport, and colocation. Wholesale customers include ISPs, telecom carriers, cable-TV operators, wireless providers, and the US government. The company markets its products and services directly to businesses, state agencies, and schools. Its content delivery unit targets video distributors, Web portals, online gaming and software companies, and social networking sites.
The fiber network giant generates revenue through a pair of segments: Core Network Services and Wholesale Voice Services and Other.
Its primary Core Network Services business, which accounts for 89% of revenue, comprises colocation and data center services, transport and fiber, IP and data services, and voice services. Generating 11% of Level 3's revenue, Wholesale Voice Services and Other consists of long distance voice services, revenue from managed modem and its related intercarrier compensation services, and revenue from the "SBC Master Services Agreement" (obtained through a 2005 acquisition).
Based in Broomfield, Colorado, Level 3 operates in North America, Latin America, and Asia/Pacific. The North America region accounts for 75% of the firm's revenue. Besides operating 18 data centers across North America, Latin America, and Europe, Level 3 owns or leases about 315 facilities worldwide. It runs 200 colocation facilities in North America, supported overseas by more than 100 colocation facilities in Europe and a dozen such offices in Latin America.
Sales and Marketing
Level 3 serves customers in 500-plus markets worldwide through owned fiber networks on three continents. The company's top 10 communications customers in fiscal 2012 accounted for approximately 17% of Level 3's total communications revenue.
The telecommunications company had been spending more on advertising in recent years, but scaled back in 2013. Level 3 spent $16 million on advertising in 2013, down from $20 million in 2012.
Although it has yet to make a profit as a public company, Level 3’s revenue ticked down 1% to $6.3 billion in 2013. The company attributes the slight reduction to declines in use as customers move to voice over IP services. There was growth in its Core Network Services for services provided to existing enterprise customers and new enterprise customers. The company’s net loss was $109 million, down from a net loss of $422 million in 2012. It saw more business in products with higher margins and refinanced some debt.
Key to Level 3's strategy and market competitiveness is its expansive global network infrastructure, which extends to major metropolitan markets in the US, Europe, and Latin America. Expanding that network is a primary focus of the company's strategy. Relying on its own network instead of other carriers (which it needs for some locations) drives its customer targeting.
In 2014, Level 3 expanded its government services with a contract from the US Department of Homeland Security to provide a range of local area network managed services for the agency within the National Capital Region. Under the contract, developed along the network as a service model, Level 3 will connect about 60 DHS locations.
In Brazil, the company agreed to provide Fototica, an eye care provider in Brazil, with virtual hosting, colocation and redundancy services for business operations in the Brazilian states of Sao Paulo, Bahia, Pernambuco, and Sergipe.
In 2013 the company also expanded an existing agreement with MLB Advanced Media (MLBAM) -- Major League Baseball's interactive media and Internet company -- to include data center services for the company's leading digital media products (including MLB.TV live video streaming). It has also entered long-term settlement-free Internet traffic exchange agreements (known as peering agreements) with XO Communications.
Level 3 also continues to expand its portfolio of services to include more bundled options for clients looking to add support for wireless broadband connectivity (Clearwire) and managed video networking services (FOX Broadcasting), among other advanced services.
Level 3 continues to develop into a global fiber-optics communications company. Effective 2013, the company provides hosting services for Rocket's websites and its data center located in Sao Paulo, Brazil. Additionally, Level 3 renewed its agreement with Grupo Salud S.A. in 2012 and entered into a new service provisioning agreement that extends through 2017. Level 3 will support the prepaid healthcare company by delivering telecommunications services, security infrastructure, and technical support that will allow its more than 1,000 doctors to share patient information throughout Ecuador. In 2013 it launched new high-speed networks in Argentina (Buenos Aires) and Colombia (Bogota).
As Level 3 grows, the company regularly reorganizes its business, which involves workforce reductions. The company has initiated layoffs in 2013, 2012, and 2011.
Mergers and Acquisitions
In mid-2014 the company bought tw telecom in a stock-and-cash transaction valued at $5.7 billion in order to create a stronger competitor to the incumbents. While Level 3 has an extensive global presence, tw telecom offers a deep metropolitan footprint in the US, serving 75 markets in about 30 states.